As the stock market extends its rally to new highs, it's important to watch the stocks most loved among equity analysts. Broadcom and GE Aerospace are two of the seven best stocks where investors can find magnificent profit growth prospects.
Arista No. 1 In Networking
Arista Networks is the No. 1 stock in the computer networks industry group, boasting a 99 Composite Rating. The company's EPS Rating also is a perfect 99 following earnings gains of 30%, 25%, 30% and 38% the past four quarters. Sales growth accelerated 20%, 25%, 28% and 30%.
The company blew by analysts' expectations when it reported second-quarter earnings Aug. 5. Arista also raised full-year guidance, noting a capital spending boom at cloud computing companies.
Arista stock climbed back above its 200-day moving average June 26. It has since topped resistance around the 100 price level and is now at all-time highs.
Of 29 analysts who cover Arista, 83% have the highest ratings on the stock. The consensus 2025 earnings estimate is $2.79 per share, an increase of 23%.
Arista Networks, which makes cloud-computing network equipment, is buying VeloCloud from Broadcom. VeloCloud sells software-defined wide-area network technology. Analysts generally had a positive reaction to the deal. Terms weren't disclosed.
Broadcom Another Tech Leader
Broadcom is back in our list of magnificent earnings leaders, after posting EPS gains of 18%, 28%, 45% and 44%. Its EPS Rating is a perfect 99, and its Composite Rating is just as good, at 99 also.
The company is one of the most widely followed on Wall Street, and most are bullish. Of 47 analysts who cover the company, 91% have buy ratings on the stock.
Analysts expect the chip company to earn $6.61 a share in the fiscal year ending in October. That would be a 35.8% increase year over year. It also would be far better than the gains in the teens the two previous fiscal years.
Silicon Valley-based Broadcom is benefiting from President Donald Trump's push to ensure the U.S. leads artificial intelligence technology. Announced in July, the president's Strategy includes expediting permits for new data centers and semiconductor fabs, and initiatives to increase high-demand jobs. It may also lead to more chip exports to China, which is under U.S. restrictions.
Broadcom stock has shaken off some selling earlier in the week, when Trump said semiconductor tariffs were coming. The actual proposal left untouched companies that plan to expand capacity in the U.S.
Axon Enterprise Earnings
Of 21 analysts covering Axon Enterprise, 81% have buy ratings and the rest hold ratings. Analysts expect the maker of Taser stun guns, body cameras and other police equipment will see its fast profit growth slow, however.
Axon reported Q2 earnings Aug. 4 and beat estimates. The company also raised its full-year outlook above analysts' consensus estimate.
Analysts expect EPS to rise 6.7% this year, after gains of 89% and 44% the past two years, according to MarketSurge. Still, Axon has a highest-possible EPS Rating of 99. It is the highest in the security and safety industry group, and Axon also has one of the best Composite Ratings in the group, a 98.
The stock on May 13 broke out above the 715.99 buy point of a cup base in active trading but gave back all the gains. Shares, however, rebounded and climbed back above the 50-day moving average on the earnings report.
GE Aerospace Earnings
GE Aerospace beat expectations July 17 as it reported a 38% increase in earnings and a revenue jump of 21% for the second quarter. Management raised its full-year outlook, putting adjusted revenue growth in the midteens vs. its prior forecast for low-double-digit growth.
After the latest report, GE stock has a 98 EPS Rating, which ranks first among 73 stocks in the aerospace and defense industry group. The Composite Rating is a brilliant 99.
As a major manufacturer of jet engines and aviation systems, GE Aerospace faces tariff risks. Yet, the stock is trading at all-time highs, holding support above its 10-week moving average.
The crash of an Air India Boeing 787 has dragged on GE, which built the engines used in that plane. The fatal crash is under investigation, but early signs point to a pilot turning off fuel flow. GE stock is up more than 28% from its May breakout 214.21, so investors who bought around that level should take some profits.
Of 19 analysts who cover the jet engine maker, 79% have buy or outperform ratings. Analysts expect full-year EPS to climb 27.6% to $5.87 a share.
Comfort Systems Earnings
Comfort Systems has posted accelerating EPS gains of 49%, 60%, 67% and 75% the past four quarters, sending its EPS Rating to 99. That's the highest in IBD's air conditioning and heating products industry group.
Of the nine analysts covering the company, six have top recommendations and the rest have hold ratings. For the full year, analysts expect earnings of $23.18 a share, up 58.7%.
While the company saw broad improvements in the latest quarter, executives said the massive building of data centers is boosting its performance. Data centers require large amounts of cooling. Analysts cited strong organic growth, larger margins and a growing backlog.
The stock is trading at all-time highs after gapping up following its July 24 earnings report. It has formed a three-weeks-tight pattern with a 7187.40 buy point.
Comfort Systems has the highest EPS Rating and Composite Ratings in its industry group, both 99.
Meta Platforms
Meta Platforms, the parent company of Facebook and Instagram, rallied more than 11% after its Q2 earnings July 30 impressed investors. The company also gave a strong sales forecast and continues to ramp up its generative AI initiatives.
Meta has posted earnings gains of 37%, 50%, 37% and 38% the past four quarters. That's helped give the stock a 96 EPS Rating. Its Composite Rating is 96.
Of 74 analysts who cover Meta, 86% have top ratings. The consensus EPS estimate for 2025 is $28, an increase of 17%.
Meta stock broke out of a cup-with-handle base on June 2. It is extended from the 662.67 buy point. The stock bounced off support at the 10-week moving average following the earnings news.
The company is making an aggressive push into artificial intelligence.
Last month, Meta CEO Mark Zuckerberg said Meta will spend "hundreds of billions" on AI infrastructure as the social media company targets AI superintelligence. He said the company will bring in "the most elite and talent-dense team in the industry."
The company plans to build large data centers to train and power AI large-language models. Meta plans to launch several data center clusters that would be among the world's largest such facilities.
Chefs' Warehouse
Chefs' Warehouse has the highest EPS Rating (96) of 11 stocks in the miscellaneous food preparation industry group.
That reflects accelerating EPS gains of 9%, 17%, 67% and 30% the past four quarters. That's well above the three-year earnings growth rate of 20%. Sales growth, however, remains in single digits.
Analysts are unanimously bullish on the stock, with all seven giving a buy recommendation. The consensus EPS estimate for this year is $1.77, a 20.6% increase year over year, according to FactSet.
The food distributor specializes in serving premium restaurants, hotels and fine-food stores. It supplies cheeses, chocolates, meats, cooking oils and other foods, some which are imported.
The stock tried to break out of a cup-with-handle base with a 66.26 buy point on July 7 but it sank right back into its price range. Chefs' Warehouse has a 91 IBD Composite Rating.
Universe of S&P 500, S&P 400 and S&P 600 Stocks
To select companies for this list, IBD used a combination of FactSet data and IBD ratings.
The screening began with the S&P Composite 1500 index, which aggregates the S&P 500, S&P MidCap 400 and S&P SmallCap 600 companies. This index is a good representation of the U.S. stock market while eliminating less-liquid and lower-quality names.
The next layer of screening flagged companies showing FactSet consensus ratings of overweight or buy, the most bullish views. To further refine the list, we screened for stocks with strong analyst consensus earnings growth estimates for the current fiscal year. In the final cut, we selected stocks with high Composite Rating and Relative Strength Ratings.
The final seven best stocks for outstanding earnings growth and estimates overlap with some Magnificent Seven stocks.
To find other ideas for the best stocks to buy or watch, check out IBD Stock Lists and other IBD content.
