Investors got a good case of whiplash over the past four years. The pandemic crash of 2020 brought a decade-long bull market to a screeching halt. However, the spin-up into the revenge-buying bull market of 2021 soon followed. A bear market followed again the next year, only to be gored by another bull run higher in 2023. We’re still in the midst of that today.
The benchmark index seems to set new records almost daily these days, and Wall Street fully embraces it. Analysts are much more upbeat, and their stock ratings reflect that outlook. Of the more than 5,600 stocks on the market, 15% have a Hold rating and less than 2% are rated a Sell. That means over 80% of all stocks are a Buy or better.
There is good reason stocks with high analyst ratings dominate the market. It’s because stocks tend to go up over time. Data from The Hartford Funds shows the average bear market lasts just 289 days or less than 10 months. Bull markets, on the other hand, tend to last for 2.6 years! Wall Street is simply playing the odds and betting on the American economy to keep growing.
Still, experts are particularly excited about some stocks with high analyst ratings. The following three stocks have that kind of consensus. They are ones almost all analysts rate as a Buy or Strong Buy. Let’s see if that enthusiasm is warranted.
Micron Technology (MU)
Best known as a provider of DRAM and NAND memory chips, Micron Technology (NASDAQ:MU) is getting swept up in the artificial intelligence (AI) tsunami. It was the first chipmaker to ship advanced high-bandwidth memory called HBM3E, which provides more than 20 times the memory bandwidth standard D5-based DIMM server modules can. It also does it at 30% lower power consumption.
That’s key because generative AI models require an ever-growing amount of data as they scale. Micron’s second-generation HBM3E chip was among the first to be qualified for Nvidia’s (NASDAQ:NVDA) updated H200 and GH200 accelerators, and the new Blackwell GPU architecture-based AI systems allocate 33% more HBM3E content.
CEO Sanjay Mehrotra told analysts Micron sold out its entire HBM3E supply for 2024. Almost all of 2025’s supply is also gone. As it only just began recognizing revenue from the new chips in Q2, investors can expect to see sales explode in future quarters.
That’s likely why 92% of analysts have a Buy rating or better on MU stock. Shares spiked on the earnings news, but at less than 15 times next year’s earnings, Micron has plenty of growth still to come.
Anheuser-Busch InBev (BUD)
Anheuser-Busch InBev (NYSE:BUD) continues to reel from its disastrous Bud Light marketing campaign. The controversial decision to step into the culture wars and alienate its core customer cost the brand not only its position as the best-selling beer but actually lost BUD stock $1.4 billion in sales.
Bud Light is now trailing Constellation Brands‘ (NYSE:STZ) Modelo Especial after giving up five percentage points of market share. Although the share losses have since stabilized, growth is barely occurring. Management admits the beer is only gaining 0.1 to 0.2 percentage points every 3 to 4 weeks. Fourth-quarter revenue was still down 17% from the weak year-ago figure, and sales to retailers (STR), a measure of consumer demand, fell 12% as the Bud Light fiasco hangover lingers.
Still, Wall Street remains hopeful Anheuser-Busch will rebound. Some 88% of analysts rank the brewer a Buy or better. In large part, that’s due to the belief beer drinkers will trade down from ultra-premium brands as consumer spending weakens. As A-B still has a commanding presence in the premium market, it would stand to benefit most.
Moreover, the brewer is a global company. While North America accounts for 15% of global volume and 25% of revenue, Central and South America combine to represent more than half of each, respectively. With significant growth prospects there and trading at just about 12 times free cash flow, BUD stock might warrant the upside potential Wall Street assigns it.
Dexcom (DXCM)
Medical device maker Dexcom (NASDAQ:DXCM) is highly regarded for its continuous glucose monitors (CGM) for diabetics. It has long dominated the Type I diabetes market, where patients take insulin to keep their glucose levels in check. Yet, the Type 2 diabetes market is estimated to be twice as large because it is far more common. Patients may or may not need insulin injections.
Dexcom has a big opportunity to gain a large swath of the Type 2 market with its CGMs. The FDA just approved Dexcom for over-the-counter sales of its Stelo CGM for individuals who don’t take insulin. There is stiff competition in the CGM market from both Abbott Labs (NYSE:ABT) and Medtronic (NYSE:MDT). Dexcom, though, could gain the lead.
President and CEO Kevin Sayer told analysts that 70% of Dexcom’s CGM prescriptions already come from primary care physicians. It should be relatively easy for the medical device maker to see doctors now prescribe the Stelo to their diabetic patients who don’t take insulin.
It won’t be a straight moonshot for DXCM stock but Wall Street is on the right track with its Strong Buy rating. As 86% of analysts give Dexcom a thumbs up, the stock could continue growing even though it does carry a premium valuation.
On the date of publication, Rich Duprey 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.
