The postelection rally has experienced some turbulence in recent days, giving investors a bumpy ride in the near future. However, this volatile market can offer many opportunities – for those who know how to look.
Investors should not focus too much on short-term volatility due to portfolio positioning. Recommendations from Wall Street can help them make decisions about stocks and find solid long-term returns.
Top analysts pay attention to various aspects when selecting stocks of companies with strong fundamentals and strong execution.
Keeping in mind, there are three stocks favored by the Street’s top professionals, according to TipRanks, a platform that ranks analysts based on past performance.
Amazon
We start this week with the giants of e-commerce and cloud computing Amazon (AMZN). The company impressed investors with a third-quarter punch to the top and bottom lines, fueled by strength in its cloud and advertising businesses.
In reaction to the solid Q3 print, Monness analyst Brian White reaffirmed his buy rating on Amazon stock and raised his price target to $245 from $225. While the analyst acknowledges regulatory pressure, he remains bullish on AMZN because he thinks it will continue to “capitalize on the cloud, expand its digital advertising business, innovate with AI, realize the efficiency of its regional fulfillment network, and use a leaner cost structure.”
White highlighted that Amazon’s revenue growth accelerated to 17%, with significant profits. In particular, Q3 operating profit exceeded estimates, driving a record operating margin at 11%. He also noted a sharp sequential increase in operating margins in Amazon Web Services, or AWS, and the International business. Based on the solid results, analysts are raising earnings and earnings per share for 2024 and 2025.
White also pointed to Amazon’s focus on reducing costs through improved efficiency and new initiatives such as the regionalization of its US fulfillment network. The company now aims to regionalize its inbound network in the US and use advanced robotic innovations in its fulfillment network.
Overall, White sees profitable growth potential for Amazon in e-commerce, AWS, digital media, advertising, Alexa, robotics, artificial intelligence and other avenues.
White is ranked 38th among more than 9,100 analysts tracked by TipRanks. His ratings have been favorable 69% of the time, yielding an average of 20.4%. View Amazon Stock Chart on TipRanks.
Uber technology
Now we move on to the second option of the week, the ride sharing platform Uber technology (UBER). The company recently delivered better-than-expected third-quarter revenue and earnings. However, it missed Wall Street expectations for Q3 gross orders.
However, Evercore analyst Mark Mahaney remains bullish on UBER stock. He reiterated his buy rating with a $120 price target, following several investor meetings with management.
Mahaney thinks UBER will benefit from the launch of autonomous vehicles, given its position as the largest ride-sharing aggregator. He added that the improved availability of robotaxis on the Uber platform will improve customer service through shorter wait times, more ride options and possibly lower prices.
“UBER believes that the economics that AV owners can offer are attractive, allowing them to generate very high profits and better fleet utilization than they could develop on their own,” Mahaney said.
Based on discussions with management, Mahaney explained that the deceleration that reflects the growth of Uber Mobility orders in Q3 and estimates for Q4 is due to the negative demand elasticity caused by the increase in insurance costs and the slowdown in “party hours” orders, or those that occur in the evening and on weekends. He thinks that this deceleration will be moderate, due to the reduction in the rate of increase in insurance costs, the growth prospects of new products such as Uber for Teens and Uber for Business as well as the potential improvement in consumer discretionary demand.
Finally, Mahaney remains confident in Uber’s ability to consistently boost earnings before interest, taxes, depreciation and amortization and free cash flow margins over the next three to five years, supported by various measures to drive cost efficiency.
Mahaney ranks No. 34 among more than 9,100 analysts tracked by TipRanks. His ratings have been successful 64% of the time, yielding an average of 28.9%. View Uber Technologies Stock Options on TipRanks.
Block
Finally, let’s look at fintech giants Block (SQ). The company, formerly known as Square, beat analysts’ earnings expectations but missed revenue estimates for the third quarter.
Following the results, BTIG analyst Andrew Harte discussed the positives and negatives of Q3 Block’s performance. He noted that preliminary FY25 gross profit growth guidance of at least 15% almost met consensus estimates at 14.9%. However, the outlook for Q4 gross profit of 14% is less than expectations due to changes in the timing of certain expected profits from Q4 to next year.
Analysts think CEO Jack Dorsey did a good job of highlighting the company’s lending products and explaining how they can improve the Block ecosystem. Despite soft Q4 guidance and management comments indicating that investors should wait until the second half of 2025 for growth to accelerate, SQ stock continues to be a top pick for BTIG.
Harte cited several reasons for his bullish stance, including Block’s track record of exceeding guidance and the stock’s attractive valuation at 12 times FY25 EV (enterprise value)/EBITDA. He added that the company has initially seen increased adoption of its products in the Cash and Square ecosystems, indicating continued growth potential ahead.
“Block is just starting to integrate the Cash App and Square ecosystems, which could create a meaningful flywheel effect over time,” Harte said while expressing a buy rating on the stock with a $90 price target.
Harte ranks No. 152 among more than 9,100 Analysts tracked by TipRanks. His ratings have been favorable 75% of the time, yielding an average of 63.8%. Read Block Hedge Funds Activity on TipRanks.
