As I’ve noted in a few past columns, “Investor’s Business Daily’s IBD 50 is ‘a weekly, rules-based, computer-generated stock index.’” Moreover, the stocks on the list tend to be fundamentally strong and have top-notch growth outlooks. Also importantly, their shares are usually being rapidly acquired by a significant portion of Wall Street’s largest investors.
I’ve used the IBD top 50 stocks list on multiple occasions as a screening tool to identify little-known names that eventually turned out to be big winners. Also illustrating the excellent performance of the list, the Innovator IBD 50 ETF (NYSEARCA: FFTY) has jumped about 20% so far in 2024. Of course, the ETF seeks to reflect the performance of all of the companies on the list. Here are three of the top stocks to buy that are currently on the IBD top 50 list.
e.l.f. Beauty (ELF)
e.l.f. Beauty (NYSE:ELF), which sells cosmetics products, is well-positioned to benefit from an important macro trend. Specifically, as I pointed out in a recent column, a survey conducted last month by well-known consulting firm McKinsey found that the members of Generation Z intend to spend more money on beauty products going forward. And 29% of all respondents reported that they intend to “splurge” on beauty and personal care products.
e.l.f. is likely already benefiting from this key trend. It reported outstanding first-quarter financial results with net sales soaring 71% versus the same period a year earlier to $321 million. Further, adjusted EBITDA soared 93% year-over-year to $40.9 million.
On June 18, investment bank Canaccord Genuity hiked its price target on ELF stock to $250 from $214. According to the bank, the sales of the company’s products by its channel partners have been doubling year-over-year, while e.l.f. should benefit from improvements in the shelf positioning of its products this summer.
IBD gives ELF stock an Accumulation/Distribution grade of A-. That means that many large institutional investors have been buying the shares over the last 13 weeks.
Netflix (NFLX)
Netflix’s (NASDAQ:NFLX) active user base, revenues and profits are increasing rapidly, largely thanks to its new, more affordable ad-supported plan and its efforts to prevent password sharing. The number of users of its ad tier soared to 40 million at the end of last quarter, versus just 5 million during the same period a year earlier. The company estimates that over 500 million people worldwide watch its channel.
In 2023, the company’s user base jumped nearly 13%, while its operating income soared 54% year-over-year to $2.6 billion year-over-year in Q1 and its revenue rose 15% year-over-year (YOY) to $9.37 billion.
Over the longer term, Netflix should get a big boost from its addition of live programming, including sports. This change should enable it to meaningfully raise its prices, boosting its top and bottom lines.
In the shorter term, the company should get a lift from increased viewership of its ads.
Royal Caribbean (RCL)
As I noted in a past column, consumer confidence recently dropped to its lowest level since the end of 2023, according to data collected by McKinsey. However, 33% of consumers still want to “splurge” on travel, McKinsey found.
That dynamic should boost Royal Caribbean (NYSE:RCL) and its peers, since cruises provide consumers with relatively affordable vacations.
Royal Caribbean may already have been significantly helped by this dynamic as its top line jumped 29% versus the same period a year earlier in Q1 to $3.7 billion, while its bottom line came in at $360 million up from a loss of $48 million in Q1 of 2022. The company expects its profit to jump 60% for the full year.
In May, Wells Fargo predicted that the U.S. cruise sector would have a good year, driven by new ships and strong booking trends. Given these points, I view RCL stock as one of the top stocks to buy at this point.
On the date of publication, Larry Ramer did not hold (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
