The Next Big Stocks to Watch: 7 for Your Must-Buy List
The stock market offers thousands of investment opportunities for people who want to compound their savings. Some stocks cater to people who want stability and steady cash flow, but other investors are willing to take on more risk for a higher potential return.
Several big stocks like the Magnificent Seven have outperformed the stock market for several years. Most of those stocks have additional room to run, but what about some of the big stocks that have received less attention? These are some of the stocks to consider for your must-buy list.
Cava (CAVA)
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Cava (NYSE:CAVA) is a relatively small fast food restaurant chain that specializes in Mediterranean food. The stock only has a $7.5 billion market cap but has a P/E ratio north of 300. The high P/E ratio may spook value investors, but the corporation’s impressive revenue growth and long-term catalysts can help the stock grow into its valuation.
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Revenue attributable to Cava increased by 59.8% year-over-year in Q4 2023 and the firm opened an additional 72 Cava restaurants in fiscal 2023. Cava is striving to “define the next big cultural cuisine category” and has delivered three consecutive quarters of positive net income.
Cava is in a good position to raise its profit margins significantly in upcoming quarters. Net profit margins came in at just above 1% in the most recent quarter. The stock has delivered an exceptional 59% year-to-date gain as more investors rally behind the emerging fast food restaurant chain.
Qualcomm (QCOM)
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Qualcomm (NASDAQ:QCOM) is a semiconductor giant that has put most of its 2023 headwinds behind. After a few consecutive quarters of declining revenue and earnings, the company posted 5% year-over-year revenue growth in the first quarter of fiscal 2024. Net income increased by 24% year-over-year.
The company’s Snapdragon platforms are helping it capitalize on generative AI and can fuel future revenue growth. While most AI stocks have rallied to lofty valuations, Qualcomm only trades at a 24 P/E ratio while offering a dividend yield of nearly 2%. Investors have been piling into the stock this year based on its 18% year-to-date gain. That’s better than the S&P 500 and the Nasdaq 100.
Qualcomm is aiming to generate $8.9 billion to $9.7 billion in Q2 FY24 revenue. The midpoint of $9.3 billion implies roughly flat growth while the high-end of guidance suggests a 4.6% year-over-year growth rate. As Qualcomm moves further away from last year’s headwinds, it has the potential to surprise investors.
Meta Platforms (META)
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Meta Platforms (NASDAQ:META) is a social media juggernaut that has pushed many funds and indices higher over the years. A strong resurgence in 2023 has generated renewed interest in the stock. Meta Platforms put the cherry on top by tripling its net income year-over-year in the fourth quarter of 2023. Revenue increased by 25% year-over-year.
Every social network and online platform competes for people’s attention. Winning more attention allows social media companies to display more advertisements. Attention also begets attention, as people who spend hours on social media each week tend to visit these platforms habitually.
According to a recent study, the average person spends 19 hours and 47 minutes on Facebook each month. Only TikTok and YouTube saw more activity. The cumulative time spent across Meta Platforms’ family of apps (i.e., Instagram and WhatsApp) exceeded the time spend on TikTok and YouTube.
Meta Platforms continues to retain users while welcoming new users to its platforms. Family daily active users increased by 8% year-over-year in Q4 2023.
Synopsys (SNPS)
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Synopsys (NASDAQ:SNPS) is a semiconductor giant that is working on a big acquisition to expand its market share. While the acquisition will help Synopsys accelerate its revenue and earnings growth, the company is already performing well on its own.
Synopsys reported 21% year-over-year revenue growth in the first quarter of fiscal 2024. Net income increased by 65% year-over-year and helped the company secure a 27% net profit margin. The stock trades at a 42 forward P/E ratio and has outperformed the stock market over several years. SNPS has a 1-year gain of 55% and is up by 428% over the past five years.
While the semiconductor giant has several catalysts, a recent nod from Nvidia (NASDAQ:NVDA) can generate more growth. Nvidia and Synopsys are joining forces to innovate on the future design, automation, and manufacturing of chips. Corporations have a tendency to gain value if they partner with Nvidia, but neither company needs the partnership to reward long-term shareholders. Investors should consider this collaboration as a bonus for a robust business model.
Deckers Outdoor (DECK)
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Deckers Outdoor (NYSE:DECK) is an athletic apparel company that has several brands under its corporate umbrella like Hoka and Ugg. The company is gaining market share while industry titans like Nike (NYSE:NKE) endure slow growth. Deckers Outdoor has more impressive profit margins — regularly above 20% — and long-term returns than Nike.
DECK stock has gained 544% over the past five years compared to Nike’s 21% gain during the same amount of time. The new member of the S&P 500 also has a 33 P/E ratio.
Deckers Outdoor continued to grow its revenue and earnings in the third quarter of fiscal 2024. Revenue increased by 16% year-over-year while net income surged by 40% year-over-year. The firm raised its revenue and EPS guidance which is always a good sign.
The stock is currently rated as a “Strong Buy” from 16 analysts. The average price target implies a 4% upside, but recent price targets indicate more gains are on the way. The highest price target of $1,150 per share suggests a 27% gain from current levels.
American Express (AXP)
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American Express (NYSE:AXP) is a promising long-term growth stock that operates in the credit and debit card industry. The fintech company also has a 1.27% dividend yield and hiked its payout by 17% earlier this year. The stock has more than doubled over the past five years and is up by 39% over the past year.
The company regularly produces solid financial results and double-digit profit margins thanks to the resilience of consumer spending. Even when the economy contracts, people still use their credit and debit cards to buy products and services.
Revenue growth of 11% year-over-year and a 23% year-over-year increase in net income highlighted the company’s Q4 2023 earnings report. The company is aiming for double-digit growth rates for its top and bottom lines for several years. The company’s full-year 2024 guidance projects 9% to 11% year-over-year revenue growth. EPS is expected to range from $12.65 to $13.15 in full-year 2024.
The Trade Desk (TTD)
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The Trade Desk (NASDAQ:TTD) is a leading programmatic advertising company that has a $39 billion market cap and impressive financials. The firm reported 23% year-over-year revenue growth and 37% year-over-year net income growth in the fourth quarter of 2023.
Shares are up by 40% over the past year and have soared by 293% over the past five years. The stock is still more than 25% removed from the all-time high it set in November 2021.
Analysts are feeling very optimistic about how well the stock will perform for long-term investors. The stock has a “Strong Buy” rating among 20 analysts and has an average price target of $96.48. This price target implies a 21% upside from the current price. The Trade Desk operates in high-growth advertising segments like connected TV and retail media.
The Trade Desk is projected revenue of at least $478 million in the first quarter of 2024. This minimum implies a 24.8% year-over-year growth rate which is more than what the company did in Q4 2023. Growth looks to remain strong in future quarters. As profit margins expand, the valuation will look more reasonable.
On this date of publication, Marc Guberti held long positions in CAVA, SNPS, and DECK. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.comPublishing 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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