The 3 Hottest Blue-Chip Stocks to Watch in 2024
Last year was more for stock pickers than a year where all sectors and stocks surged. Further, there were multi-bagger returns from blue-chip as well as growth stocks. Among the hottest blue-chips, Nvidia (NASDAQ:NVDA) skyrocketed by almost 240%. Apple (NASDAQ:AAPL) stock also had a healthy rally of 48%. These were some blue-chips that outperformed many growth stocks.
For the current year, I expect a similar trend. It’s unlikely that there will be a euphoric market rally. However, there will be stories that grab the limelight and surge higher. Potential rate cuts in the year’s second half will be a catalyst for upside in several stocks.
Among blue-chip stocks, this column discusses three ideas that can trend higher by 30% to 50% before the end of 2024. These are fundamentally strong stories that have positive tailwinds.
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Let’s discuss the reasons for bullish on these hot blue-chip stocks.
Tesla (TSLA)
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Tesla (NASDAQ:TSLA) stock was in a comeback mode last year with a rally of over 100%. I believe TSLA will be among the hottest blue-chips this year. It’s worth noting that in July 2023, the stock touched highs of $300. This has been followed by some correction and consolidation, and TSLA stock trades at $250. Backed by positive business news, I expect a renewed rally.
Even amidst scaling-up challenges, Cybertruck mass deliveries in the coming quarters will be a growth catalyst. There are speculations that the current backlog is over two million and the Cybertruck will be sold out for years to come.
Another interesting development on the cards is the possibility of Tesla’s first plant in India in the state of Gujarat. There is a possibility of the potential launch of affordable cars as Tesla explores new emerging markets.
From a financial perspective, Tesla has a strong balance sheet with $27 billion in cash and equivalents. Further, for the first nine months of 2023, Tesla reported operating cash flow of $8.9 billion. With high financial flexibility, Tesla is well-positioned to make some big investments.
Newmont Corporation (NEM)
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Considering the upside in gold and the possibility of multiple rate cuts this year, Newmont Corporation (NYSE:NEM) is among the hottest blue-chip to buy. NEM stock has been subdued with negative returns of 12% in the last 12 months. I am betting on a 30% to 50% upside from current levels in the coming quarters.
An obvious reason to like Newmont is an investment grade balance sheet. The Company has a strong liquidity buffer of $6.2 billion. Further, net-debt-to-adjusted-EBITDAX of 0.7 points to headroom for leveraging. Recently, the Company completed the acquisition of Newcrest Mining (OTCMKTS:NCMGF). This will help in boosting production and cash flows.
It’s worth noting that for the first nine months of 2023, Newmont reported adjusted EBITDA of $2.8 billion. With an upside in the gold price, Newmont is likely to deliver an annual EBITDA of more than $4 billion this year. An increase in cash flows will be associated with healthy dividend growth.
Chevron Corporation (CVX)
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Chevron Corporation (NYSE:CVX) is another blue-chip stock that has been depressed in the last 12 months. The reason is a correction in crude oil prices on the back of global growth deceleration. However, with potential rate cuts, there are hopes of growth acceleration in 2025. This factor will likely be discounted in crude oil in the coming quarters. I, therefore, expect a strong comeback for CVX stock.
It’s worth noting that Chevron is on an aggressive investment spree. For the current year, the Company expects to invest $16 billion. However, the target is to scale up capital investments in the range of $19 to $22 billion once the acquisition of Hess Corporation (NYSE:HES) is completed. Robust investments coupled with acquisitions will ensure production growth and a healthy reserve replacement.
An important point is that Chevron can invest $22 billion annually from internal cash flows. Even with the relatively depressed oil price, Chevron reported an operating cash flow of $9.7 billion for Q3 2023. Cash flows are likely to swell this year and provide ample headroom for aggressive investments coupled with dividend growth. All in all, it’s one of those hottest blue-chips stocks to buy.
On the date of publication, Faisal Humayun 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.
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