The stock market is in a rough patch as of late while investors grapple with macro pressures, upcoming elections and geopolitical tensions.
However, investors and their portfolios can hold up in the tumult – if they’re able to ignore the short-term noise and choose stocks with attractive return prospects over the long term.
In this regard, the ratings of top Wall Street analysts and their investment theses can provide useful insights and help us make the right decisions.
Bearing that in mind, here are three stocks favored by the Street’s top pros, according to TipRanks, a platform that ranks analysts based on their past performance.
Costco Wholesale
Membership-only warehouse chain Costco Wholesale (COST) is this week’s first pick. The company recently reported its June sales and announced an increase in its membership fee. Costco is increasing the annual fee for its “Gold Star” membership by $5 to $65, effective Sept. 1. Moreover, the fee for the premium “Executive Membership” will now cost $130, up from $120.
Reacting to Costco’s first membership hike since June 2017, Jefferies analyst Corey Tarlowe reiterated a buy rating on COST stock and boosted the price target to $1,050 from $860, saying the stock remains a top pick. The analyst thinks the membership hike is a favorable catalyst for the stock and the company’s earnings.
Tarlowe noted that in the past, Costco has hiked its membership fees every 5.5 years, on average. However, this time, the retailer increased the fee after a seven-year gap. He thinks that the timing of the fee hike is good, given the consistent membership health the company is experiencing and strong June numbers.
“Historically, COST has not experienced a significant impact on membership trends when fees are increased, so we think the impact will be muted,” said Tarlowe.
The analyst expects the higher fee to enhance sales and earnings before interest and taxes, as membership fee accounts for a substantial portion of Costco’s consistently increasing operating profit. He estimates a potential benefit of nearly 3% to the company’s earnings per share over each of the next two years.
Tarlowe ranks No. 321 among more than 8,900 analysts tracked by TipRanks. His ratings have been profitable 67% of the time, delivering an average return of 18.8%. (See Costco Dividends on TipRanks)
MongoDB
Next up is the database software company MongoDB (MDB). The stock plunged in May after the company announced weak guidance for the fiscal second quarter and lowered its full-year outlook. MongoDB blamed a slower-than-expected start to the year for both new workload wins and the consumption growth of its cloud-based database software offering Atlas.
Tigress Financial analyst Ivan Feinseth recently lowered the price target on MDB stock to $400 from $500 to reflect the near-term pressures but reaffirmed a buy rating, as he views the sell-off in the stock as a good buying opportunity.
Despite the weak start to the year, Feinseth is bullish on MongoDB, as the company continues to gain traction among developers. He also mentioned the growing momentum for MDB’s Atlas DBaaS (database as a service) product.
He expects the company to benefit from the integration of artificial intelligence (AI) into its offerings. “MDB’s incorporation of new AI-powered capabilities improves developer productivity, accelerates application development, and accelerates its rapid enterprise adoption trends,” said Feinseth.
The analyst also highlighted the company’s expansion into other major verticals, such as health care, insurance, manufacturing and automotive production. He is optimistic about the prospects of MDB’s solid DBaaS platform, given its superior functionality and cost advantages compared to traditional database solutions.
Feinseth ranks No. 191 among more than 8,900 analysts tracked by TipRanks. His ratings have been successful 62% of the time, delivering an average return of 13.6%. (See MongoDB Stock Buybacks on TipRanks)
Nvidia
Semiconductor giant Nvidia (NVDA) is this week’s third pick. The generative artificial intelligence wave has significantly increased the demand for the company’s advanced graphics processing units. Even after the stock’s impressive year-to-date rally, Goldman Sachs analyst Toshiya Hari thinks that it has more room to run.
Following a meeting with Nvidia’s CFO Colette Kress, Hari reiterated a buy rating on the stock with a price target of $135. The analyst said that the meeting bolstered his “belief in the sustainability of the ongoing Gen AI spending cycle.” The meeting also reassured the analyst about NVDA’s potential to maintain its dominance through robust innovation across compute, networking and software.
Commenting on Nvidia’s next-generation AI graphics processor, Blackwell, the analyst reported that the CFO had said the company’s key suppliers are better positioned for the Blackwell ramp than the previous generational transitions. Hari expects notable revenue contribution from the Blackwell platform in Q4 FY25 and Q1 FY26, but he sees limited contribution in Q3 FY25.
The analyst is confident that despite rising competition, Nvidia will continue to maintain its leadership position based on several factors, like a large installed base and better access to supply. Moreover, the rapid speed at which large enterprises and cloud service providers are building and deploying generative AI models gives Nvidia an edge over competitors who are still developing advanced AI GPUs.
Hari ranks No. 30 among more than 8,900 analysts tracked by TipRanks. His ratings have been profitable 69% of the time, delivering an average return of 30.2%. (See Nvidia Options Activity on TipRanks)
