Top Stocks for the Year Ahead: 2024 Picks

Stocks saw a significant upward trend in 2023, driven by a slower pace of rate hikes, decreasing inflation, and a resilient job market. These factors suggest the potential for a “soft landing" for the U.S. economy. The positive momentum continued into early 2024, with all three major U.S. stock market indexes reaching all-time highs in the first half of the year. While 2024 will undoubtedly bring its share of surprises for investors, there are several reasons to be optimistic about the following stocks for the remainder of the year and beyond. Here are the 10 best stocks to buy for 2024

Summary 

1. Alphabet Inc. (GOOGL)

2. Discover Financial Services (DFS)

3. Walt Disney Co. (DIS)

4. PDD Holdings Inc. (PDD)

5. Occidental Petroleum Corp. (OXY)

6. Match Group Inc. (MTCH)

7. Grupo Aeroportuario del Sureste SAB de CV (ASR)

8. Target Corp. (TGT)

9. Pimco 25+ Year Zero Coupon U.S. Treasury…

10. Citigroup Inc. (C)

1. Alphabet Inc. (GOOGL)

Alphabet, the parent company of Google, is one of only five publicly traded companies valued at over $2 trillion. It is a dominant force in Big Tech, offering a suite of products including the Google search engine, smart devices, Pixel smartphones, YouTube, Google Cloud, and the Google Play store.

In late 2023, JPMorgan named Alphabet a “top stock" for 2024, citing improved ad growth, higher margins from cost cuts, and advancements in artificial intelligence (AI). Despite a rocky start to the year, Alphabet's strong first-quarter earnings and a new $70 billion share buyback program have bolstered its stock, which is up 35.5% year-to-date through early July.

2. Discover Financial Services (DFS)

Discover Financial Services stands to benefit from a potential soft landing for the economy. As a credit card issuer that also loans money to consumers, the company's success is tied to the health of the American consumer, which remains strong.

 In February, Capital One Financial Corp. announced its intent to acquire Discover in an all-stock deal, offering a 7.4% premium to Discover's stock price. This acquisition, pending regulatory approval, is expected to close by late 2024 or early 2025. Year-to-date, Discover's stock is up 15.9%.

3. Walt Disney Co. (DIS)

Disney, a global entertainment giant, continues to be a strong investment under the leadership of CEO Bob Iger, who returned to address spiraling costs in late 2022. The company has announced significant cost-cutting measures and has successfully defended against a proxy battle from activist investor Nelson Peltz. With a diverse portfolio that includes parks, cruises, broadcast and streaming platforms, and well-known brands like ESPN and Disney+, Disney is poised for continued growth. Year-to-date, Disney's stock is up 8.3%.

4. PDD Holdings Inc. (PDD)

PDD Holdings, the parent company of Pinduoduo and Temu, is a rapidly growing Chinese e-commerce company. Since its launch in 2015, PDD has become a significant competitor to Alibaba and JD.com. Temu, its international e-commerce platform, has expanded to 40 countries within a year of its launch. 

Despite a 7.9% decline year-to-date, PDD's impressive revenue growth and profitability make it a strong candidate for future gains, especially if sentiment towards Chinese equities improves.

5. Occidental Petroleum Corp. (OXY)

Occidental Petroleum, a favorite of Warren Buffett, continues to be a valuable stock. Buffett's Berkshire Hathaway has steadily increased its stake in Occidental, taking advantage of lower stock prices. With a modest 1.4% dividend and trading at 14.2 times forward earnings, Occidental is positioned well for a rebound if oil prices rise in 2024. Year-to-date, the stock is up 2.8%.

6. Match Group Inc. (MTCH)

Despite facing challenges in recent years, Match Group, the parent company of Tinder, Hinge, PlentyOfFish, OkCupid, and Match.com, remains a strong long-term investment. With a forward P/E of 13.6 and expected earnings growth of 20% annually over the next five years, Match Group is poised for a comeback as online dating continues to grow in popularity. Year-to-date, the stock is down 17.3%.

7. Grupo Aeroportuario del Sureste SAB de CV (ASR)

Grupo Aeroportuario del Sureste, a Mexican airport operator, has shown impressive performance, earning a spot on the best stocks list for the third consecutive year. With a forward P/E of less than 14 and expected revenue and earnings growth, ASR benefits from the trend of nearshoring as U.S. companies move production closer to home. The stock has a 1.8% dividend yield and is up 6% year-to-date.

8. Target Corp. (TGT)

Target offers a reasonable valuation at 16 times forward earnings, compared to other discount retailers. Despite challenges in 2023, including store closures and boycotts, Target is expected to grow earnings by 5% this fiscal year and 12% next fiscal year. The company has historically performed well during recessions and offers a 3% dividend yield. Year-to-date, Target's stock is up 5.9%.

9. Pimco 25+ Year Zero Coupon U.S. Treasury Index ETF (ZROZ)

The Pimco 25+ Year Zero Coupon U.S. Treasury Index ETF is a strategic play on falling interest rates. With an effective duration of 26.7 years, this ETF benefits significantly from declines in long-term interest rates. Although the ETF is down 9.5% year-to-date due to sticky inflation, it serves as a good portfolio hedge if the economy weakens.

10. Citigroup Inc. (C)

Citigroup, a megabank trading at about 11 times forward earnings and offering a 3.3% dividend, is in the midst of a turnaround plan. The stock, a holding for Buffett's Berkshire Hathaway, has risen 28% year-to-date. Despite this, it remains undervalued, trading at just 0.65 times book value. With ongoing restructuring efforts, Citigroup is positioned for continued growth.

Frequently Asked Questions

Q.1: Are these stocks guaranteed to perform well? 

A.1: No. Investing in stocks carries risks, and past performance is not indicative of future results. It's essential to research and consider your financial situation or consult a financial advisor before investing.

Q.2: Should I invest in all these stocks?

A.2: Diversification is key to managing risk. Consider your investment goals and risk tolerance before allocating funds across multiple stocks.

Q.3: How can I mitigate risks associated with stock investments?

A.3: Diversifying your portfolio, staying informed about market trends, and understanding each company's fundamentals are ways to mitigate investment risks.

Q.4: How often should I review my investment portfolio? 

A.4: It's recommended to review your portfolio at least annually or whenever there are significant changes in your financial situation or market conditions.

Q.5: What should I do if a stock starts underperforming?

A.5: Evaluate the reasons for underperformance, consider the long-term potential, and consult with a financial advisor before making any decisions. Sometimes, it might be prudent to hold, while in other cases, selling might be the best option.

Conclusion

Investing in stocks can be rewarding but comes with inherent risks. The stocks listed here represent opportunities based on current market trends and company performance. It's crucial to conduct thorough research or seek advice from a financial professional before making investment decisions. Remember, your financial situation is unique, and there are no guarantees in the stock market.

Important Note: Please Read Before You Invest

We're just sharing some helpful tips, but remember, investing comes with risks. We can't promise that these tips will always work or that you'll make money. Everyone's financial situation is different, so it's smart to do your research or talk to a financial advisor before you invest. By using these tips, you agree that you're responsible for your own investment decisions and results.