Wall Street has returned to a growth trajectory in November after three consecutive months of negative closing. The three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — posted positive returns in the last three successive weeks.
The impressive bull run of the first seven months of this year suffered a setback in the next three months as concerns about the continuation of higher interest rate for a longer-than-expected period and consequently the fear of an imminent recession resurfaced in investors’ community.
The rebound of U.S. stock markets in November is primarily driven by a strong anticipation among market participants that the Fed is already through with its interest rate hike regime for the current cycle.
In his post-FOMC statement on Nov 1, Fed Chairman Jerome Powell said “economic activity expanded at a strong pace in the third quarter,” compared with the September statement in which he said that the economy had expanded at a “solid pace.” According to Powell, “employment gains have moderated since earlier in the year but remain strong.”
As several key economic data including CPI, PPI and retail sales in the past three months are gradually cooling, a large section of market researchers and economists expect the Fed to be already through with this round of the interest rate hike cycle. This will pave the way for a year-end rally.
Meanwhile, a handful of U.S. corporate behemoths (market capital > $100 billion) have seen a sharp rally in 2023 buoyed by a lower magnitude and frequency of interest rate hike by the Fed.
These companies have a robust business model worldwide, a solid financial position and globally acclaimed brand recognition. Investment in these stocks with a favorable Zacks Rank and more upside left should be prudent in 2024.
Our Top Picks
We have narrowed our search to five such U.S. corporate giants that have skyrocketed in 2023 with strong upside left for 2024. These stocks have seen positive earnings estimate revisions for 2024 in the last 30 days. Each of our picks carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The chart below shows the price performance of our five picks year to date.
Image Source: Zacks Investment Research
Meta Platforms Inc. META is benefiting from steady user growth across all regions, particularly Asia Pacific. Increased engagement for its products like Instagram, WhatsApp, Messenger and Facebook has been a major growth driver. META is considered to have pioneered the concept of social networking.
Meta Platforms has an expected revenue and earnings growth rate of 13.4% and 23.4%, respectively, for next year. The Zacks Consensus Estimate for next-year earnings has improved 3% over the last 30 days. The stock price of META has soared 182.5% year to date.
Amazon.com Inc. AMZN has been benefiting from a strengthening AWS services portfolio and its growing adoption rate has contributed well. Ultrafast delivery services and an expanding content portfolio are positives for AMZN.
The strengthening relationship with third-party sellers is also encouraging. Its advertising business is also making a robust contribution. Improving Alexa skills along with robust smart home product offerings are tailwinds for AMZN.
Amazon has an expected revenue and earnings growth rate of 11.7% and 31.8%, respectively, for next year. The Zacks Consensus Estimate for next-year earnings has improved 13.2% over the last 30 days. The stock price of AMZN has jumped 73.9% year to date.
ServiceNow Inc. NOW has been benefiting from the rising adoption of its workflows by enterprises undergoing digital transformation. NOW’s expanding global presence, solid partner base and strategic buyouts are positives. New solutions — Automated Service Suggestions, Service Request Playbook and Workplace Scenario Planning — are helping NOW win new customers. An expanding portfolio with new generative AI solutions is expected to drive top-line growth for NOW.
ServiceNow has an expected revenue and earnings growth rate of 20.7% and 22.5%, respectively, for next year. The Zacks Consensus Estimate for next-year earnings has improved 4% over the last 30 days. The stock price of NOW has climbed 71.8% year to date.
Intel Corp. INTC designs, develops, manufactures, markets, and sells computing and related products worldwide. INTC operates through Client Computing Group, Data Center and AI, Network and Edge, Mobileye, Accelerated Computing Systems and Graphics, Intel Foundry Services, and Other segments.
INTC mainly offers platform products, such as central processing units and chipsets, and system-on-chip and multichip packages, and accelerators, boards and systems, connectivity products, and memory and storage products.
Intel has an expected revenue and earnings growth rate of 13.7% and more than 100%, respectively, for next year. The Zacks Consensus Estimate for next-year earnings has improved 12.1% over the last 30 days. The stock price of INTC has surged 69.1% year to date.
General Electric Co. GE has benefited from the strong performance of the Aerospace unit, driven by robust demand and solid execution in commercial engines and services. With strength in GE Gas Power services and growth at Grid business and Onshore Wind in North America, signs of improvement in GE Vernova (the combined operations of GE Power and Renewable) hold promise. Due to these tailwinds, the company has raised its 2023 guidance.
General Electric has an expected revenue and earnings growth rate of 7.2% and 69%, respectively, for next year. The Zacks Consensus Estimate for next-year earnings has improved 3.5% over the last 30 days. The stock price of GE has advanced 43.3% year to date.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.