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Top Stock Picks for Week of March 4, 2024

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International Business Machines Corporation (IBM - Free Report) has gradually evolved as a provider of cloud and data platforms. IBM is likely to benefit from the rising demand of its hybrid cloud and AI solutions. Increased Watson adoption by clients is a tailwind. IBM's Watson is a sophisticated artificial intelligence platform that incorporates machine learning, natural language processing, and data analytics. A combination of a better business mix, improving operating leverage through productivity gains and increased investment in growth opportunities will likely drive profitability. IBM’s collaboration with SAP to tap generative AI technology within the retail industry will likely generate incremental revenues. Strong free cash flow generation provides the financial flexibility required for strategic investments in the evolving business environment. The Zacks Consensus EPS estimate has moved higher recently. IBM’s recent EPS surprise history illustrates that Wall Street underestimates the big tech juggernaut.  For full-year 2024, the company expects revenue growth in the mid-single digits on a constant currency basis. Free cash flow is expected to be in the vicinity of $12 billion.

SkyWest (SKYW - Free Report) , operates as a regional airline in the United States through its subsidiary SkyWest Airlines.SkyWest's fleet-modernization efforts are commendable. Concurrent with its fourth-quarter 2023 results, SKYW announced that it has acquired a 25% ownership stake in Contour Airlines, a Part 135 carrier. The Contour deal includes an asset provisioning agreement, per which SKYW will offer CRJ airframes, engines and rotable parts to Contour. By 2026-end, SKYW is scheduled to operate 258 E175 aircraft. SkyWest announced a new flying agreement with United Airlines ,in line with its efforts to expand and modernize its fleet. Per its previously announced share repurchase program authorized by SKYW’s board of directors in May 2023, SKYW repurchased 10.6 million shares for $289 million for 2023. As of Dec 31, 2023, SKYW had $91 million available under its current share repurchase program. SKYW has an impressive earnings surprise history. The company's earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average surprise of 128.02%. Further, SKYW reported better-than-expected fourth-quarter 2023 earnings performance.

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