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Analysts at Bank of America say there is a host of buy-rated stocks set to outperform heading into the remainder of 2024. The Wall Street investment bank says these companies are best positioned to gain and are firing on all cylinders. CNBC Pro combed through Bank of America research to find stocks the bank believes are “best-in-class.” They include Carvana , ESAB, Netflix , Texas Roadhouse and Johnson Controls . Netflix Everything is “on track” for the streaming giant following its earnings report in October, according to BofA. Profit margins are rising and the company is making the right investments to maintain its longstanding streaming leadership, according to analyst Jessica Reif Ehrlich. “Also, NFLX’s existing scale advantage is bearing fruit as healthy revenue growth and cost discipline are driving operating leverage, leading to an increased 2024 margin outlook to ~27%,” she said. The bank says Netflix is well positioned for more upside as earnings per share momentum is poised to outperform in coming quarters. “In our view, Netflix remains one of the best positioned companies within media & has several growth drivers, including the accelerating ramp of its burgeoning ad business which is expected to double in ’25 and become a multi-year growth driver in ’26 and beyond, along with Gaming, Live & Sports,” Reif Ehrlich went on to say. Shares are up 69% this year. ESAB The fabrication technology welding company is too attractive to ignore, analyst Sherif El-Sabbahy says. “The firm continues to compound even in a weak manufacturing backdrop,” he wrote of the company. ESAB is “thriving in a tough backdrop,” as free cash flow continues to expand, according to El-Sabbahy. Further, BofA says ESAB is well positioned domestically and internationally with more market share gains on the horizon. A robust balance sheet also affords plenty of room for further growth, he added. Meanwhile, shares are up 43% this year, with El-Sabbahy maintaining ESAB as a top pick. He called ESAB a “best in class compounder with short cycle upside.” Texas Roadhouse Analyst Sara Senatore is sticking with shares of the Texas-themed restaurant following earnings in late October. “As beef prices continue to prove more favorable than expected, TXRH is well-positioned to maintain restaurant-level margins even as pricing rolls off in [fiscal] 2025,” she wrote. BofA says Texas Roadhouse benefits from low staff turnover, innovative technology and same-store sales that continue to improve. In addition, Senatore called traffic growth “best-in-class” with month-to-month improvement even as the wider industry battles numerous headwinds. Shares of the company are up 62% this year with plenty of room to run, Bank of America says. “We believe Texas Roadhouse has a long growth runway, with room to expand its store count in the U.S. by 70% to about 1000 stores,” Senatore went on. Netflix “3Q: Everything remains on track Netflix is a global leader in the streaming market offering a best-in-class subscription and advertising video on demand service to more than 280mn subscribers in over 190 countries. … Also, NFLX’s existing scale advantage is bearing fruit as healthy revenue growth and cost discipline are driving operating leverage, leading to an increased 2024 margin outlook to ~27%.” ESAB “Best in class compounder with short cycle upside. … The firm continues to compound even in a weak manufacturing backdrop. … As [the] manufacturing economy gradually recovers, we expect ESAB to compound earnings and [free cash flow] to drive further multiple expansion. Reiterate Buy. Thriving in a tough backdrop, with a [balance sheet] for growth.” Carvana “The company remains in growth mode, with best-in-class eCommerce growth driven by market expansion and greater penetration in existing markets. We think the company is well positioned for high levels of sustained growth long term and see upside potential in the medium term given strong inventory levels, resilient consumer demand and [a] North America car production shortage.” Texas Roadhouse “As beef prices continue to prove more favorable than expected, TXRH is well-positioned to maintain restaurant-level margins even as pricing rolls off in F25. … TXRH [offers] best-in-class traffic trends & topline growth and … further operating leverage. … We believe Texas Roadhouse has a long growth runway, with room to expand its store count in the U.S. by 70% to about 1000 stores.” Johnson Controls “Best-in-class data center assets and change is coming. … We believe data centers to be one of the more profitable verticals. … We see the JCI story as combining self-help and structural outgrowth driven by smart buildings controls and software. We see the new CEO as a positive catalyst.”
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