Many investors have one or more preferred fundamental or technical indicator. These help to cut through the noise surrounding a stock. And, in some cases, the opinion of analysts is one of those indicators. Analyst-backed stocks have a high correlation with future stock price growth.
Analysts have access to information, and corporate insiders, that individual investors like you and me do not. They also generally follow many stocks within a sector, giving them the ability to spot emerging bullish or bearish trends. When analysts upgrade a stock or maintain a rating of Buy (or one of its equivalents such as Overweight or Outperform), it tells you that analysts have a strong belief that the stock will move higher.
That kind of information brings clarity. And that clarity is essential in times when economic indicators are sending conflicting signals. Here are seven analyst-backed stocks with several analyst upgrades in the 30 days ending April 10, 2024.
Analyst-Backed Stocks: Micron Technology (MU)
Micron Technology (NASDAQ:MU) leads this group of analyst-backed stocks with 22 upgrades. Many of the upgrades are above the stock’s consensus price target of $121.35.
The company is one of the leading providers of memory chips that are becoming essential as companies add artificial intelligence (AI) functionality. AI models require a tremendous amount of data, which then requires high bandwidth memory (HBM). And Micron continues to be a leader in the HBM sector. As evidence of that, the company’s newest solution, the HBM3E will be embedded into the new Nvidia (NASDAQ:NVDA) H200 graphic processing unit (GPU).
MU stock is up 92% in the last year which may explain why short interest is up more than 9% in the last month. But with bullish analyst sentiment acting as a tailwind, any pullback can set the stage for the next move higher.
The next catalyst for Micron is likely to come from their earnings report in June. That makes this a good time to take a position as the stock is giving you a small pullback.
SentinelOne (S)
SentinelOne (NASDAQ:S) is another of the top analyst-backed stocks with eight recent upgrades. Cybersecurity will continue to be one of the top sectors for investors in 2024. Much of that demand is being driven by AI. So, it stands to reason that SentinelOne’s AI-driven cybersecurity solutions will be in demand.
That’s certainly the sentiment of analysts from Bank of America (NYSE:BAC) that upgraded SentinelOne from a Neutral to a Buy with a $35 price target in February in support of the company’s competitive positioning, which has to do with its leadership in AI-based cybersecurity.
SentinelOne is not turning a profit, yet. And at a time when investors have less of an appetite for the risk that comes with those stocks, the company closed that gap significantly last year and expects to close it even more in 2024.
Like many tech stocks, S stock has had a sharp pullback in the last 30 days. But with analysts giving the stock a consensus price target of $29.96, investors have the potential for 32% upside. And 19 out of 32 analysts give SentinelOne either a Strong Buy or Buy rating.
Analyst-Backed Stocks: Williams-Sonoma (WSM)
I recently put Williams-Sonoma (NYSE:WSM) on a list of stocks to buy based on bullish analyst calls, and it’s worth repeating my bullish call here. Although analysts put a consensus Hold on WSM stock, the company has received 12 upgrades in the 30 days ending on April 10, 2024.
On the one hand, market bears can say that, even with 12 upgrades, WSM is still a Hold. On the other hand, the company beat on earnings every quarter in 2023 even though the earnings were lower year-over-year. And that speaks to the idea that Williams-Sonoma can still command the 20.1% operating margin that it reported in its March earnings report.
WSM stock has pulled back about 5% the week of April 8. That’s likely some profit taking as investors come to grips with any rate cuts moving further down the calendar in 2024, if they arrive at all. But this is a company with a more affluent target market that is more able to manage through inflation.
Occidental Petroleum (OXY)
As you might expect, several energy stocks – and specifically oil and gas stocks – have been getting upgrades. Occidental Petroleum (NYSE:OXY) is one of the stocks that should be on investors’ radars with six analyst upgrades.
Occidental is a favorite of Warren Buffett who continues to invest heavily in OXY stock. At the end of 2023, Buffett owns over 25% of the company’s stock. The legendary investor believes in the company’s turnaround story and in how Occidental is well positioned to deliver value to shareholders. That value is becoming clear in the company’s dividend. After cutting the dividend in 2020, the company has raised its quarterly dividend from a penny per share in 2022 to its current amount of 22 cents per share.
It’s fair to point out that Buffett likes OXY for its sustainability initiatives as well as its assets in the Permian basin. But the latter certainly doesn’t hurt. Especially as oil prices are now over $85 a barrel and likely headed higher in the next 12 months.
Analyst-Backed Stocks: Netflix (NFLX)
Netflix (NASDAQ:NFLX) is another one of the heavily analyst-backed stocks with 10 recent upgrades. That’s despite an 83% gain in NFLX stock in the last year. Netflix has silenced many naysayers (full disclosure, yours truly among them) by not only retaining subscribers but growing its base.
The streaming giant has leaned into its ad-supported tier and is seeing minimal pushback as it cracks down on passwords. The cherry on top is that the company has managed to increase the rate for its premium, ad-free, tier. And it’s done so without seeing much consumer attrition.
Oh, and the company also signed a multi-year contract with the WWE that is the company’s first foray into the coveted live sports market. While the company says it has no long-term plans for the space, it may turn out to be too lucrative to pass up.
In fairness, since late March, NFLX stock has found firm resistance at its 52-week high. However, the company reports earnings on April 18, 2024, which could very well be the next catalyst to send the stock soaring higher.
Dollar General (DG)
The latest readings on inflation show that it’s moving higher. But consumers have known that, especially those that do the shopping for their household. That’s why it was surprising that the discount retailer, Dollar General (NYSE:DG) was down 29% in the last 12 months.
The key story for the company is location more than pricing. Despite its name it may not have the lowest price on items you might buy at a store like Walmart (NYSE:WMT). But the company’s business model places its stores in rural areas or in areas that are otherwise not being served by big-box retailers. That means consumers are saving money on gas as well as their purchases, which can tip the scale in favor of Dollar General.
The company has been disappointing on the earnings front as inflation hits discount retailers particularly hard. However, DG stock has 10 recent upgrades and is one of the top analyst-backed stocks. the stock is also up about 12% in 2024 which signals that sentiment could be turning around for DG stock.
For that turnaround to fully take shape may take an interest rate cut. That would be inflationary for consumers, but it may help Dollar General with its margins.
Madrigal Pharmaceuticals (MDGL)
For investors who follow the biotech sector, Madrigal Pharmaceuticals (NASDAQ:MDGL) has been a big winner. In March 2024, Madrigal received accelerated approval for Reziffra, the company’s treatment for adults with noncirrhotic nonalcoholic steatohepatitis (NASH) that includes moderate to advanced liver fibrosis. The drug must be used as part of a program that includes diet and exercise.
There are an estimated 6 to 8 million adults with NASH in the U.S. alone. And this is the first treatment for those patients.
At this time, Reziffra is only approved for NASH. But it’s important to note that a key component of Reziffra is a thyroid hormone receptor agonist, Resmetirom. Since thyroid hormones impact metabolism, if that hormone activity increases, as it will with Reziffra, patients may experience increased fat burning and weight loss. There is a high correlation between excess weight and liver disease. Resmetirom also positively influences heart-related lipids and LDL cholesterol.
Will these be future indications? It’s too early to tell, but the price action in MDGL stock suggests that it may not be too early for analysts to speculate.
On the date of publication, Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.