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5 Must-Buy Growth Stocks for Sparkling Returns in Near Future

U.S. stock markets ended 2023 on a strong note after a highly disappointing 2022. The three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — rallied 13.7%, 23.9% and 43.4%, respectively. Wall Street’s northward journey continues in 2024. Year to date, the Dow, the S&P 500 and the Nasdaq Composite — have advanced 2.5%, 4.9% and 5.1%, respectively.

At this stage, it will be prudent to invest in growth stocks that have strong potential to gain in the near term.

Labor Market Remains Resilient

The Department of Labor reported that the U.S. economy added 353,000 nonfarm jobs in January, well above the consensus estimate of 185,000. Moreover, the data for December was revised upward to 333,000 from 216,000 reported earlier. Similarly, the data for November was also revised upward by 9,000 to 182,000.

The unemployment rate in January was 3.7%, the same as in December. The consensus estimate was 3.8%. However, the real unemployment rate (including discouraged workers and those holding part-time jobs for economic reasons) edged higher to 7.2%.

The hourly wage rate increased 0.6% in January compared with 0.4% in December. The consensus estimate was 0.3%. Year over year, the hourly wage rate increased 4.5%, beating the consensus estimate of 4.1%.

No Recession Ahead

Despite a marginal increase in the inflation rate in January, the peak inflation rate is well behind us. Personal consumption expenditure remains rock solid despite a record-high interest rate and elevated inflation. Manufacturing, although in the contraction range, has shown signs of improvement.

In its latest projection, the Atlanta Fed forecast that U.S. GDP will grow at a 2.9% clip in first-quarter 2024. This will follow a growth rate of 3.3%, 4.9%, 2.15 and 2%, respectively, in the last four consecutive quarters.

High Expectations for Rate Cut

In the January FOMC meeting, the Fed gave enough indications that the much-hyped cut in the benchmark lending rate in March is out of sight. Notably, the central bank paused rate hikes in July 2023 and kept it steady in the range of 5.25-5.5%.

Despite the Fed’s tepid rate cut signal, market participants are hopeful about interest rate cut to a good extent this year. At present, the CME FedWatch tool shows a 81.6% probability of a 25 basis-point rate cut in June and four more rate cuts of the same magnitude during the rest of 2024.

Our Top Picks

We have narrowed our search to five growth stocks that have solid upside left for 2024. These stocks have witnessed positive earnings estimate revisions in the last 30 days. Each of our picks carries a Zacks Rank #1 (Strong Buy) and has a Growth Score A. You can see the complete list of today’s Zacks #1 Rank stocks here.

The chart below shows the price performance of our five picks year to date.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Amazon.com Inc. AMZN is gaining on solid Prime momentum owing to ultrafast delivery services and a strong content portfolio. The strengthening relationship with third-party sellers is a positive. Additionally, a strong adoption rate of AWS is aiding AMZN’s cloud dominance.

An expanding AWS services portfolio is continuously helping AMZN gain further momentum among customers. Robust Alexa skills and an expanding smart home products portfolio are positives. AMZN’s strong global presence and solid momentum among small and medium businesses remain tailwinds.

Amazon has an expected revenue and earnings growth rate of 11.4% and 39%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 10.7% over the last 30 days.

The Progressive Corp. PGR continues to gain on higher premiums, given its compelling product portfolio, leadership position and strength in both Vehicle and Property businesses. Focus on becoming a one-stop insurance destination, and catering to customers opting for a combination of home and auto insurance augurs well for PGR.

Policies in force and retention ratio should remain healthy for PGR. Competitive pricing to retain current customers and address customer needs with new offerings should continue to drive policy life expectancy.

The Progressive has an expected revenue and earnings growth rate of 15.5% and 45.3%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 3.4% over the last seven days.

Royal Caribbean Cruises Ltd. RCL has been benefiting from solid demand for cruising and acceleration in booking volumes. Also, the emphasis on strong pricing (on closer-in-demand) bodes well. RCL stated that the momentum has continued into 2024, with booked load factors and rates surpassing those of all previous years.

Given the full fleet resumption and load factors at high prices, RCL expects customer deposits to return to typical seasonality in the upcoming periods. RCL intends to focus on new innovative ships and onboard experiences to boost its offering and deliver superior yields and margins.

Royal Caribbean Cruises has an expected revenue and earnings growth rate of 14.1% and 44%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1% over the last seven days.

HCA Healthcare Inc.’s HCA revenues increase on the back of a surge in admissions and outpatient surgeries. HCA expects equivalent admissions to grow in the range of 3-4% in 2024. Significant growth in its Managed Medicare operations is expected to drive its performance.

Multiple buyouts aided in increasing patient volumes, enabled network expansion and added hospitals to the portfolio. EPS is predicted within $19.7-$21.2 in 2024, higher than the 2023 figure.

The company has been gaining from its telemedicine business line. HCA resorts to prudent capital deployment via share buybacks and dividend payments. HCA increased its quarterly dividend by 10% to $0.66 in the first quarter of 2024.

HCA Healthcare has an expected revenue and earnings growth rate of 6.2% and 7.2%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.3% over the last seven days.

AppLovin Corp. APP is engaged in building a software-based platform for mobile app developers to enhance the marketing and monetization of their apps in the United States and internationally. APP provides a technology platform that enables developers to market, monetize, analyze and publish their apps.

AppLovin has an expected revenue and earnings growth rate of 20.1% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 48.7% over the last seven days.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Amazon.com, Inc. (AMZN) : Free Stock Analysis Report

Royal Caribbean Cruises Ltd. (RCL) : Free Stock Analysis Report

The Progressive Corporation (PGR) : Free Stock Analysis Report

HCA Healthcare, Inc. (HCA) : Free Stock Analysis Report

AppLovin Corporation (APP) : Free Stock Analysis Report

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