Wall Street Favorites: 3 Social Media Stocks With Strong Buy Ratings for May 2024

Stocks to buy

Social networks have changed consumer behavior since their introduction. Advertisers flock to these platforms for targeted ad placements and higher conversion rates than most advertising channels.

These platforms benefit from winning people’s attention and have gotten very good at it. Many consumers habitually visit their favorite social networks through smartphone apps, desktops and other means. 

Some social media stocks have delivered exceptional returns for their investors. Even though these platforms have been around for a while, shareholders can stand to benefit from these three social media stocks to buy.

Alphabet (GOOG, GOOGL)

Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) is the leading advertising giant. Thanks to YouTube, it has a monopoly in the search engine market and a strong position in the social media industry.

YouTube is the most senior of video-focused social networks. The platform was founded in 2005 and has roughly 2.50 billion monthly active users. Alphabet is also growing in the cloud computing industry. Google Cloud’s growth rate outpaced the company’s advertising growth in Q1 2024.  

Overall revenue increased by 15% year-over-year in the quarter. Net income jumped by 57% year-over-year and helped the corporation achieve a 29.4% net profit margin. Alphabet has been a steady outperformer. It’s logged a 22% year-to-date gain and has nearly tripled over the past five years.

Analysts are feeling optimistic about the tech giant. It’s currently rated as a “Strong Buy” among 38 analysts and has a projected 13% upside. The highest price target of $225 per share suggests a 33% upside.

Meta Platforms (META)

Source: rafapress / Shutterstock.com

Facebook is arguably the most recognizable social network on the web. This foundational piece of Meta Platforms (NASDAQ:META) was founded in 2004. Since its humble beginnings, Meta Platforms has amassed 3.24 billion daily active users across its platforms. That figure is from the company’s Q1 2024 earnings results.

Daily active users increased by 7% year-over-year, but that’s not the only metric that went up. Revenue increased by 27% year-over-year, while net income surged by 117% year-over-year. The social media firm is becoming more efficient and reporting top-line growth while trimming its headcount by 10% year-over-year.

Cost-cutting measures have helped the company initiate a dividend program that will give a quarterly payout of $0.50 per share. Meta Platforms has a low yield for now, but investors should anticipate a double-digit growth rate for several years.

Analysts aren’t waiting for the yield to get higher. The stock is currently rated as a “Strong Buy” among 43 analysts. Meta Platforms has a projected 11% upside from current levels.

Pinterest (PINS)

Source: DANIEL CONSTANTE / Shutterstock

Pinterest (NYSE:PINS) has returned to the spotlight as younger consumers flock to the platform. Shares are up 95% over the past year and have gained 16% year-to-date. The image-focused social network impressed investors with 23% year-over-year revenue growth in the first quarter 2024. Net losses decreased by 88%, going from $209 million in Q1 2023 to $25 million in Q1 2024. 

Revenue in North America, Europe and the rest of the world increased by more than 20% year-over-year. Monthly active users grew by 12% year-over-year to reach 518 million. The company exhibited strong growth in Europe and the rest of the world. Monthly active users in the United States and Canada inched 3% higher year-over-year. 

Pinterest grew its average revenue per user by 10% year-over-year, with strong gains in North America. While North America didn’t experience as much user growth, Pinterest is getting its money’s worth from each user. 

The stock is rated as a “Moderate Buy” among 30 analysts. The latest price targets have been quite bullish, with the highest price target of $52 per share suggesting a 24% upside.

On this date of publication, Marc Guberti held a long position in GOOG. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Marc Guberti is a finance freelance writer at InvestorPlace.com who hosts the Breakthrough Success Podcast. He has contributed to several publications, including the U.S. News & World Report, Benzinga, and Joy Wallet.

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