Investors made their way through a volatile week of trading, in which the Trump administration’s tariff rhetoric rocked the major averages and a rally on Friday still left stocks with weekly losses.
Against that volatile backdrop, investors can track the stock picks of top Wall Street analysts to enhance their portfolios by adding stocks that can withstand near-term pressures and deliver strong returns over the long term.
With that in mind, here are three stocks favored by the Street’s top pros, according to TipRanks, a platform that ranks analysts based on their past performance.
Zscaler
Cloud-based cybersecurity company Zscaler (ZS) is this week’s first pick. The company is known for its Zero Trust Exchange platform, which securely connects and protects users, devices and applications from cyberattacks and data loss. Zscaler impressed investors with market-beating results for the second quarter of fiscal 2025, thanks to the growing adoption of Zero Trust and artificial intelligence.
In reaction to the stellar results, TD Cowen analyst Shaul Eyal reiterated a buy rating on Zscaler stock with a price target of $270. The analyst noted several positives that drove the second-quarter results, including a revamped go-to-market strategy, improvement in sales attrition for the second consecutive quarter, and increased sales productivity with further enhancement expected in the second half of fiscal 2025.
Eyal also highlighted that AI tailwinds are driving demand and product development, with annual contract value from the AI Analytics portfolio nearly doubling year over year. Zscaler expects to achieve $3 billion in annual recurring revenue by the end of fiscal 2025.
Commenting on Zscaler’s federal business, Eyal pointed out that the company serves 14 of the 15 U.S. cabinet agencies and expects to benefit from Elon Musk’s so-called Department of Government Efficiency due to the cost savings and efficiencies offered by its solutions. The analyst added that the company continues to reflect strength in the large customer cohort, with the number of customers generating ARR of more than $1 million increasing by 25% year over year to 620.
“With organic development and acquisitions, ZS has increased its capabilities and expanded its reach into complementary adjacencies,” said Eyal.
Eyal ranks No.18 among more than 9,400 analysts tracked by TipRanks. His ratings have been profitable 65% of the time, delivering an average return of 23.9%. See Zscaler Hedge Funds Trading Activity on TipRanks.
Costco Wholesale
We move to Costco Wholesale (COST), a membership-only warehouse chain that recently reported mixed results for the second quarter of fiscal 2025. The company’s revenue surpassed expectations on higher comparable sales, but earnings missed estimates.
Jefferies analyst Corey Tarlowe noted that the slight earnings per share miss was due to lower-than-anticipated expansion in Q2 FY25 gross margin and reflected the impact of forex headwinds and other factors. Nonetheless, the analyst was impressed by the company’s solid comparable sales and higher membership fee.
Tarlowe highlighted that Costco delivered robust adjusted comparable sales growth of 8.3% despite the challenges seen at other retailers, led by the strength in the company’s non-food categories. Further, the company’s U.S. comps gained from higher traffic and ticket growth.
The analyst believes that Costco has the opportunity to expand its warehouse footprint further. He also noted the company’s low exposure to the recently announced tariffs by the Trump administration. Notably, the company confirmed that about one-third of its U.S. sales are imported from other countries, with less than half coming from China, Mexico and Canada.
“We believe that COST’s scale and high private label penetration will help insulate the co. from the negative impacts of tariffs,” said Tarlowe and reiterated a buy rating on COST stock while raising the price target to $1,180 from $1,145.
Tarlowe ranks No.664 among more than 9,400 analysts tracked by TipRanks. His ratings have been successful 55% of the time, delivering an average return of 11.4%. See Costco Ownership Structure on TipRanks.
Karman Holdings
Third on this week’s list is Karman Holdings (KRMN), a defense and space systems maker that recently went public. The company’s diverse range of offerings includes payload and protection systems, aerodynamic interstage systems, and propulsion and launch systems.
Recently, Evercore analyst Amit Daryanani initiated coverage of KRMN stock with a buy rating and a price target of $38. The analyst is bullish on Karman due to the company’s ability to drive strong growth over the next several years, fueled by many secular tailwinds.
The tailwinds highlighted by Daryanani included solid growth in the U.S. orbital launch volume, with the company selling products to every U.S. launch provider, and a growing focus on missile defense and hypersonics in the U.S. The analyst is also optimistic about Karman due to the multi-year restocking of missile and missile defense inventories by the U.S. and its NATO allies.
Daryanani expects KRMN’s fiscal 2025 sales to grow 18% year over year to $409 million and EPS of 36 cents, indicating a 100 basis-point expansion in EBITDA margin to 31%.
Overall, Daryanani believes that Karman is “well positioned for sustained mid/high teens growth given their unique position addressing all the fastest growing parts of the military and space markets.”
Daryanani ranks No.478 among more than 9,400 analysts tracked by TipRanks. His ratings have been profitable 53% of the time, delivering an average return of 10.3%. See Karman Holdings Technical Analysis on TipRanks.
This post was originally published on CNBC Markets
