As the US stock market outlook appears set to take a turn for the better amid expectations of upcoming Federal Reserve rate cuts, brokerages are beginning to upgrade some stocks that had recently struggled.
With the anticipation of rate cuts clearing the gloomy outlook prompted by April’s news that the Consumer Price Index (CPI) was coming in hotter than expected, we’re likely to see far more out-performance among the market’s strongest growth stocks.
This has led to an increase in major brokerages distributing rare ‘triple upgrades’ throughout Wall Street’s high-potential stocks. This refers to the uncommon occurrence when a stock undergoes multiple upgrades by the same brokerage.
Triple upgrades are particularly enticing for investors because it usually indicates that a stock is undergoing a change in fortune, or has consistently outperformed its more lukewarm expectations in the past.
Triple upgrades occur when analysts assume a stock has transitioned from a period of negative or slow growth to an impressive long-term option to buy and hold. With this in mind, let’s take a deeper look at three of Wall Street’s strongest examples of triple-upgrade stocks.
Lululemon (LULU)
For a stock that’s suffered a 40% decline over the first two quarters of 2024, Lululemon (NASDAQ:LULU) is a triple upgrade stock unlike any other.
In its Q1 2024 earnings, Lululemon announced that it had beaten both its earnings and revenue estimates, but issued weaker Q2 guidance on the expectation of slower sales in the Americas.
Despite this, the stock entered the top 10 most upgraded stocks by analysts in 2024 with Market Beat aggregating the stock as a moderate buy following the input of 32 analysts.
Crucially, Lululemon, an activewear stock, stands well-positioned to rebound as the Paris Olympic Games approach.
Additionally, the company has been expanding its business at an international scale with performance in global markets stealing a march on its slower Stateside performance. This makes LULU a strong stock to track at a discounted rate.
Nvidia (NVDA)
It’s impossible to discuss Wall Street’s most upgraded stocks without mentioning Nvidia (NASDAQ:NVDA). The semiconductor giant has been at the forefront of the generative AI boom and is widely expected to cement its position as a market leader in powering the next generation of the internet amid the rise of Web 3.0.
The stock itself experienced growth of more than 150% in the first half of 2024 alone. In the past, these metrics would have heralded as astonishing, but Nvidia’s recent strength means the tech star can achieve anything.
Despite its recent performance, Nvidia has suffered a slight wobble in recent weeks, prompting investor uncertainty and fears that the GenAI rally could be running out of steam.
However, Nvidia CEO Jensen Huang appears to be unbothered by recent struggles and has suggested that the firm’s upcoming launch of its Blackwell platform could become the “most successful product” in its history.
Given an amazing 2023, a successful Blackwell launch could see the stock become the world’s most valuable stock. NVDA is certainly worth tracking as a result.
Alphabet (GOOG,GOOGL)
Another stock showing impressive growth of over 30% over the first half of the year is Alphabet (NASDAQ:GOOG,GOOGL). This not only means that the stock has outperformed the S&P 500 by 11%, but it also offers investors a platform for growth despite the firm not yet fully showing its generative AI capabilities.
Google’s parent company has long been a leading growth stock for investors to buy and hold, but we’re seeing evidence of Alphabet becoming unsatisfied with its rate of innovation amid the rapid development of artificial intelligence technology. It’s for this reason that the announcement of a $2.3 billion investment program in Google’s Ohio data centers is a particularly exciting indicator of infrastructural upgrades for the blue-chip stock.
ChatGPT remains the most-talked-about GenAI platform on the market. However, Google’s commitment to implementing more intelligence and generative features for its world-renowned search engine is beginning to bring tangible change to how online queries are resolved.
As Google continues to refine its Gemini model, it will increase its exposure through integration into its search engine, which is used for an estimated 8.5 billion queries per day.
This exposure is the perfect springboard for emerging as a market leader in a growing AI market.
On the date of publication, Dmytro Spilka did not hold (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.
On the date of publication, the responsible editor did not have (either directly or
indirectly) any positions in the securities mentioned in this article.
