The New Year gives investors the opportunity to reassess their portfolios, determine their objectives and plan accordingly.
Investors often go into a New Year hoping to outperform last year’s returns. Some stocks offer that possibility. While index funds can generate respectable returns, several growth stocks can comfortably exceed index returns and reward long-term investors.
With the year still in its early innings, investors have time to jump on board captivating growth stories. These are some of the must-have stocks that can kickstart your 2024 portfolio.
Broadcom (AVGO)
Broadcom (NASDAQ:AVGO) has been a top-performing semiconductor stock that has almost doubled over the past year. Shares have gained 321% over the past five years.
The company is benefitting from the rising demand for artificial intelligence which has generated more sales. Broadcom’s recent acquisition of VMware will also increase the company’s revenue and earnings.
Unlike most high-growth stocks, Broadcom pays a dividend and has a generous yield that is close to 2%. The company regularly raises its dividend by double-digits each year. The annual dividend per share currently sits at $21.
Broadcom serves as a growth and income play for investors seeking both at the same time. The company has healthy net profit margins that regularly exceed 35%. Broadcom closed 2023 with 8% year-over-year revenue growth for the entire year. Hock Tan, President and CEO of Broadcom referred to the VMware acquisition as “transformational” and mentioned artificial intelligence as a growth driver for the company.
Axcelis Technologies (ACLS)
Axcelis Technologies (NASDAQ:ACLS) has seen its stock price fall from grace in recent months. Shares are down by over 40% from their all-time high without any significant news. The sell-off has resulted in a 16 P/E ratio for a company that has a $1.2 billion backlog.
For context, the company made $292.3 million in the third quarter of 2023 which was 27.6% higher than last year’s Q3 revenue. The order backlog is more than four times the company’s Q3 2023 revenue. Furthermore, Axcelis Technologies reported 63.7% year-over-year revenue growth and saw its net profit margin exceed 20%.
Axcelis rallied considerably in 2023 until its descent which started in early August. The company also serves a critical role in the semiconductor industry with its ion implantation technology. Companies use Axcelis’ resources to make their chips more effective.
Axcelis isn’t losing business and trades at a reasonable valuation. The drop feels unwarranted, but it does give bullish investors a great opportunity to buy the dip. The firm is currently valued below $4 billion.
Costco (COST)
Costco (NASDAQ:COST) is a blue chip that doubles as a growth investment. Many consumers turn to the retailer for cheaper goods and services. While inflation isn’t as hot as it once was, prices aren’t getting lower and people are always looking for ways to save.
Shares have gained 40% over the past year and have more than tripled over the past five years. Costco offers a low 0.60% dividend yield but occasionally flexes its financial muscles with substantial special dividends. The company decided to distribute a special dividend of $15 per share to close out 2023. Shareholders received the special dividend on January 12th.
Costco continues to expand its presence and achieve top and bottom-line growth. The company reported a 6.1% year-over-year increase in net sales and 16.5% year-over-year net income growth. The company opened 10 new locations in the quarter and plans to open 33 new locations in fiscal 2024.
Costco offers a good blend for investors who want growth and resistance from a potential recession. The company seems poised to retain customers and reach new members in any economy.
Visa (V)
Credit cards and debit cards have become popular payment methods, especially with e-commerce companies often requiring them. Companies like Visa (NYSE:V) make money for every transaction involving its credit and debit cards.
When consumer spending goes up, Visa benefits due to more transactions and higher purchase prices. That dynamic explains why many investors treat Visa as a bellwether stock for the economy. Many investors get more bullish about the broader market when Visa posts good earnings.
The company once again pleased investors in Q4 2024 with 11% year-over-year revenue growth. GAAP net income also went up by 15% year-over-year on the back of a 9% year-over-year increase in volume.
Ryan McInerney, CEO of Visa, mentioned that the company has seen a strong rebound in consumer spending across several categories, with cross-border travel as a standout.
Visa has been a reliable fintech company for investors. Shares are up by 18% over the past year and surged by 90% over the past five years.
Fortinet (FTNT)
Fortinet (NASDAQ:FTNT) endured a rocky second half of 2023 due to decelerating revenue and backlog growth. Shares briefly fell below $50 apiece in November, but investors have been bidding up the stock ever since.
The cybersecurity giant trades at a 37 forward P/E ratio which is lower than that of most cybersecurity stocks. Investors have reasons to be cautious, as the company projected a 5.2% year-over-year decline in billings for the fourth quarter. Revenue is only projected to increase by 9.9% year-over-year in that quarter.
Investors will get to see the results on February 6th. The company expects headwinds to fade in the middle of 2024, and when that happens, the stock can see a resurgence. Fortinet has been a reliable long-term stock that has been GAAP profitable with positive free cash flow every year since its IPO in 2009.
Fortinet could face a correction after earnings, but investors who focus on the long-term picture can benefit from the dip. Even with revenue growth decelerating, net income growth remains strong: The company reported 39.4% year-over-year revenue growth in the third quarter.
MercadoLibre (MELI)
MercadoLibre (NASDAQ:MELI) is an Argentinian company that specializes in e-commerce and fintech. The high-growth company delivered 69% year-over-year revenue growth in Q3 2023 on an FX-neutral basis. Gross merchandise value, the figure representing the total sales driven across the platform, grew by 59% year-over-year on an FX-neutral basis.
The company is well-diversified across emerging markets which has helped the company achieve high revenue growth. A hidden gem in the financials is that the growth rates for revenue and gross merchandise value are high and similar.
My concern with a stock like Etsy (NASDAQ:ETSY) is the company’s flat gross merchandise value. A flat value on this front will eventually result in flat or declining revenue. High gross merchandise value growth gives MercadoLibre more room for its revenue to run.
The stock has had plenty of room to run and continues to reward long-term investors. Shares are up by 55% over the past year and have gained 354% over the past five years. The stock currently trades at a 46 forward P/E ratio.
Cloudflare (NET)
Cloudflare (NYSE:NET) is a global cloud services provider that keeps websites safe. Over 30% of the Fortune 1000 are paying customers and the company has over 182 million paying customers overall. Cloudflare has diversified outside of the U.S. and generates 48% of its revenue from other countries.
Cloudflare has posted an exceptional compounded annual growth rate of 48% from fiscal 2017 to fiscal 2022. The company didn’t hit that mark in its latest earnings report, but 32% year-over-year revenue growth is still impressive. The company reported a GAAP net loss of $23.5 million which is a big improvement from a GAAP net loss of $42.5 million in the same period last year.
Cloudflare stock has rewarded most of its long-term investors, but investors who bought at the top in 2021 may have some gripes with the company. Shares have gained 86% over the past year and are up by 349% over the past five years. The stock remains more than 60% removed from its all-time high.
On this date of publication, Marc Guberti held long positions in AVGO, ACLS, FTNT and NET. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.comPublishing Guidelines.
