In 2023, investors became acutely aware of the phrase "Magnificent Seven." This referred to the seven technology stocks that drove most of the 27% gains in the S&P 500 in the last 12 months.
However, through the first two months of 2024, many of those stocks have lost their sheen. Tesla Inc. (NASDAQ: TSLA) is down 24%. Apple Inc. (NASDAQ: AAPL) is down 9%. And Alphabet Inc. (NASDAQ: GOOGL) is down 4.5%.
At the same time, the S&P 500 is up 6.7% as of March 5, 2024. And this is during what's expected to be the weak part of the year for equities. Analysts expect stronger performance in the second half of the year in anticipation of the Federal Reserve issuing at least one interest rate cut.
That means that other stocks must be doing well. In this special presentation, MarketBeat gives you seven stocks that you should be looking at to create your own Magnificent Seven in 2024.
Quick Links
- Nvidia Corporation
- Advanced Micro Devices
- Palantir Technologies
- Palo Alto Networks
- Monster Beverage
- Eli LIlly
- Booking Holdings
#1 - Nvidia Corporation (NASDAQ:NVDA)
Nvidia Corporation (NASDAQ: NVDA) was the most magnificent of the Magnificent Seven in 2023, rocketing 239% higher. The company is unlikely to post a 376% growth in earnings per share (EPS) as it did in 2023. Still, if you're looking for a stock that's likely to outperform the market, NVDA stock is a logical choice.
For now, at least, the story is still about artificial intelligence (AI). The AI revolution is still in its early stages, and demand for Nvidia's graphic processing units (GPUs) remains strong. Investors should also note that the company is already seeing strong demand for its H200 next-generation AI chips, which are expected to start shipping in the second quarter of 2024.
There's no doubt that Nvidia is an expensive stock that's trading at 39.3x forward earnings. But if the estimates of 9% earnings growth are accurate and cap-ex spending gets a boost from rate cuts, NVDA stock will easily outpace the broader market.
About NVIDIA
NVIDIA Corporation provides graphics and compute and networking solutions in the United States, Taiwan, China, Hong Kong, and internationally. The Graphics segment offers GeForce GPUs for gaming and PCs, the GeForce NOW game streaming service and related infrastructure, and solutions for gaming platforms; Quadro/NVIDIA RTX GPUs for enterprise workstation graphics; virtual GPU or vGPU software for cloud-based visual and virtual computing; automotive platforms for infotainment systems; and Omniverse software for building and operating metaverse and 3D internet applications.
Read More - Current Price
- $145.89
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 40 Buy Ratings, 4 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $154.63 (6.0% Upside)
#2 - Advanced Micro Devices (NASDAQ:AMD)
Advanced Micro Devices (NASDAQ: AMD) is the 1A to Nvidia's leadership position in this super cycle for computer chips. Trading at 76x forward earnings, you might question its inclusion on this list. However, AMD seems to be in the best position to take at least some market share from Nvidia.
As companies race to build their AI infrastructure, the lack of competition in the AI chip space is becoming pronounced. Customers are looking for alternatives to Nvidia, and that's what AMD brings to the table. In the fourth quarter of 2023, AMD released its MI100 AI chips. The company gave an initial forecast for $2 billion in annual sales. But on the company's recent earnings call, CEO Lisa Su raised that guidance to $3.5 billion and some analysts believe that is a conservative estimate.
One potential roadblock is the company's cautious guidance for its CPU chips. However, that's being more than offset by sales of GPU chips, particularly the M100 chips. And AMD is projected to post a 58% increase in earnings in the next 12 months.
About Advanced Micro Devices
Advanced Micro Devices, Inc operates as a semiconductor company worldwide. It operates through Data Center, Client, Gaming, and Embedded segments. The company offers x86 microprocessors and graphics processing units (GPUs) as an accelerated processing unit, chipsets, data center, and professional GPUs; and embedded processors, and semi-custom system-on-chip (SoC) products, microprocessor and SoC development services and technology, data processing unites, field programmable gate arrays (FPGA), and adaptive SoC products.
Read More - Current Price
- $137.60
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 29 Buy Ratings, 3 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $192.79 (40.1% Upside)
#3 - Palantir Technologies (NYSE:PLTR)
Thomas Hughes recently wrote for MarketBeat about the lack of love that Palantir Technologies Inc. (NYSE: PLTR) is receiving from analysts despite a solid earnings report. In fact, if you take the analyst ratings as of March 5, 2024, at face value, PLTR stock looks overvalued.
However, this could be a case of sell-side analysts trying to shake out weak hands. The "hope" in this case is that by keeping the price target low and maintaining a sentiment like Reduce, retail investors will sell the stock either out of impatience or fear. That would create a better entry point for institutions that have missed the gains in PLTR stock to date.
The key will be if Palantir can deliver on its growth from 2023. The company is forecasting 20% growth. That may be too conservative, particularly when you consider the growing worldwide demand for AI services. Palantir also continues to expand into other commercial sectors that will expand the use cases for the company's software.
About Palantir Technologies
Palantir Technologies Inc builds and deploys software platforms for the intelligence community to assist in counterterrorism investigations and operations in the United States, the United Kingdom, and internationally. The company provides Palantir Gotham, a software platform which enables users to identify patterns hidden deep within datasets, ranging from signals intelligence sources to reports from confidential informants, as well as facilitates the handoff between analysts and operational users, helping operators plan and execute real-world responses to threats that have been identified within the platform.
Read More - Current Price
- $62.11
- Consensus Rating
- Reduce
- Ratings Breakdown
- 2 Buy Ratings, 8 Hold Ratings, 6 Sell Ratings.
- Consensus Price Target
- $31.71 (48.9% Downside)
#4 - Palo Alto Networks (NASDAQ:PANW)
Palo Alto Networks Inc. (NASDAQ: PANW) has been in the news recently. The reasons have been very different. However, both show why cybersecurity stocks will continue to be in high demand. First, Palo Alto Networks is working with UnitedHealth Group Inc. (NYSE: UNH) after the recent cyber attack on the health insurer's Change Healthcare subsidiary.
The other newsworthy item is the attention that PANW stock is receiving from Congressional insiders. That alone should tell you how vital cybersecurity will be in the coming years. In fact, as the role of AI increases, the need for cybersecurity will continue to grow.
PANW stock recently dropped sharply after announcing that it will provide some of its services for free in order to gain market share. However, as analysts have had time to digest the move, they realize that it is likely to lead to sticky revenue down the road.
About Palo Alto Networks
Palo Alto Networks, Inc provides cybersecurity solutions worldwide. The company offers firewall appliances and software; and Panorama, a security management solution for the global control of network security platform as a virtual or a physical appliance. It also provides subscription services covering the areas of threat prevention, malware and persistent threat, URL filtering, laptop and mobile device protection, DNS security, Internet of Things security, SaaS security API, and SaaS security inline, as well as threat intelligence, and data loss prevention.
Read More - Current Price
- $392.89
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 31 Buy Ratings, 11 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $391.92 (0.2% Downside)
#5 - Monster Beverage (NASDAQ:MNST)
Monster Beverage Corp. (NASDAQ: MNST) is one option if you're looking beyond the technology sector for Magnificent Seven-type gains. MNST stock is up more than 92% in the last five years, including a 14% share price gain last year.
Along with a higher price has come a higher valuation. MNST stock currently trades around 32x forward earnings. That's a premium to the consumer staples sector, which is around 27x.
The Monster Beverage Analyst Ratings on MarketBeat show expectations for 7.5% growth in the stock price. However, recent analyst sentiment indicates that analysts are starting to bid the stock higher. That may be based on earnings expectations. Monster delivered 41% earnings per share (EPS) growth.
And although earnings are only expected to grow by around 14% this year, analysts can't help but notice the company still commands 30% of the market share in its core category of energy drinks. Monster also branched out into alcoholic beverages in 2023. The company expects that category to become a more significant part of revenue and earnings in the coming years.
About Monster Beverage
Monster Beverage Corporation, through its subsidiaries, engages in development, marketing, sale, and distribution of energy drink beverages and concentrates in the United States and internationally. The company operates through three segments: Monster Energy Drinks, Strategic Brands, Alcohol Brands, and Other.
Read More - Current Price
- $53.70
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 13 Buy Ratings, 6 Hold Ratings, 2 Sell Ratings.
- Consensus Price Target
- $56.45 (5.1% Upside)
#6 - Eli LIlly (NYSE:LLY)
Eli Lilly and Company (NYSE: LLY) is another solid option for investors who are looking for stocks likely to outperform in 2024. The stock is up 143% in the past 12 months and 31.6% in the last three months alone. But you shouldn't be afraid to chase LLY higher.
In 2023, the company introduced two blockbuster products, Mounjaro and Zepbound, that are taking their respective industries by storm. Mounjaro is a revolutionary diabetes treatment that surpassed $2.2 billion in sales. Zepbound is Lilly's entry into the growing and competitive weight loss sector. In its initial quarter, Zepbound contributed $175 million to the company's top line.
The stock is trading at 62x forward earnings. That's expensive compared to itself and the biotechnology sector. Considering the company is coming off a 20% decline in EPS, some may feel LLY stock is overpriced. However, analysts forecast a 47.5% earnings growth in the next 12 months.
About Eli Lilly and Company
Eli Lilly and Company discovers, develops, and markets human pharmaceuticals worldwide. The company offers Basaglar, Humalog, Humalog Mix 75/25, Humalog U-100, Humalog U-200, Humalog Mix 50/50, insulin lispro, insulin lispro protamine, insulin lispro mix 75/25, Humulin, Humulin 70/30, Humulin N, Humulin R, and Humulin U-500 for diabetes; Jardiance, Mounjaro, and Trulicity for type 2 diabetes; and Zepbound for obesity.
Read More - Current Price
- $753.41
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 17 Buy Ratings, 4 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $1,007.94 (33.8% Upside)
#7 - Booking Holdings (NASDAQ:BKNG)
Booking Holdings Inc. (NASDAQ: BKNG) may not be the first name that comes to mind when you think about AI plays. But, the company has introduced some AI tools into its KAYAK travel search engine. The goal is to help travelers make decisions faster, easier, and more intuitively.
The effect of these AI tools may be hard to quantify. However, the reason that Booking Holdings is likely to outperform the market is much simpler. Travel demand may be slowing, but it hasn't abated. Consumers, at least once they get above a certain income threshold, are still prioritizing travel.
And if the Federal Reserve lowers interest rates, that will be a tailwind for BNKG stock in the second half of the year. One reason is that lower interest rates will likely spur hiring activity, which will boost consumer confidence. That combination is almost always bullish for travel plans.
Some investors will choke on the company's share price, which is over $3,400 as of March 5, 2024. However, the stock only trades at 19x earnings and is projecting 17x earnings growth in the next 12 months.
About Booking
Booking Holdings Inc, formerly The Priceline Group Inc, is a provider of travel and restaurant online reservation and related services. The Company, through its online travel companies (OTCs), connects consumers wishing to make travel reservations with providers of travel services across the world. It offers consumers an array of accommodation reservations (including hotels, bed and breakfasts, hostels, apartments, vacation rentals and other properties) through its Booking.com, priceline.com and agoda.com brands.
Read More - Current Price
- $5,016.43
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 22 Buy Ratings, 10 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $4,785.00 (4.6% Downside)
Investors will continue to plow money into technology stocks. However, a reason other than performance to consider moving beyond the Magnificent Seven is diversification. That's why this list includes stocks that cover a variety of sectors.
Yes, there are still many mega cap names on this list. But growth-oriented investors know that the AI-fueled growth in big tech stocks won't last forever. Consider Meta Platforms Inc. (NASDAQ: META) and Amazon.com Inc. (NASDAQ: AMZN). Both companies are projected to post over 15% earnings growth in 2024. However, analysts believe much of that growth is already priced into the respective stocks.
Then again, many feel the same about Nvidia, yet it made the list. The list isn't an exact science, but with the help of the MarketBeat Stock Screener, it shows companies expected to deliver strong earnings growth that will likely fuel further stock price gains in the coming year.
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