As the calendar flips to a new year, investors face an environment rife with macroeconomic uncertainties. Concerns surrounding inflation and the resultant implications for interest rates are prompting cautious sentiment within the investment community. Amidst this backdrop, one crucial strategy for assuaging risks while seeking favorable returns lies in identifying stocks with robust financial health and significant long-term growth potential. Analysts on Wall Street provide valuable insights that can help investors make informed decisions on which stocks to add to their portfolios. This article explores three investment opportunities that have garnered attention from top analysts according to TipRanks, a platform that evaluates the performance of financial analysts.
First on the radar is Uber Technologies (UBER), a powerhouse in the ride-sharing and food delivery sectors. The latest quarterly earnings report revealed that Uber outperformed expectations concerning revenue and earnings; however, its gross bookings did not meet forecasts. Mizuho analyst James Lee reaffirmed his buy rating on Uber, setting a price target of $90. Looking ahead, Lee envisions 2025 as a pivotal year for Uber as the company doubles down on growth investments. Although these actions may impact short-term earnings before interest, taxes, depreciation, and amortization (EBITDA), they are projected to set the stage for sustained growth.
Lee anticipates that Uber’s strategic initiatives will facilitate a compound annual growth rate (CAGR) of 16% in core gross bookings from fiscal year 2023 to 2026. This aligns with the company’s long-term growth trajectory as articulated during its analyst day. Moreover, the analyst believes that concerns regarding the deceleration of Uber’s Mobility segment are exaggerated. He posits that gross bookings are set to grow in the high teens for fiscal year 2025, aided by increased operational efficiency and economies of scale.
The Delivery branch of Uber is also expected to flourish, with projections indicating a steady growth rate in the mid-teens for fiscal year 2025. Data from Mizuho reveals an all-time high in order frequency, coupled with increased user penetration in grocery services across North America, underscoring the potential for sustained market share in food delivery. Lee’s analysis positions him favorably among peers, holding a 60% success rate on his ratings and an average return of 12.9%.
Next up is Datadog (DDOG), a prominent player in the cloud monitoring and security landscape. The company recently reported results exceeding expectations for its third quarter of 2024, capturing analysts’ attention. Monness analyst Brian White reinforced his buy rating on Datadog, setting a target price of $155. White’s position stems from his belief that Datadog is navigating the burgeoning realm of generative artificial intelligence (AI) thoughtfully, avoiding the hyperbolic claims often seen in the tech sector.
Despite facing stiff competition, Datadog has reported impressive performance metrics, with a marked increase in its annual recurring revenue derived from AI-native customers. Progress here suggests that Datadog’s innovative AI solutions, such as LLM Observability and its AI assistant Bits AI, are beginning to resonate within the marketplace. White maintains that Datadog justifies a premium valuation over its traditional software competitors, thanks to its cloud-native structure and agility in adapting to secular trends.
From White’s perspective, the anticipated long-term growth in generative AI signifies increasing activity within the industry in the coming years. With a high success rate of 69% on his stock ratings and a stellar average return of 20%, Datadog represents an intriguing option for investors betting on the future of cloud solutions.
Lastly, we examine Nvidia (NVDA), a semiconductor giant positioned at the forefront of the generative AI revolution. With an unwavering demand for their advanced graphics processing units (GPUs), Nvidia stands to benefit significantly from ongoing trends within the tech sector. Following discussions with CFO Colette Kress, JPMorgan analyst Harlan Sur reaffirmed his buy rating and a price target of $170.
Sur emphasizes that Nvidia is well-equipped to handle production ramp-ups, particularly with their Blackwell platform, despite external challenges such as supply chain constraints. Looking forward, robust spending within the data center sector is expected to propel Nvidia’s revenue growth in calendar year 2025, highlighting the company’s strategic advantages in accelerated computing solutions.
Moreover, Nvidia’s management team has expressed optimism regarding untapped revenue opportunities and market growth beyond traditional high-end gaming, venturing into AI applications and PCs. Harlan Sur’s positive assessment of Nvidia cemented his credibility, holding a successful rating percentage of 67% along with an impressive average return of 26.9%.
As market uncertainties loom, identifying stocks with strong fundamentals and established growth strategies becomes paramount. Uber Technologies, Datadog, and Nvidia emerge as compelling options for investors seeking to navigate the tumultuous waters of the current economy. By aligning with the insights of accomplished analysts, investors can bolster their portfolios with stocks positioned favorably for future success, ultimately turning potential risks into opportunities.