Top Wall Street analysts find these stocks promising for the long haul
Top Analyst Picks: Three Stocks to Watch #
As the earnings reporting season concludes, many companies have delivered solid results despite pressures on consumer spending. Investors seeking stocks that can withstand short-term pressures and deliver over the long term may want to consider the following three stocks favored by top Wall Street analysts.
Take-Two Interactive Software #
Game developer Take-Two Interactive Software (TTWO) recently reported better-than-expected adjusted earnings for the first quarter of fiscal 2025. Analysts are optimistic about the company’s upcoming releases and expect its bookings to increase significantly in the next fiscal year.
The robust bookings growth estimate is supported by the anticipated release of key titles, including Civilization VII, Borderlands 4, and Grand Theft Auto VI (GTA VI). New console/PC releases are expected to deliver substantial incremental bookings, while the mobile business and catalog/live services are also projected to contribute significantly.
While management is confident about releasing GTA VI next year, any potential delay between fiscal years is expected to have a limited impact on the company’s two-year earnings path. The release is anticipated to generate substantial bookings in the first year and enhance the company’s financial flexibility.
Long-term prospects for Take-Two Interactive include benefits from live services/catalog sales and further depth in the pipeline with sequels to popular franchises and potential new sports titles.
Costco Wholesale #
Membership-only warehouse chain Costco Wholesale (COST) recently reported a 7.1% rise in its net sales for the retail month of August. Excluding the impact of changes in gasoline prices and foreign exchange, Costco’s August comparable sales also grew 7.1%.
Analysts note that Costco’s performance continues to stand out against an increasingly challenged spending backdrop. The company delivered solid core comparable sales growth and displayed persistent strength in the non-foods area, even as there is continued softness in discretionary categories across most of the retail sector.
Costco’s appeal as a “growth staple” remains intact, thanks to its consistent performance, store network expansion, encouraging membership key performance indicators, and a recently announced fee hike.
Netflix #
Streaming giant Netflix (NFLX) has impressed investors with its crackdown on password sharing and the rollout of an ad-supported tier. While advertising is a new venture for Netflix, analysts believe it has the potential to become a major ad player as scale and monetization grow in the coming years.
Estimates suggest that ad revenue, excluding the subscriptions component, could account for more than 10% of the company’s revenue by 2027. Although Netflix’s ad tier currently lags behind some competitors in scale, analysts are confident that the company can boost its scale through changes in plans and pricing, bundling offers, and providing live content with extensive appeal.
Netflix’s impressive growth in upfront ad sales commitments, greater scale, and improved focus on ad formats and ad tech are expected to drive higher monetization. Analysts are optimistic about Netflix’s ability to grow its top line, improve margins, and deliver multi-year free cash flow growth.
Overall, these three stocks - Take-Two Interactive Software, Costco Wholesale, and Netflix - represent promising opportunities in their respective sectors, according to top Wall Street analysts.