Wall Street Analysts Pick These 5 Stocks for Attractive Returns, Including NVIDIA: As September begins, the macro landscape appears challenging, but analysts have highlighted several stocks they feel confident about for the long term.
According to Wall Street’s top experts, based on TipRanks ratings, here are five attractive stocks, a platform that ranks analysts based on their past performance:
Let’s start with chip giant NVIDIA’s shares (NVDA), which have experienced unprecedented growth this year, as the frenzy for generative artificial intelligence has boosted demand for the company’s graphics processing units (GPUs). The company recently reported its second-quarter financial results, which disappointed Wall Street’s expectations, as revenue more than doubled compared to the same quarter last year.
JP Morgan analyst Harlan Sur said that expectations were higher for the fiscal second quarter. Nevertheless, due to significant growth in demand for the company’s data center products, nearly $14 billion in a robust automotive revenue pipeline, and software, analysts expect the company’s earnings power to increase by over 30% annually in the coming years, driven by continuous strength in the data center segment, growth of $1 to $2 billion in licensing and subscription revenue over the next 3-4 years.
Sur raised his price target from $500 to $600 and affirmed a Buy rating on NVIDIA stock, stating, “The proliferation of generative AI and large language/transformer models is driving strong demand for NVIDIA’s rapid compute/networking platform and software solutions.”
TipRanks ranks NVIDIA as 95th out of over 8,500 analysts tracked, with a success rate of 65%, and each rating providing an average return of 19.3%. (See NVIDIA’s stock analysis on TipRanks.)
Marvell Technology (MRVL), another semiconductor stock, is included on this week’s list. The company managed to beat analysts’ expectations for the fiscal second quarter, even though it saw a revenue decline compared to the same period a year ago. Management expects accelerated revenue growth in the third fiscal quarter, thanks to AI and cloud infrastructure.
In response to the results, Deutsche Bank analyst Ross Seymour doubled down on his Buy rating on MRVL stock, raising his price target to $70. Seymour noted that the company provided a modest top-line beat and in-line outlook while addressing macro-related weakness with strong sequential growth in AI-related applications.
According to Seymour, “overall, we believe MRVL has an attractive portfolio of foundational products addressing AI/cloud (electro-optics and critical custom compute), 5G, and automotive mega trends.”
Analysts believe that Marvell’s foundational products, combined with end-customer collection in storage, wired, and on-premises businesses, will help accelerate the company’s growth in calendar year 2024.
On TipRanks, among more than 8,500 analysts tracked, Seymour ranks 9th, with a success rate of 75%, and each rating provides an average return of 24.2%. (See Marvell’s stock chart on TipRanks.)
Palo Alto Networks
“The next-generation cybersecurity firm Palo Alto Networks (PANW) announced better-than-anticipated financial results for the fourth quarter.
Revenue increased by 26% year-over-year to $1.95 billion but fell slightly short of expectations.
Keith Bachman, an analyst at BMO Capital Markets, ranked 584th out of over 8,500 analysts on TipRanks, said the company’s financial guidance for fiscal year 2024 includes 19% to 20% year-over-year billings growth and a 37% to 38% adjusted free cash flow margin. This was better than expected, with a mid-range billing growth of 30% and an EBITDA margin of around 30%.
Bachman believes the trend of consolidating solutions with major security vendors will continue as threats evolve and emphasize the need for generic AI data aggregation. He stated that employing an integrated portfolio enhances the ability to detect and respond to threats in real-time.
The analyst also noted that PANW’s customers are adopting all three of its platforms (Strata, Prisma, and Cortex) rapidly, as they seek unified solutions and integrated data models. He raised his price target from $235 to $275 and doubled down on the buy rating for Palo Alto.
“We believe that the strength and cost consolidation of PANW’s portfolio are the primary drivers for its long-term goals and significant new NGS ARR [Next-Generation Security Annual Recurring Revenue] growth,” Bachman said.
The analyst boasts a 57% success rate with an average return of 7% for each rating on TipRanks.
Turning to financial software company Intuit’s results for the fourth quarter, they exceeded analysts’ previous estimates. They reported that the financial perspective for the first quarter of the fiscal year 2024 fell short of expectations, while revenue guidance was in line with estimates.
Deutsche Bank analyst Brad Zelnick noted that the company’s strong fourth-quarter results were driven by the better performance of its small business unit, supported by solid development in QuickBooks Online (QBO) ecosystem.
In the upcoming Innovations and Investor Day events scheduled for September, analysts hope that management will provide more details on Intuit’s AI investments and progress in generative AI over the past several years. They expect the company’s AI initiatives to create value for small business owners, consumers, and taxpayers, leading to long-term growth and improved profitability.
Zelnick kept his buy rating on Intuit, raising the price target from $525 to $575, saying, “We see this AI-powered expert platform driving rapid innovation with a consistent mid-teens or better EPS growth.”
Zelnick ranks 50th among over 8,500 analysts tracked by TipRanks. His ratings have been profitable 71% of the time, yielding an average return of 15.4%.
The Chefs’ Warehouse
Finally, let’s talk about Chef’s Warehouse (CHEF), a distributor of specialty food products, supplies, and equipment for chefs and restaurants.
BTIG analyst Peter Saleh noted that despite six consecutive quarters of improvement in guidance, record sales, total income, operating income, and EBITDA, CHEF’s stock is trading near or around pre-pandemic levels on EV/EBITDA and P/E multiples (excluding the volatility of the COVID era).
The analyst expects the company’s sales to grow by 28.5% to reach $3.36 billion in 2023, driven by nearly 8% growth in organic sales, contributing to continued growth in EBITDA. He argued that while their estimate is more than double the $1.59 billion in revenue in 2019, shares are trading nearly 25% below pre-pandemic levels, and he believes CHEF’s stock is undervalued and underappreciated by investors.
With a price target of $48 and a maintained buy rating, Saleh said, “Double-digit sales and EBITDA growth, along with growth in the development profile, lead us to believe that CHEF represents a unique opportunity for long-term investors, and we keep the stock as our top small-cap pick.”
Saleh ranks 402nd among over 8,500 analysts on TipRanks. Additionally, 60% of his ratings have been profitable with an average return of 11.1%