The market rally that began in the fall of 2022 looks to be shifting into a new gear. Investors big and small appear to be branching out and shifting capital into more defensive blue-chip stocks and away from the mega-cap technology stocks that have driven the rally up to this point. As we close out March, the benchmark S&P 500 index that is the broadest measure of the United States market is up 3% on the month, double the 1.50% gain in the technology-focused Nasdaq Composite index. This led us to creating this list of sleeper stocks to buy.
Analysts point out that the rotation of capital is healthy and that a broadening out could help to sustain the market rally throughout the remainder of 2024. However, the shift will require investors to evaluate the current holdings in their portfolio and possibly make changes. Now is an opportune time for a portfolio review before the next earnings season kicks off in mid-April, and amid signs that the market is consolidating right now. Here are three stocks to buy for the next bull run: March 2024.
Robinhood Markets (HOOD)
Robinhood Markets (NASDAQ:HOOD) doesn’t generate the attention it did during the meme stock rally of 2021, and its share price has fallen 43% from the heights its reached after its July 2021 initial public offering (IPO). However, Robinhood has been quietly expanding beyond its core business of online stock trading in an effort to become a financial services company. To that end, Robinhood has just launched its first credit card.
The Robinhood Gold Card is being offered exclusively to members of the company’s subscription-based trading platform. The credit card has no annual or foreign-transaction fees and offers 3% cash back on all purchases. The credit card is the latest in a series of new products from Robinhood as it expands beyond being an online brokerage.
Last year, the company introduced retirement investment accounts for its customers. So far, about 500,000 Robinhood retirement accounts have been opened and $3 billion currently sits in them, according to the company. Consumers who use the new credit card can create virtual cards with disposable numbers for privacy and add up to five family members to an account. News of the credit card launch sent HOOD stock up nearly 5%. So far in 2024, the company’s shares are up 61%.
Canada Goose (GOOS)
Canada Goose Holdings (NYSE:GOOS) has been in bad shape for a while now. The company’s stock has declined 75% over the past five years as sales of its signature winter parkas steadily erode. Unseasonable warm winters and consumers pulling back on discretionary spending amid high inflation have hurt the company’s earnings and its share price. But now there are tentative signs that Canada Goose might be turning a corner.
The company has announced that it is cutting 17% of its workforce. The job cuts impact employees at the company’s Toronto headquarters, though it’s not clear exactly how many people will be let go. Canada Goose employed 915 people at its head office last year, according to regulatory documents. In a news release, Canada Goose said the job cuts will help it achieve immediate cost savings and allow it to become more efficient.
GOOS stock rose 4% on news of the workforce reduction as investors cheer the move. Hopefully the cuts will help reverse a string of quarterly financial results that missed Wall Street forecasts and sent the stock lower.
Darden Restaurants (DRI)
Darden Restaurants (NYSE:DRI) is another longtime underperformer that might finally be getting its mojo back. The company recently reported mixed financial results and a decline in same-store sales. However, the revenue miss was mostly due to Darden finalizing its $715 million acquisition of Ruth’s Chris Steak House. Going forward, Ruth’s Chris provides Darden with 53 new restaurant locations and should help to boost sales.
Darden, which owns other franchise restaurants such as the Olive Garden and LongHorn Steakhouse, saw its same-store sales decrease 1% in the final quarter of 2023 as consumers pullback on dining out due to high inflation. However, the company should see an uptick in customer traffic as interest rates are lowered in this year’s second half and consumer discretionary spending grows.
During the low interest rate days of the pandemic, Darden was averaging annual same-store sales growth of nearly 12%. DRI stock is up 2% on the year and showing signs of life. If you are looking for sleeper stocks to buy, start here.
On the date of publication, Joel Baglole 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.
