The debate around when the Federal Reserve will start to lower interest rates continues to influence market sentiment. Investors are interpreting important macroeconomic data, including jobs market reports, to decipher the current state of the U.S. economy.
At the same time, Wall Street analysts continue to focus on picking individual stocks that can thrive even in the face of short-term pressures and deliver attractive, long-term returns.
Here are three stocks favored by the Street’s top pros, according to TipRanks, a platform that ranks analysts based on their past performance.
Burlington Stores
Off-price retailer Burlington Stores (BURL) is this week’s first pick. The company impressed investors with its upbeat results for the first quarter of fiscal 2024 (ended May 4) and raised its profit margin and earnings outlook for the full year.
In reaction to the Q1 results, Jefferies analyst Corey Tarlowe reaffirmed a buy rating on BURL and increased the price target to $275 from $260. The analyst is confident about the retailer’s ability to deliver robust comparable sales growth.
Tarlowe noted that the expansion in Burlington Stores’ gross and operating margins helped drive better-than-expected earnings in the first quarter. The analyst also highlighted the New Jersey-based company’s well-managed inventory levels.
“BURL is the smallest and least-profitable of the major off-price retailers, and we believe that it has a significant top-line and margin runway ahead that is not yet fully factored into estimates,” said Tarlowe.
Tarlowe expects BURL to gain from customers’ migration to off-price retailers from department stores, which were hit hard by the Covid pandemic. The retailer operated 1,021 stores as of the end of Q1 fiscal 2024 and plans to open about 100 new stores this year. The analyst expects BURL to expand its footprint to 2,000 stores over time.
Tarlowe ranks No. 291 among more than 8,800 analysts tracked by TipRanks. His ratings have been successful 67% of the time, with each delivering an average return of 18.9%. (See Burlington Stores Stock Charts on TipRanks)
Amazon
E-commerce and cloud computing company Amazon (AMZN) is also a top pick. The company delivered solid first-quarter earnings despite a challenging macroeconomic backdrop. The company’s bottom line gained from strong revenue growth and cost-cutting measures.
Recently, Tigress Financial analyst Ivan Feinseth reiterated a buy rating on AMZN and increased his price target to $245 from $210, citing generative artificial intelligence-related tailwinds, multi-industry leadership position and impressive brand equity.
The analyst noted that businesses are increasingly adopting generative AI to boost operating efficiency and enhance competitiveness, driving profits at Amazon Web Services (AWS). He expects AWS to see a continued rise in the number of large language models (LLM) built on its platform, thanks to its “superior operating performance, security, and industry-leading capabilities.”
Feinseth highlighted Amazon’s other strengths, including continued efforts to expand Prime membership benefits, increase grocery sales, grow its digital advertising business and continue to innovate. Moreover, AMZN’s solid balance sheet and cash flows enable it to make investments in strategic deals and growth initiatives.
Feinseth ranks No. 242 among more than 8,800 analysts tracked by TipRanks. His ratings have been profitable 60% of the time, with each delivering an average return of 12.2%. (See Amazon Technical Analysis on TipRanks)
PagerDuty
Finally, there’s PagerDuty (PD), a digital operations management platform. The company reported mixed results in the first quarter of fiscal 2025 (ended April 30). Adjusted earnings per share topped analyst expectations, while revenue slightly missed estimates. The company highlighted that it was profitable on a non-GAAP basis for a seventh consecutive quarter.
Following the Q1 print, RBC Capital analyst Matthew Hedberg reiterated a buy rating on PagerDuty with a price target of $27, saying, “We feel slightly better about the potential for 2H/25 acceleration despite tough macros.”
The analyst highlighted the 10% growth in the company’s annual recurring revenue (ARR) and an 11% rise in billings. In particular, he noted that ARR growth was steady at 10% for the second consecutive quarter. Management projects ARR growth to accelerate in the second half of Fiscal 2025, given traction in multi-year deals.
Hedberg thinks that there is better pipeline visibility into the second half of fiscal 2025, backed by momentum in multi-product and multi-quarter deals. He is also encouraged by the opportunities that PagerDuty is seeing in its federal business. Notably, the company secured an Authority to Operate (ATO) from the Department of Veteran Affairs and closed its first seven-figure deal in the public sector.
Hedberg ranks No. 565 among more than 8,800 analysts tracked by TipRanks. His ratings have been profitable 52% of the time, with each delivering an average return of 9.7%. (See PagerDuty Financial Statements on TipRanks)