These 3 Stocks Are Favored by Wall Street Analysts for the Long Haul

This past week saw turbulent stock market activity, as trade policy tensions from the Trump administration's tariff discussions sent major indexes on a roller-coaster ride. Even after a strong rebound on Friday, markets still ended the week in the red.

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In such an unpredictable environment, investors can benefit from tracking the recommendations of leading Wall Street analysts. These experts highlight stocks with strong fundamentals that can weather short-term volatility while offering promising long-term returns.

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Here are three stocks that top analysts are backing, according to data from TipRanks, a platform that evaluates analysts based on their historical accuracy.

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Zscaler: Riding the AI and Cybersecurity Boom

Zscaler (ZS), a cloud-based cybersecurity firm, is the first stock on this week’s list. The company’s Zero Trust Exchange platform has gained traction as businesses and governments look to strengthen their cybersecurity defenses. Zscaler’s strong second-quarter fiscal 2025 earnings exceeded expectations, driven by increased demand for Zero Trust security and artificial intelligence-powered solutions.

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Following these robust results, TD Cowen analyst Shaul Eyal reaffirmed his bullish stance on Zscaler, maintaining a buy rating and a price target of $270. Eyal pointed to several key factors that contributed to the company's outperformance, including an improved sales strategy, lower sales team attrition for the second consecutive quarter, and higher sales productivity, with further enhancements anticipated in the latter half of the fiscal year.

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Artificial intelligence continues to be a major growth driver for Zscaler, with the company’s AI Analytics portfolio nearly doubling in annual contract value compared to the previous year. The company expects to reach $3 billion in annual recurring revenue by the close of fiscal 2025.

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Eyal also highlighted Zscaler’s extensive federal contracts, noting that it serves 14 of the 15 U.S. cabinet agencies. The company is expected to benefit from cost-cutting initiatives within government operations, which align with its cost-efficient cybersecurity solutions. Additionally, Zscaler’s large enterprise customer base remains strong, with the number of clients generating over $1 million in annual recurring revenue rising 25% year over year to 620.

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“With a mix of organic growth and strategic acquisitions, Zscaler has broadened its capabilities and expanded into adjacent market opportunities,” Eyal noted.

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Eyal ranks among the top 20 analysts tracked by TipRanks, with a 65% success rate and an average return of 23.9% per rating.

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Costco Wholesale: A Retail Powerhouse with Growth Potential

Next on the list is Costco Wholesale (COST), the popular membership-only retail chain. Costco recently delivered mixed second-quarter fiscal 2025 earnings, with revenue exceeding expectations due to strong comparable sales growth, though earnings per share fell slightly short.

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Jefferies analyst Corey Tarlowe attributed the earnings miss to a lower-than-expected expansion in gross margin during the quarter, partially impacted by currency fluctuations. However, he remained positive on Costco’s business model, citing robust 8.3% adjusted comparable sales growth, even as other retailers struggled.

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Tarlowe also pointed out that Costco is well-positioned to expand its warehouse network and benefits from relatively low exposure to the new tariffs imposed by the Trump administration. The company disclosed that only one-third of its U.S. sales come from imported goods, with less than half originating from China, Mexico, and Canada.

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“We believe Costco’s scale and strong private-label penetration will help shield it from the negative impact of tariffs,” Tarlowe stated. He reaffirmed his buy rating on Costco stock and raised the price target from $1,145 to $1,180.

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Tarlowe ranks within the top 700 analysts tracked by TipRanks, boasting a 55% success rate and an average return of 11.4% per recommendation.

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Karman Holdings: A New Player in Defense and Space

The third stock on this week’s list is Karman Holdings (KRMN), a recently public aerospace and defense company specializing in missile defense, propulsion systems, and space launch technology.

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Evercore analyst Amit Daryanani initiated coverage of Karman Holdings with a buy rating and a $38 price target, citing multiple secular tailwinds expected to drive the company’s growth in the coming years.

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Key growth drivers include the expansion of U.S. orbital launch volume, with Karman supplying components to every major U.S. launch provider, as well as increased investments in missile defense and hypersonic technologies. Additionally, the U.S. and its NATO allies are undergoing a multi-year restocking of missile defense inventories, further boosting demand for Karman’s products.

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Daryanani projects that Karman’s fiscal 2025 revenue will rise 18% year over year to $409 million, with earnings per share reaching $0.36. He also anticipates an expansion in EBITDA margins to 31%, reflecting improved profitability.

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“Karman Holdings is strategically positioned for sustained mid-to-high teens growth due to its involvement in the fastest-growing segments of the defense and space sectors,” Daryanani noted.

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Daryanani is ranked within the top 500 analysts on TipRanks, with a 53% success rate and an average return of 10.3% per rating.

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Conclusion

As market uncertainty continues, analysts see opportunities in companies that are poised to thrive despite near-term challenges. Zscaler benefits from rising AI-driven cybersecurity demand, Costco maintains strong sales momentum amid retail headwinds, and Karman Holdings stands to gain from increasing defense and space-related investments.

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While short-term volatility remains a concern, these analyst-backed stocks present compelling long-term investment opportunities.

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