As I ponder the top stock picks for 2024, I’m debating the criteria for selecting the companies on my list.
There are many ways to analyze a stock’s potential, but ultimately, whether they perform or not is in the hands of the investing gods. We cannot control how quickly a stock rises or falls, even when we’ve done plenty of due diligence and homework.
Sometimes, even the best analysis misses the mark. Having written about stocks for over a decade, I’ve learned that you can’t always correct. And more importantly, there will be when you look downright silly. That’s life.
To simplify the process, I’ll select my three top stock picks for 2024, with one from the top 10 holdings of a growth ETF, one from a value ETF, and a third from a blend of the two.
Here are my three market mavericks for 2024.
Meta Platforms (META)
One only needs to look at the Bloomberg Billionaires Index to know that Meta Platforms (NASDAQ:META) has fully recovered from the malaise it faced from investors through most of 2022.
Meta is one of the top 10 holdings of the iShares Russell 1000 Growth ETF (NYSEARCA:IWF). It tracks the performance of the Russell 1000 Growth Index, a collection of 443 large- and mid-cap stocks with growth characteristics.
Meta’s Q4 quarterly revenue was 40.1 billion dollars, up 25 percent year over year, and its yearly total revenue reached 134.9 billion dollars.
Procter & Gamble (PG)
Procter & Gamble (NYSE:PG) has gotten off to a good start in 2024. Its shares are up 5.61%, 348 basis points higher than the S&P 500. PG is the ninth-largest holding of the iShares S&P 500 Value ETF (NYSEARCA:IVE).
It tracks the performance of the S&P 500 Value Index. It uses three value characteristics to evaluate potential constituents for the index: book value to price ratio, earnings to price ratio, and sales to price ratio.
On Jan. 23, the consumer goods company, whose brands include Pampers, Tide, Bounty, Tampax, and Gillette, reported its Q2 2024 earnings. Its sales were $21.44 billion, $40 million shy of analyst estimates, while its earnings per share were $1.84, 14 cents higher than the consensus estimate.
In 2024, it expects adjusted EPS of $6.41, 8.6% higher than in 2022. Its earnings in 2022 rose just 2%, so despite slower volumes, higher prices keep the profits growing.
As part of the quarter, it reported a $1.3 billion impairment charge for Gillette. It expects up to $2.5 billion over the next two fiscal years as it restructures its business in several markets.
Its enterprise value of $397.2 billion is 17.60x its EBITDA (earnings before interest, taxes, depreciation and amortization). That’s lower than at almost any time since 2018.
Deckers Outdoor (DECK)
Deckers Outdoor (NYSE:DECK) is one of the top 10 holdings for the Invesco S&P MidCap Quality ETF (NYSEARCA:XMHQ), which tracks the performance of the S&P MidCap 400 Quality Index, a collection of quality stocks from the S&P MidCap 400.
Quality refers to those names with a high return on equity, a low accruals ratio (stocks with high cash earnings), and a low financial leverage ratio (debt is a small part of book value).
The maker of Ugg and Hoka shoes has a trailing 12-month return on equity of 37.00%, considerably higher than its five-year average of 29.67%. Decker’s financial leverage ratio is a low 14% based on $251.1 million in total debt and $1.80 billion in book value. The company’s Sloan ratio, defined as net income less operating cash flow divided by total assets, is -6.03%. A negative Sloan ratio is preferred.
Its stock is off to another fast start in 2024, up nearly 12%. In 2023, it gained more than 67%. It’s up 431% over the past five years, more than 5x the S&P 500.
Last July, I selected DECK stock as one of three footwear stocks instead of Nike (NYSE:NKE). It’s up 40% compared to a 6% decline for the Swoosh. It’s up 16% so far in 2024. As long as Hoka keeps growing, I don’t see this reversing anytime soon.
It’s one of my favorite top stock picks for 2024.
On the date of publication, Will Ashworth 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.
