Certain companies and their stocks are well-regarded on Wall Street. Strong management teams, solid execution and growing profits and sales often lead to a stock being given the highest rating among analysts. This is typically a strong buy rating or its equivalent. It is reserved for best-in-class stocks that are outpacing their peers and that have reliable future growth prospects. These companies are typically considered good long-term stocks to buy.
While analyst ratings are not foolproof, they provide investors with a sense of how a stock is being viewed by professionals on Wall Street. The ratings can be a good indicator of whether sentiment towards a stock is bullish (positive) or bearish (negative). Price targets can be helpful too as they indicate whether analysts see more growth ahead for a stock or a likely pullback in the share price.
Analyst ratings should form one part of the research investors do on a stock. For investors looking for long-term stocks to buy, these three companies are strong options.
Nvidia (NVDA)
Now looks like a great time to buy shares of chipmaker Nvidia (NASDAQ:NVDA). The stock has a strong buy rating and median price target that is 8% higher than current levels. NVDA stock is currently drifting sideways before the company reports earnings on May 22. Analysts are pounding the table on the stock ahead of the upcoming print, which is likely to send the share price higher.
Analysts at Wells Fargo, for example, just raised their price target on NVDA stock to $1,150 a share from $970 previously. That new price target is 21% higher than where the company’s share price is currently sitting. Wells Fargo is urging investors to buy the stock before earnings, which have traditionally been a catalyst for Nvidia. While trading has been subdued lately, Nvidia’s share price is still up 96% year-to-date (YTD).
Analysts expect Nvidia to continue benefitting from growing use of its microchips in artificial intelligence (AI) data centers.
Delta Air Lines (DAL)
Delta Air Lines (NYSE:DAL) has earned a strong buy rating from 17 analysts following the carrier’s record first-quarter sales. The median price target on DAL stock is $59.74, which is 12% higher than the current share price. Delta is one of the few major U.S. carriers to have a strong buy rating. Analysts clearly like that Delta swung to a profit and announced record sales for Q1 of this year. The airline is benefitting from a surge in global travel demand.
Delta announced Q1 earnings per share (EPS) of 45 cents versus 36 cents that was expected among analysts who track the company. Revenue totaled $12.56 billion, slightly below Wall Street forecasts of $12.59 billion but a record for the first quarter of any year. Management at the carrier said they are seeing strong bookings for both leisure and business travel as Americans take to the skies again.
Delta forecast Q2 earnings of $2.20 to $2.50 per share, which is ahead of analysts’ forecast of $2.23 a share. DAL stock is up 31% this year but remains below pre-pandemic levels seen in 2019.
Microsoft (MSFT)
Also rating a strong buy is technology giant Microsoft (NASDAQ:MSFT). The consensus price target on MSFT stock among 33 analysts is $489.89 per share, which implies nearly 16% upside. Like Nvidia, shares of Microsoft have drifted lately. Over the past month, the company’s stock is only up 2%. YTD, the share price has increased 14%, matching the performance of the Nasdaq index on which it trades.
There are still plenty of reasons to be bullish on Microsoft stock. The company remains a leader in AI due to its close relationship with privately held OpenAI. And Microsoft’s financial results remain extremely strong, fueled largely by growth in cloud computing. The company is reportedly planning to introduce new AI tools for use with its Windows operating system and its cloud-computing infrastructure at its Build conference next week.
Over five years, MSFT stock has risen 230%, making it one of the great long-term stocks to buy.
On the date of publication, Joel Baglole held long positions in NVDA and MSFT. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.