One of the top picks by Wall Street analysts is off-price retailer Burlington Stores (BURL). This week, the company impressed investors with its upbeat results for the first quarter of fiscal 2024 and raised its profit margin and earnings outlook for the full year. 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, thanks to the expansion in Burlington Stores’ gross and operating margins. Tarlowe believes that BURL has a significant top-line and margin runway ahead, which is not fully factored into estimates. As customers continue to migrate to off-price retailers from department stores, which were negatively impacted by the Covid pandemic, Burlington Stores is expected to benefit. The company operated 1,021 stores as of the end of Q1 fiscal 2024 and plans to open about 100 new stores this year, with expectations to expand its footprint to 2,000 stores over time.
Amazon (AMZN)
Another top pick is e-commerce and cloud computing company Amazon (AMZN). The company delivered solid first-quarter earnings despite a challenging macroeconomic backdrop. Tigress Financial analyst Ivan Feinseth reiterated a buy rating on AMZN and increased his price target to $245 from $210, emphasizing generative artificial intelligence-related tailwinds, multi-industry leadership position, and impressive brand equity. Feinseth pointed out that businesses are increasingly adopting generative AI to enhance competitiveness and boost operating efficiency, driving profits at Amazon Web Services (AWS). He expects AWS to continue seeing a rise in the number of large language models built on its platform due to superior operating performance, security, and industry-leading capabilities. Additionally, Feinseth highlighted Amazon’s efforts to expand Prime membership benefits, increase grocery sales, grow its digital advertising business, and continue innovating. Amazon’s solid balance sheet and cash flows position it well to make investments in strategic deals and growth initiatives.
PagerDuty (PD)
PagerDuty (PD), a digital operations management platform, is also a top pick by analysts. The company reported mixed results in the first quarter of fiscal 2025 but highlighted profitability on a non-GAAP basis for a seventh consecutive quarter. RBC Capital analyst Matthew Hedberg reiterated a buy rating on PagerDuty with a price target of $27. He noted a 10% growth in annual recurring revenue (ARR) and an 11% rise in billings. ARR growth remained steady at 10% for the second consecutive quarter, with management projecting acceleration in the second half of Fiscal 2025, driven by traction in multi-year deals. Hedberg expressed confidence in better pipeline visibility for the second half of the fiscal year, supported by momentum in multi-product and multi-quarter deals. He also highlighted the opportunities PagerDuty is seeing in its federal business, securing an Authority to Operate (ATO) from the Department of Veteran Affairs and closing its first seven-figure deal in the public sector.
The stock market continues to be influenced by the timing of the Federal Reserve’s interest rate decisions. However, investors are focusing on individual stock picks that have the potential to thrive despite short-term pressures and deliver attractive long-term returns. Analysts are optimistic about the growth prospects of Burlington Stores, Amazon, and PagerDuty, selecting them as top picks for investors looking for sustainable growth opportunities in the current market environment.