At the time of this writing, shares of Nvidia Corporation (NASDAQ: NVDA) are up over 17% since the company reported earnings on February 21, 2024. At this point, it seems inevitable that the stock will hit $1,000 per share, which will probably happen sooner than many analysts think.
NVDA stock has become the embodiment of the artificial intelligence trend that is lifting the entire technology sector. That trend is the reason that according to analysts from The Goldman Sachs Group Inc. (NYSE: GS), a record percentage of companies (36%) mentioned AI in one form or another in their most recent earnings reports.
But what goes up will, eventually, come down. That day is not today, and it won't be tomorrow. It may not be in 2024. However, at some point, investors will be looking to move on from AI for any number of reasons.
When that happens, what stocks should you be buying? We'd like to help you with that process. Here are seven stocks that have strong growth prospects that don't depend on AI.
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- PepsiCo
- Monster Beverage
- Costco
- e.l.f. Beauty
- Exxon Mobil
- Lululemon Athletica
- Air Products & Chemicals
#1 - PepsiCo (NASDAQ:PEP)
PepsiCo Inc. (NASDAQ: PEP) is one of the easiest choices for investors looking for some diversification from AI stocks. Pepsi is a blue-chip name that straddles the consumer staples and discretionary sectors.
In addition to its namesake soft drink brands, Pepsi owns the Frito-Lay brand, which operates as an independent subsidiary. It's this balance between beverages and snack foods that is a core differentiator between PepsiCo and The Coca-Cola Company (NYSE: KO). It's also a key reason Pepsi increased year-over-year (YOY) revenue by 5% and earnings per share by 12% in 2024 despite facing tough comparisons to 2023.
PEP stock price is up 44.49% in the last five years. That's not Nvidia 2023 growth, but investors' total return is even higher when you factor in the company's dividend. Pepsi is a Dividend King that has increased its dividend for 52 consecutive years. As of February 27, 2024, the dividend yield is 3.02%, offering investors a $5.06 annual payout per share.
About PepsiCo
PepsiCo, Inc engages in the manufacture, marketing, distribution, and sale of various beverages and convenient foods worldwide. The company operates through seven segments: Frito-Lay North America; Quaker Foods North America; PepsiCo Beverages North America; Latin America; Europe; Africa, Middle East and South Asia; and Asia Pacific, Australia and New Zealand and China Region.
Read More - Current Price
- $152.79
- Consensus Rating
- Hold
- Ratings Breakdown
- 6 Buy Ratings, 9 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $184.31 (20.6% Upside)
#2 - Monster Beverage (NASDAQ:MNST)
Monster Beverage Corporation (NASDAQ: MNST) has been one of the strongest-growing stocks in the past five years, averaging about 14% per year. That's more of what growth investors want. And the company, which is best known for its signature energy drink, has more room to move higher.
The data agrees through the first three quarters of the company's 2023 fiscal year. Revenue in the first three quarters is up 12%, and EPS is up a whopping 43%. The company's gross margin increased to 53% in the last quarter, up from 51.3% in Q3 2022. That kind of margin tells investors that Monster has pricing power at a time when inflation remains sticky.
You should also know that Coca-Cola owns 20% of Monster. This puts it at least tangentially under Warren Buffett's Berkshire Hathaway Inc. (NYSE: BRK.B) umbrella.
Although MSTR stock does not currently pay a dividend, the company does have over $1.2 billion in free cash flow, which continues to grow strongly each quarter. Monster has minimal debt and only plans to allocate about $225 million in capital expenditures in 2024.
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
- $51.72
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 13 Buy Ratings, 7 Hold Ratings, 2 Sell Ratings.
- Consensus Price Target
- $56.30 (8.9% Upside)
#3 - Costco (NASDAQ:COST)
Costo Wholesale Corporation (NASDAQ: COST) is another solid choice if you're looking for a growth stock that doesn't rely on AI. Contrary to recent headlines, Costco isn't relying on its gold bar sales either.
The company has a membership model with a retention rate of well over 90% despite the uncertainty of the last few years. This points to the company's loyal customer base and its ability to grow revenue and earnings despite inflation.
COST stock is up nearly 240% in the last five years. That's a growth rate of approximately 48% per year. That should get growth investors to take notice. Plus, Costco pays a dividend that has been growing for 20 consecutive years. As of this writing, that dividend only offers a modest yield of 0.58%, but you have to account for the fact that the stock trades for nearly $750 per share.
At nearly 50x forward earnings, COST stock isn't cheap, and analysts believe a stock split is not imminent. But this could fall under the category of owning a stock that delivers a lot of value for the price you pay.
About Costco Wholesale
Costco Wholesale Corporation, together with its subsidiaries, engages in the operation of membership warehouses in the United States, Puerto Rico, Canada, Mexico, Japan, the United Kingdom, Korea, Australia, Taiwan, China, Spain, France, Iceland, New Zealand, and Sweden. The company offers branded and private-label products in a range of merchandise categories.
Read More - Current Price
- $954.07
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 19 Buy Ratings, 8 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $1,011.74 (6.0% Upside)
#4 - e.l.f. Beauty (NYSE:ELF)
If you're looking for growth stocks that don't need an AI boost, e.l.f. Beauty Inc. (NYSE: ELF) becomes an obvious choice when compared to Nvidia. ELF stock is up 169% in the last year, and its five-year growth of over 2,467% outpaces NVDA stock over that same period.
The company's niche of offering high-quality skincare products at affordable prices is helping it take market share from Ulta Beauty Inc. (NASDAQ: ULTA). You may recall that in 2023, Ulta was the hot name in the skincare industry, and it was taking market share from The Estee Lauder Companies Inc. (NYSE: EL).
A comparison of the market caps of those three companies makes a case for a shift to the smaller players. Estee Lauder has a market cap of $53.03 billion, and Ulta checks in with a $27.11 billion market cap. ELF, by contrast, has a market cap of $11.3 billion, which barely puts it in the category of a large-cap stock. Perhaps more tellingly, e.l.f. Beauty has the attention and loyalty of the coveted Gen Z consumer.
About e.l.f. Beauty
e.l.f. Beauty, Inc is a holding company, which engages in the provision of inclusive, accessible, clean, vegan and cruelty free cosmetics and skin care products. The company focuses on the e-commerce, national retailers and international business channels. Its brands include elf, elf skin, WELL People and KEYS soulcare.
Read More - Current Price
- $128.66
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 15 Buy Ratings, 3 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $171.82 (33.5% Upside)
#5 - Exxon Mobil (NYSE:XOM)
If you're looking for growth stocks that don't rely on AI, you should consider the energy sector. And one of the biggest names to consider is Exxon Mobil Corp. (NYSE: XOM). Investors didn't get the surge in oil prices analysts predicted in 2023. But at the beginning of 2024, crude prices are making a run at $80 per barrel. And many experts project that $100 a barrel will be in range later this year.
Geopolitical tensions are responsible for that bullish outlook. As is the likelihood of interest rate cuts by the Federal Reserve. That will refuel demand from consumers. And as supply chains race to meet that demand, oil prices will rise.
Oil stocks are cyclical in nature. As a reflection of that, XOM stock is up just 30% in the last five years. That is nearly identical to the Energy Select Sector SPDR Fund (NYSE: XLE), of which Exxon Mobil is the fund's largest holding.
About Exxon Mobil
Exxon Mobil Corporation engages in the exploration and production of crude oil and natural gas in the United States and internationally. It operates through Upstream, Energy Products, Chemical Products, and Specialty Products segments. The Upstream segment explores for and produces crude oil and natural gas.
Read More - Current Price
- $105.87
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 11 Buy Ratings, 8 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $128.74 (21.6% Upside)
#6 - Lululemon Athletica (NASDAQ:LULU)
Lululemon Athletica Inc. (NASDAQ: LULU) doesn't jump out as a "value" stock. LULU stock is up over 200% in the last five years. However, the company is becoming one of the best "defensive" apparel stocks investors can buy. The company's products are priced for high net-worth individuals. But that isn't slowing down the company's growth one bit.
With one quarter to go in 2024, as of this writing, Lululemon's revenue is up 19%, and earnings are up 31%. And with the company projecting 15% earnings growth in the next 12 months, the stock's trajectory will likely remain bullish.
Analysts continue to bid the stock higher. The Lululemon Athletica analyst ratings on MarketBeat give LULU stock a consensus price target of $493.87. However, on February 20, 2024, Needham & Company reiterated its Buy rating on the stock with a price target of $525.
About Lululemon Athletica
Lululemon Athletica Inc, together with its subsidiaries, designs, distributes, and retails athletic apparel, footwear, and accessories under the lululemon brand for women and men. It offers pants, shorts, tops, and jackets for healthy lifestyle, such as yoga, running, training, and other activities. It also provides fitness-inspired accessories.
Read More - Current Price
- $379.42
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 18 Buy Ratings, 10 Hold Ratings, 2 Sell Ratings.
- Consensus Price Target
- $377.63 (0.5% Downside)
#7 - Air Products & Chemicals (NYSE:APD)
Air Products & Chemicals (NYSE: APD) first got on my radar for its double-digit dividend growth. But there's an undervaluation at work here that growth-minded investors should consider.
APD is part of the industrial gases sector. It is leading the global transition to clean energy. One of the ways this is most evident is in its efforts to produce clean hydrogen at scale. The payoff on that investment could take years. However, Air Products & Chemicals is also a leader in synthetic gas (syngas) solutions, including a recent $1 billion acquisition of a processing facility in Uzbekistan that converts natural gas to syngas.
Unlike the other stocks on this list, APD stock is down in the last 12 months. However, the APD analyst ratings on MarketBeat forecast a 23% upside for the stock. That would go along nicely with a 3% yield on a dividend that has been increasing for 49 years.
About Air Products and Chemicals
Air Products and Chemicals, Inc provides atmospheric gases, process and specialty gases, equipment, and related services in the Americas, Asia, Europe, the Middle East, India, and internationally. The company produces atmospheric gases, including oxygen, nitrogen, and argon; process gases, such as hydrogen, helium, carbon dioxide, carbon monoxide, and syngas; and specialty gases for customers in various industries, including refining, chemical, manufacturing, electronics, energy production, medical, food, and metals.
Read More - Current Price
- $294.99
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 12 Buy Ratings, 7 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $331.53 (12.4% Upside)
Investment in the AI sector is expected to reach $200 billion by 2025. With that many dollars flowing into the sector, many investors wonder if they can afford not to be in AI.
Nvidia is undoubtedly the name inducing the most FOMO in the market. However, there are several other AI stocks that have made strong moves in 2024. Some of those names include Taiwan Semiconductor Manufacturing Company (NYSE: TSM)and Arm Holdings plc (NASDAQ: ARM). Even a penny stock like SoundHound AI Inc. (NASDAQ: SOUN) has nearly tripled in the first two months of 2024. And let's not forget Advanced Micro Devices, Inc. (NASDAQ: AMD), which may be the most significant immediate competitor to Nvidia's dominance.
But that still doesn't mean you should put all your eggs into one basket. The stocks in this presentation are not "defensive stocks" per se. However, they can help shield your portfolio from having too much exposure to technology stocks in general and artificial intelligence stocks in particular.
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