Stocks have been defying expectations with the S&P 500 index reaching recent all-time highs. The bullish sentiment is being fueled by expectations of multiple interest rate cuts starting sooner rather than later. Risk-on sentiment is starting to return, and investors are looking for growth stocks to buy.
But the rally hasn’t been broad-based. It’s more like a game of Whack-a-Mole. Even the Magnificent 7 has been trimmed by one. Investors want to see the rally broaden out before they will believe a full-fledged bull market is underway.
They may be waiting a little longer. The latest reading of the consumer price index (CPI) hints that inflation may be making a return. And that is dampening hopes for interest rate cuts.
But there are some stocks that are ready to report strong earnings even if the Fed stands pat. And those stocks still look undervalued. If these stocks start to run, you’ll know a bull market is underway. Here are seven growth stocks to buy no matter what happens to the broader market.
Generac Holdings (GNRC)
Generac (NYSE:GNRC) is growing, just not as much as analysts want. That’s my initial takeaway from the company’s earnings report. The company missed analyst’s forecasts on the top and bottom line. Still, the company delivered year-over-year (YOY) gains, reversing a trend from the last few quarters.
And the company’s guidance was lighter than expected. Ok, maybe Generac could use some help from the Fed. But either way, it seems that investors are trying to figure out a fair price for the stock. I listed GNRC stock as an undervalued stock in October 2023. It surged higher but quickly moved into overbought range.
That was just about where the stock was prior to earnings. Again, this is a case of good not being good enough. The company’s gross margin continues to improve and the company still forecasts robust earnings growth in 2024.
That growth may be stronger with a little help from the Fed – or a strong hurricane season that reminds consumers of the base use case for the company’s signature product line. Either scenario would send the stock soaring which is why it should be on a watchlist of growth stocks to buy.
Snowflake (SNOW)
Investors are learning that AI, even generative AI is only as good as the data it has available. Snowflake (NASDAQ:SNOW) is a cloud-based data storage company. However, Snowflake does more than just collect and house data. It uses AI to help provide insights. To that end, the company made a number of strategic acquisitions in the last year to help enhance its AI and machine learning capabilities.
The company’s allows its customers to access its data across numerous public clouds which sets it apart from others in the sector. It also helps ensure that the company will continue to deliver double-digit revenue and earnings growth.
Analysts still have a consensus rating of Buy on SNOW stock. But the consensus price target is below the current price. But price targets are rising ahead of the company’s earnings report on February 28, 2024. A solid report and guidance would be all that some analysts will need to bid the stock higher.
Sea Limited (SE)
In marketing, companies will frequently talk about the shotgun versus rifle approach to reaching consumers. The rifle approach is a niche approach that targets a company’s products to a specific market, but in a way that will, ideally, help the company capture outsized market share in that market.
The shotgun approach means that a company has offerings that attempt to cast a wide net. That’s a long –winded way to describe what Sea Limited (NYSE:SE) is doing in Latin America and Southeast Asia. The company’s business model includes digital entertainment, e-commerce and digital payments and financial services.
If that sounds like Amazon (NASDAQ:AMZN), you’d be right. The company is often compared to Amazon. But Sea Limited has much more growth to offer, especially as many Asian markets are starting to reawaken. The company is forecasting earnings to grow by over 85% in the next 12 months and analysts give the stock a consensus Buy rating with a price target that forecasts 27% growth.
Palantir (PLTR)
Palantir (NYSE:PLTR) stock is up a whopping 177% in the last 12 months and 49.9% in 2024. However, most of its recent growth has come after it reported earnings in February. Heading into earnings, analysts were skeptical that Palantir would be able to deliver on lofty expectations of growth with its AI platform, AIP.
Those doubts were more than allayed. Palantir is signing up new customers at a dizzying pace. That’s due, in no small part to the AI bootcamps that the company is conducting.
Midway through 2023, Palantir delivered its first profitable quarter. With this latest report, the company is well on its way to delivering a full-year of positive earnings and expectations for next year are for more of the same.
Analysts still have a Neutral rating on PLTR stock, but recent price targets are moving noticeably higher. While the stock has dropped after each of its last two earnings reports, it’s moved on to higher highs each time.
Lockheed Martin (LMT)
Lockheed Martin (NYSE:LMT) is not necessarily a name that comes to mind when you think about growth stocks to buy. However, these aren’t ordinary times. The world is full of geopolitical flashpoints that seemingly could get much worse very quickly.
Metaphorically, the world is on fire. And that sound of fiddles you hear may be coming from the U.S. Congress which seems to be in a state of permanent disfunction. A little gridlock is good, but it would be nice to think Congress could pass a budget. The absence of which is weighing on LMT stock.
The company is one of the leading defense contractors to the United States. A year ago, it would have seemed laughable that the defense budget would be cut. It still may not get cut, but it’s less of a certainty. Something has to give. But that assumes the political will exists to fix the budget deficit.
Investors hate uncertainty. Budgets provide certainty. Perhaps the election will provide that.
Newmont (NEM)
Speaking of out-of-control federal spending, it may be a great time to invest in gold. And if physical gold is not your style, Newmont Mining (NYSE:NEM) may be more your flavor.
Whatever you feel about gold as an investment, it’s hard to argue with the law of supply and demand. Central banks the world over bought gold at a record pace in 2022. And last year, the amount of gold they purchased was just below that level. There’s no reason to believe they’re done buying.
Newmont is the world’s leading gold mining business, and it has the balance sheet to prove it. In its’ most recent quarter, the company’s operating cash flow came in at $1 billion. That puts the company in a solid position to meet their forecast of a 35% increase in earnings as gold continues to rise.
Pfizer (PFE)
Pfizer (NYSE:PFE) ran a Super Bowl ad which had nothing to do with that vaccine. Instead, the 90-second spot looked to remind viewers that Pfizer has played a key role in, among other things, developing cancer treatments.
That’s a good reason to consider PFE stock. In the fourth quarter of 2023, Pfizer completed its acquisition of Seagen (NASDAQ:SGEN). This will more than double Pfizer’s oncology pipeline which was already formidable. It will still take time for these drugs to move through clinical trials, but the company has other candidates in its pipeline, including its own entry into the obesity drug market, that are much closer.
All of which is to say that PFE stock is undervalued and should be considered one of the growth stocks to buy in 2024. It’s trading near its 52-week low and has a forward P/E ratio of just 12x. Analysts have a Buy rating on the stock as well with a price target of $31.21. And Pfizer pays a solid dividend that the company has increased for the 14 consecutive years and currently yields 6.11%.
On the date of publication, Chris Markoch had a LONG position in PLTR. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
