While 2023 has been a difficult year to navigate, certain stock winners should continue to dominate when the calendar turns to January. To be sure, it’s always good to do a health checkup of your portfolio and consider rotating in and out of particular entities. However, the below enterprises could still do well on autopilot.
Specifically, I’m looking at some of the compelling (in my opinion) companies on Barnkrate’s list of top stocks to buy. These ideas stem from the benchmark S&P 500 index. So, just from that alone, you should have confidence in the blue-chip enterprises. Further, I have arranged from low to high the year-to-date performance as of the Oct. 31 close.
Of course, no one really knows what will happen in 2024. Therefore, when I say that these are the best stocks to buy, do note I’m taking creative liberties. That said, I’ll do my best to provide a quantifiable and fundamental reason for my optimism.
With that, below are the stock winners of 2023 that can extend into 2024.
Stock Winners: Apple (AAPL)
As a consumer technology giant, it’s easily understandable why Apple (NASDAQ:AAPL) ranks among the stock winners. But can it really push into next year? After all, it’s not uncommon for even the most popular enterprises to incur a healthy correction. Following a 31.4% return (again, as of Oct. 31), AAPL may be due for a corrective lull.
However, I’m not really seeing evidence of that. Sure, you can point to revenue of $89.5 billion in the third quarter – a dip from the $90.15 billion posted in the year-ago period – as confirmation of slight sales constriction. However, the gross margin popped up to 45.17% in the latest Q3 report. That’s noticeably above the 42.26% figure posted in Q3 2022.
Yes, you are paying a premium for this level of outperformance. For example, AAPL trades at a forward earnings ratio of 28.54x, which is overheated. Still, this is a brand that people are forking over their money irrespective of tough economic conditions such as inflation.
Analysts view shares as a strong buy with a $201.49 average price target.
Alphabet (GOOG, GOOGL)
Admittedly not one of the most exciting ideas among stock winners, Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) nevertheless commands serious respect. As I’ve stated before, Alphabet’s Google ecosystem owns the Internet. Don’t believe me? Check out the search engine market share data, which sees Google owning 91.55% of the sector. And that’s with the best that Russia and China have to offer.
It’s almost inevitable that chants of “USA!, USA!, USA!” are erupting somewhere, if only in the mind. While it might be annoying for fans of other countries, with internet technology, Alphabet reigns supreme. So, with GOOG/GOOGL gaining about 41% since the January opener, it’s a completely credible performance. In my opinion, it should push over into 2024.
Here, Alphabet’s top line and gross margin increases are impressive. In Q3, the company posted $76.7 billion in revenue, up from $69.1 billion in the year-ago quarter. Gross margin clocked in at 56.7%, noticeably above the 54.9% from one year ago. Yeah, you’re paying a forward earnings premium of 20.19X, which isn’t bad for the dominance.
Analysts peg GOOG a consensus strong buy with a $152 price target.
Stock Winners: Microsoft (MSFT)
In the biopic Jobs starring Ashton Kutcher as Apple’s iconic co-founder, Steve Jobs is depicted yelling at Bill Gates, co-founder of tech giant Microsoft (NASDAQ:MSFT). I mention this because Microsoft has always come off as a bit boring, at least in my opinion. So, assuming that the scene is accurate, I’m not surprised that Jobs let loose. Microsoft is just dull.
However, it’s also one of the stock winners of 2023. Since the beginning of the year through the end of October, MSFT gained 41% of equity value. And I’d imagine that it will be one of the top stocks to buy in 2024. It’s just that the underlying products are too important, whether for academia, the professional realm or merely for personal use.
Looking at desktop operating market share data, Microsoft’s Windows OS dominates at just under 69%. Based on current trends, it doesn’t really seem others will catch up significantly. Yes, MSFT does trade at a premium forward earnings multiple of 32.95x. But you’re getting consistently robust profitability for that premium. Analysts rate MSFT as a strong buy with a $408.76 target.
A multinational computer software company, Adobe (NASDAQ:ADBE) mainly garnered a reputation for providing platforms for creatives. Commanding leadership in the areas of graphics, photography, illustration, animation and other multimedia applications, Adobe represents a must have for anyone – from students to freelancers to major corporations – seeking to gain a marketing and branding edge. As a result, I don’t think the creatives angle should be considered a pejorative.
Indeed, ADBE has been one of the best stocks to buy this year. Since the January opener, ADBE gained a very impressive 58% of equity value. Over the past five years, it soared 167%. To be fair, because of the performance, ADBE now trades at over 54x trailing earnings. That’s on the high side for sure. At the same time, the company enjoys robust growth and continues to print positive figures on the bottom line.
Additionally, the burgeoning gig economy – which some experts project will hit a valuation of $1.86 trillion by 2031 – should serve Adobe well. Thus, it should be one of the stock winners for 2024 and beyond.
Stock Winners: Amazon (AMZN)
As an e-commerce giant, Amazon (NASDAQ:AMZN) might not immediately strike investors as one of the stock winners for next year. Sure, it’s been on a strong run this year. From the beginning of the year to the end of October, AMZN moved up over 58%. However, circumstances don’t look so hot regarding consumer sentiment.
Recently, Walmart (NYSE:WMT) stated that the environment for the holiday season could be a bit dour compared to prior expectations. If so, betting on AMZN as one of the top stocks to buy admittedly appears risky. However, e-commerce retail transactions as a percentage of total sales have been marching higher since the second quarter of last year. At 15.4% in Q2 of this year, it could start to challenge the all-time high of 16.5%.
Fundamentally, it appears that consumers appreciate the convenience of Amazon’s massive online marketplace. Yes, AMZN is priced at a premium but you’re getting gargantuan growth and robust profitability. In my opinion, it’s worth betting on as a dominant force in its key industries.
General Electric (GE)
Years before the Covid-19 pandemic, you’d be forgiven if you had given up on industrial conglomerate General Electric (NYSE:GE). Prior to the Great Recession, shares peaked at around $261 per share on a weekly average basis. Post-recession, shares managed to hit roughly $205 before succumbing to a horrible implosion. Still, GE has made a strong comeback, potentially making it one of the stock winners of 2024.
Since the January opener to the end of October, GE popped up more than 66%. Some of the enthusiasm centers on its reorganization plans. Specifically, the company will combine its renewable energy, power, and its industrial software units into one entity, GE Vernova. From there, it will pursue a tax-free spinoff of this business at the beginning of Q2 2024.
Theoretically, the combination and spinoff should make the split enterprises more focused on their strengths. And GE Vernova is promising based on the importance of renewable energy and its potential ability to foster energy independence. So, it’s worth considering for top stocks to buy.
Palo Alto Networks (PANW)
Timing is everything and for Palo Alto Networks (NASDAQ:PANW), it’s a little bit unfortunate. Recently, the company posted strong results for its quarter ended October. On the top line, Palo Alto rang up sales of $1.88 billion, up 20% from one year ago. Also, it beat analysts’ consensus estimate of $1.84 billion. Further, adjusted profit landed at $1.38 per share, also exceeding the consensus target of $1.16 per share.
So, why did PANW fall? Per Barron’s, management provided guidance for both the end-of-January quarter and the July 2024 fiscal year that missed Wall Street’s estimates on billings. Subsequently, shares fell more than 5%. That’s a sharp contrast to earlier enthusiasm, which saw PANW rise over 74% between the January starter to the end of October.
Nevertheless, I’m going to pay attention to the fundamentals. As recent cyberattacks have demonstrated, nefarious online actors are becoming more effective and thus more brazen. They can badly disrupt business, meaning that enterprises are willing to pay any ransoms.
Someone’s got to put a stop to this matter, which should benefit Palo Alto. Therefore, PANW may be one of the stock winners of 2024.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.