Analyst Upgrades: 7 Stocks That Make the Grade in Q1 2024

Earnings season is a great time for data-hungry investors. Even though a company’s earnings report is largely backward-looking, it’s also an opportunity for companies to provide guidance for upcoming quarters.  

Another signal that investors can look for is analyst upgrades. If an earnings report is a progress report, an analyst rating gives the stock a grade: buy, hold or sell. Once a company reports earnings, analysts that cover the company will issue a rating and/or price target. 

Obviously, investors should look for companies that get a significant amount of analyst upgrades after they report earnings. And, although many analysts wait until after the earnings report to issue ratings, some analysts release this information prior to earnings. That’s even better.  

Using a stock screener, I found a list of companies that have received the most analyst upgrades in the last 30 days. That’s a good sign that institutional investors will be buying these stocks. Don’t fight the trend. These are solid names to ride higher along with analyst sentiment.  

Netflix (NFLX) 

Source: xalien / Shutterstock

Coming off a bullish earnings report, Netflix (NASDAQ:NFLX) is an easy choice as a stock that analysts love in the first quarter of 2024. As of this writing, the streaming giant has received 30 analyst upgrades and/or boosts to its price target.  

The company checked off all the boxes in its fourth quarter earnings report. Subscriber count is up as is ad revenue. The company is successfully cracking down on password sharing and has passed along a price increase to its basic and premium (ad-free) subscribers.  

All of this is bullish for the company’s margins and cash flow which will likely break records in 2024. Plus, the company’s new contract with WWE, beginning in 2024, is a clever way to engage with live sports, one of the coveted growth drivers for all streaming drivers.  

The consensus price target shows a gain of about 7.5% for NFLX stock. But several analysts are bidding the stock up between 20% and 25%. And this was on top of the company’s stock price being up 50% in the last 12 months.  

Lam Research (LRCX) 

Lam Research sign and logo at semiconductor company Lam Research Corporation headquarters in Silicon Valley. LRCX Stock

Source: Michael Vi / Shutterstock

The semiconductor sector continues to be in a super cycle. Lam Research (NASDAQ:LRCX) doesn’t manufacture semiconductor chips, but it does make the equipment that chip makers need. And as Rich Duprey explained to biedexmarkets.com readers, there’s one particular area, etching, that is making the company a particularly attractive investment in 2024. 

The company has 10 analyst upgrades in the last 30 days. However, as I write this, Lam is only a day removed from reporting its fourth quarter and full-year earnings in which it beat estimates on the top and bottom lines. You can expect LAM stock to get more upgrades.  

Trading at an all-time high of over $869 a share, LAM stock may be due for a pullback. So if you don’t have a position, you may want to wait for a slightly better price. But for those who have ridden the 73% stock price gain in the last 12 months, this is a good Hold especially when you can collect a safe dividend that pays only $8 per share on an annual basis today but has plenty of room to move higher.  

Advanced Micro Devices (AMD) 

Advanced Micro Devices, Inc. (AMD) logo in the building at CNE in Toronto. AMD is an American semiconductor company.

Source: JHVEPhoto / Shutterstock.com

You’ll have to take my word for it, but when I started researching this article, Advanced Micro Devices (NASDAQ:AMD) had 10 analyst upgrades in the last 30 days. It’s now up to 13. What’s particularly bullish about the upgrades to AMC stock is that they are occurring in advance of the company’s earnings report on January 30, 2024.  

It’s not hard to see why. It will be hard for any company to have another Nvidia (NASDAQ:NVDA) moment like we saw in 2023. But with the launch of its MI300X GPU chipset, the company is well-positioned to take market share from Nvidia simply because of the overwhelming demand in the sector.

Here’s where investors need to watch carefully. As of this writing, AMD stock is trading north of $180 a share. The consensus target is still around $158. That doesn’t mean the stock is going to drop more than 15%. But it does suggest that the stock may be frontrunning earnings just a bit. Look to buy AMD on any dip.  

Monster Beverage (MNST) 

A can of Monster Beverage (MNST) energy drinks sits on top of a skateboard.

Source: Domagoj Kovacic / Shutterstock.com

Checking in with five analyst upgrades is Monster Beverage (NASDAQ:MNST). In the last five years, MNST stock has rewarded investors with a “monster” 97% gain.  

However, as the stock price has grown so has the company’s valuation. Monster now trades at around 35x forward earnings. That’s in line with the company’s historic average, which is higher than the consumer staples sector average of around 27x earnings.  

If you’re going to pay that premium, you’ll want to know how likely it is that Monster will hit its projection for 15% earnings growth in the next year. The bullish analyst sentiment for a stock that has split six times with the most recent occurring in March 2023 is encouraging.  

Supporting analyst sentiment is the company’s 30% market share in its core category of energy drinks. Monster also began branching out into alcoholic beverages in 2023. Right now, that makes up just a fraction of the company’s overall sales, but it’s a growing category that will be additive to both revenue and margin in the coming years.  

Lululemon Athletica (LULU) 

Lululemon storefront in a mall. People shop inside the store among the clothes. LULU stock.

Source: lentamart / Shutterstock

Lululemon Athletica (NASDAQ:LULU) has eight upgrades with the stock expected to have 6.6% upside in the next 12 months. The athleisure company best known for its iconic yoga pants is proving that consumers and investors will do well by buying the best.  

The initial reading on fourth quarter GDP came in hotter than expected. But investors may have expected that when they saw that Lululemon increased its sales and profit forecast for the fourth quarter based on a strong holiday season.

Not surprisingly, analysts are racing to catch up to LULU stock which in late 2023 was changing hands for around $511 a share. It’s dropped about 7% in the last month. But the stock looks to be finding support in the $465 range. And with earnings not scheduled until the end of March, investors may be able to grab some shares before what is likely to be another strong report.  

Procter & Gamble (PG) 

Procter & Gamble Union Distribution Center. P&G is an American Multinational Consumer Goods Company

Source: Jonathan Weiss / Shutterstock.com

So far, the stocks on this list have been growth stocks. With bullish analyst sentiment, they will be solid choices even if the economy continues to struggle. However, investors with a lower risk tolerance may be looking for stocks that come with less volatility. One option is to look for high-quality dividend stocks like Procter & Gamble (NYSE:PG).  

The case for Procter & Gamble is simple enough. The company is part of the consumer staples sector. It has products consumers need, not want. And in many cases, consumers are still loyal to the company’s popular brands even when they are competing with generic or house brands. 

PG stock is up about 66% in the last five years. Some years (2020 and 2021) have been great. In 2022, not so much. The average gain of about 13% stock price growth every year is not going to beat the markets in many years, but P&G is still a reliable, long-term investment.  

And even in the years when the stock doesn’t perform as well, the stock has a solid, and growing dividend. P&G is part of the exclusive Dividend Kings club having increased its dividend for 68 consecutive years.  

Verizon Communications (VZ) 

Verizon Retail Location. Verizon delivers wireless, high-capacity fiber optics and 5G communications. VZ stock

Source: RAMAN SHAUNIA / Shutterstock.com

Verizon Communications (NYSE:VZ) is proof that boring can be beautiful. The wireless business is a tough business model in the best of times. But it’s also a reliable business model. And with about 28% of market share, investors can count on consistency quarter after quarter.  

VZ stock is down about 25% in the last five years. Much of that has been because the company was spending money to build out its 5G infrastructure. But analysts bidding up the stock is a good sign that investors are betting that the company is about finished with that spending. That should allow for stock price appreciation in the coming years.  

That stock price growth will pair nicely with a juicy dividend that currently has a yield of over 6% and the company has increased that dividend in each of the last 19 years. With the company’s cash flow likely to increase in coming years, more dividend growth is a near certainty.  

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 biedexmarkets.com.com Publishing Guidelines.   

Chris Markoch is a freelance financial copywriter who has been covering the market for over five years. He has been writing for biedexmarkets.com since 2019.

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