Finding the right stocks in today’s market isn’t easy. With so many options, it’s tough to know which ones are worth your attention. But when you get it right, the payoff can be huge. That’s why we do the heavy lifting for you, sorting through the noise to bring you stocks that are set to move.
Each week, we dig into the data, look at market trends, and identify stocks with real potential. Our focus is on opportunities that aren’t just good for a quick win but have the strength to deliver ongoing growth.
This week, we’ve highlighted three stocks that stand out from the pack. Backed by solid analysis, these picks are positioned for a strong run in both the short and long term.
McDonald’s (MCD) U.S. Growth Fueling Momentum for 2025
McDonald’s (MCD) stock could be set for further gains, especially as its U.S. business starts showing more positive trends. With earnings season on the horizon, Morgan Stanley recently bumped up its price target by $44, to $340, implying a potential upside of over 9% from the stock’s current levels. While the stock has already posted a 23% gain in the past three months, there could be even more room to run as key catalysts start to emerge.
The latest insight suggests that McDonald’s U.S. business is seeing momentum, with potential sales drivers still ahead. One of the main catalysts could be a permanent value relaunch, possibly set for 2025, which could help maintain the positive sentiment surrounding the stock. Domestically, things are moving in the right direction, and this momentum could carry into the second half of 2024, providing more upside for the stock.
On the flip side, McDonald’s international performance might be more mixed, and that could bring some near-term caution, especially when the company reports its Q3 earnings. Nonetheless, the U.S. strength could offset those concerns and give investors something to look forward to.
With shares of McDonald’s up 4.5% for the year so far, and analysts maintaining an overweight stance on the stock, long-term investors may find this fast-food giant a strong candidate to add to their portfolio, especially heading into 2025. Keep an eye on its domestic performance and potential sales drivers as we move further into the year.
Cloudflare, Inc. (NET) Cloudflare’s AI Ambitions Are Gaining Traction
Cloudflare has made impressive strides in the AI space, positioning itself as a potential leader in cloud-based AI infrastructure. Traditionally known for its cybersecurity solutions, Cloudflare is now leveraging its global infrastructure to provide AI-powered solutions. The company’s Workers AI platform, introduced last year, enables developers to build and deploy AI applications using Cloudflare’s network without having to purchase costly hardware like GPUs.
The most compelling aspect of Cloudflare’s recent strategy is its deployment of Nvidia GPUs across 180 cities globally, with plans to expand further. This infrastructure gives organizations access to powerful AI tools without the associated capital expenditures. As the AI and cloud computing markets continue to grow, this positions Cloudflare to capture a significant portion of the $580 billion IaaS market by 2030.
Additionally, the company’s new AI Audit tool, aimed at content creators, could generate additional revenue streams by allowing websites to monetize how AI bots use their content. These initiatives add to Cloudflare’s already strong growth trajectory, with revenue up 30% year-over-year in its second-quarter results. With analysts projecting Cloudflare’s earnings to grow at an annual rate of 62% for the next five years, the stock looks like a promising opportunity for investors looking to capitalize on AI-driven growth.
Chewy (CHWY) E-Commerce Platform with Long-Term Growth Potential
Chewy (CHWY) is currently trading at around $30 per share, having risen approximately 65% from its price a year ago and 36% year-to-date in 2024. The company’s rapid growth is driven by its e-commerce platform, which offers thousands of pet products, including its own private-label brands. But that’s just the surface of Chewy’s long-term strategy.
A significant part of its expansion lies in diversifying its revenue streams. Chewy’s online pharmacy service includes compounding medications for pets, while its telehealth platform offers on-demand vet services. These healthcare options, combined with the launch of a pet insurance plan, aim to deepen customer engagement. The recent addition of a sponsored ads program is expected to contribute 1% to 3% to the company’s net sales by the end of 2024.
Chewy’s push into physical locations is also notable. So far in 2024, the company has opened six Chewy Vet Care clinics, which have exceeded expectations in new customer acquisition. Impressively, about 50% of customers who visited a clinic have subsequently placed orders on Chewy’s e-commerce platform, proving that these brick-and-mortar expansions complement its online presence.
Financially, Chewy posted strong results in Q2 2024, with net sales reaching $2.9 billion, up 2.6% from the previous year. What’s more, its net income skyrocketed by an impressive 1,380% to $299.1 million compared to just $20.2 million in Q2 2023. A significant portion of sales came from recurring customer purchases, with its Autoship program contributing to 78% of all net sales. Non-discretionary spending, such as healthcare and essential pet items, accounted for 85% of total spending.
While Chewy’s revenue growth rate was moderate, the company’s profitability surged, signaling that it’s making the right moves in expanding both its customer base and its product offerings. Long-term investors may want to keep an eye on Chewy as its combination of recurring revenue and new initiatives could continue to drive its performance in the years ahead.