As the earnings reporting season approaches its conclusion, a landscape of financial resilience has emerged among several companies, contradicting the prevailing challenges in consumer spending. Investors searching for stocks that possess both the endurance to weather short-term economic storms and the promise of long-term growth would benefit from the insights of leading Wall Street analysts. Herein, we explore three stock picks recommended by esteemed analysts, whose past performance lends credibility to their insights, as evaluated by platforms like TipRanks.
The gaming industry continues to be a focal point for investors, and one particular company, Take-Two Interactive Software (TTWO), is garnering attention. In August, the firm reported adjusted earnings that exceeded expectations for the first quarter of its fiscal 2025. Analyst Colin Sebastian from Baird has reaffirmed a “buy” rating on TTWO, projecting a price target of $172. His optimism stems from an expected surge in bookings, predicted to increase by a staggering 40% in the coming fiscal year due to several key title launches, including Civilization VII, Borderlands 4, and the highly awaited Grand Theft Auto VI (GTA VI).
Sebastian’s projections indicate not only robust sales growth but also an anticipated contribution of $2.25 billion from new console and PC releases. He also estimates that the mobile division will generate around $3.1 billion and that catalog and live services will produce $2.5 billion over the fiscal year. The potential for GTA VI to generate up to $3 billion in its inaugural year presents an exciting forecast for investors. Sebastian’s insights seem well-founded; although the management has expressed confidence in releasing GTA VI next year, a delay would minimally hinder TTWO’s earnings trajectory. Beyond this critical launch, Sebastian also highlights opportunities stemming from an expanding portfolio, encompassing sequels to franchises like Red Dead and BioShock.
Switching gears to the retail sector, Costco Wholesale (COST) stands out as a formidable player in an increasingly volatile market. Recently, the company announced a 7.1% increase in net sales for August, which is particularly noteworthy considering the pressures faced across the retail landscape. Baird’s analyst Peter Benedict, highlighting COST’s resilience, recently raised his fourth-quarter fiscal 2024 earnings per share (EPS) estimate to $5.10, slightly above the consensus estimate of $5.07.
Benedict’s analysis reflects an impressive track record of sales stability and consistent growth, even amidst a challenging consumer spending environment. Notably, he emphasizes COST’s robust core comparable sales growth, especially in non-food categories, which contrasts starkly with the overall softness seen in discretionary spending across the sector. The appeal of membership-based warehouse shopping continues to thrive, bolstered by a strategic store expansion plan and an impending fee hike. Benedict confidently maintains a “buy” rating on COST with a price target set at $975, underscoring its status as a defensive play in turbulent economic times.
Streaming service giant Netflix (NFLX) is our third focal point and represents a blend of innovation and adaptation in the face of market pressures. The competitive streaming landscape is challenging, but Netflix’s strategic initiatives, such as crackdowns on password sharing and the introduction of an ad-supported tier, have positioned it for continued growth. Analyst Doug Anmuth from JPMorgan acknowledges that while expanding into advertising may not align with Netflix’s traditional business model, there is significant potential for success in this area.
Anmuth estimates that by 2027, ad revenue could contribute more than 10% of Netflix’s total revenue. Although Netflix currently trails behind industry rivals like Amazon in terms of advertising scale, there are notable avenues for increasing engagement through innovative bundling and an emphasis on high-demand live content. Despite the initial dilution of its average revenue per member due to the ad tier, Netflix’s rapid growth in upfront ad sales—up 150%—hints at robust monetization opportunities. Anmuth maintains a “buy” rating on NFLX, forecasting a price target of $750 while anticipating continued top-line growth in the coming years.
These three companies—Take-Two Interactive, Costco Wholesale, and Netflix—illustrate the complex interplay of innovation, adaptability, and traditional business strengths amidst challenging economic conditions. Investors keen on identifying resilient stocks that combine short-term defensive attributes with long-term growth potential should consider these well-analyzed recommendations. Each company possesses unique strengths and strategic intentions, and with top analysts backing their prospects, they present compelling investment opportunities worth watching closely in the months to come.