In the first quarter of 2024, the U.S. stock market experienced a notable run, but there is still a sense of uncertainty in the air. Investors are eagerly anticipating interest rate cuts and keeping a close eye on the upcoming U.S. elections. Despite the short-term noise, Wall Street analysts are focusing on companies with strong fundamentals that can deliver attractive returns in the long run.
One such company that has caught the eye of top pros on the Street is memory chipmaker Micron Technology (MU). Known for its impressive quarterly performance, Micron recently provided solid guidance, driven by the demand surge in the artificial intelligence sector. Needham analyst Quinn Bolton reaffirmed a buy rating on MU stock and raised the price target to $120 from $100 post Micron’s impressive quarter. Bolton specifically highlighted the company’s HBM3E memory solution, which has not only generated revenue in the fiscal second quarter but has also sold out for calendar year 2024. Management’s positive outlook, anticipating several hundred million dollars of revenue from HBM3E in fiscal 2024 and record high revenue in fiscal 2025, further solidifies Micron’s position.
Bolton expressed confidence in Micron’s gross margins, forecasting an increase through fiscal 2024 and into fiscal 2025, driven by favorable pricing and product mix. The rebound in the memory cycle in 2024 is expected to benefit the company in the long term. Bolton believes that Micron is well-positioned to capitalize on strong data center demand, automotive semi content, graphics, and industrial automation, making it a key player in the market.
Another stock favorite among Wall Street analysts is athletic apparel maker Lululemon (LULU). Despite a lackluster start to the first quarter in the U.S., the company reported better-than-expected results for the fourth quarter of fiscal 2023. However, shares dipped due to disappointing guidance reflecting soft sales in the U.S. Guggenheim analyst Robert Drbul slightly adjusted his fiscal 2024 EPS estimates and lowered the price target to $525 from $550, but maintained a buy rating on the stock, labeling it as the firm’s top growth story for 2024.
Drbul is optimistic about Lululemon’s capacity to grow its domestic business and gain market share, despite initial setbacks in the U.S. market. He is encouraged by the robust momentum in LULU’s international business in the last quarter of 2023. Setting ambitious targets for the company, Drbul is hopeful that Lululemon will quadruple its international revenue by fiscal year 2026 compared to 2021 levels, subsequently boosting overall revenue and operating margins. According to Drbul, Lululemon stands to benefit from various secular tailwinds such as health, wellness, casualization, and fitness trends.
Tech giant Broadcom (AVGO) is a prominent name in Wall Street analyst circles, highly regarded as one of the primary beneficiaries of the generative AI wave. Following a recent investor meeting, Susquehanna analyst Christopher Rolland reiterated a buy rating on AVGO stock with a price target of $1,650. The event shed light on Broadcom’s innovative strategies to hit $10 billion in AI chip sales in 2024.
Rolland emphasized Broadcom’s strong portfolio across AI accelerators and networking products and its confidence in Ethernet over InfiniBand technology, contrary to industry expectations. He praised Broadcom for its customized chips that drive cost efficiencies in consumer AI applications. The company’s collaborative approach with clients in co-designing AI accelerators enhances performance efficiency and hardware optimization. Rolland also commended Broadcom’s proven ability in strategic acquisitions, highlighting that the company’s integration skills have been pivotal in driving earnings growth in the semiconductor industry.
These three stock picks favored by top Wall Street analysts for 2024 represent companies at the forefront of innovation and growth, poised to deliver substantial returns in the long term. Investors may consider these recommendations as they navigate the evolving landscape of the U.S. stock market amidst economic uncertainties and upcoming events.