As the global economy recovers from a period of high inflation, investors seek the best soft landing stocks to buy. A soft landing in economics is when central banks raise interest rates to slow economic growth to avoid a recession. Over the last year, Wall Street has pushed the narrative that a recession is on the horizon.
Some investors might argue that we are already in a recession, and a hard landing is the only likely scenario. However, real GDP growth and consumer spending have suggested that the economy might be on an upswing. Consumer spending remains strong, and real GDP growth increased at an annual rate of 4.9% in Q3 2023. Although the central bank was significantly behind the curve back in late 2021, the prospect of a soft landing could spur the next bull market.
Let’s discuss the three best soft Landing stocks for 2024.
Check Point (CHKP)
Check Point (NASDAQ:CHKP) might be the biggest sleep cybersecurity stock to watch for 2024. The company’s consistent revenue, Earnings Per Share (EPS) growth over the last decade and gross margins are its biggest competitive advantages.
While the cybersecurity sector saw increased investor attention in 2023, Check Point has largely flown under the radar. They have been in space for three decades and have been a leader in cloud native security solutions. Check Point has also been ramping up its AI strategy with its AI-powered security platform, XD Horizon XDR/XRP.
Check Point’s gross margins have consistently been more than 86% for the last decade. Furthermore, the company has remained profitable while generating positive FCF from operations. With the AI cloud security race in full effect, Checkpoint is a top growth stock to consider as the economy steers clear from a recession.
American Express (AXP)
American Express (NYSE:AXP) stands as a no-brainer growth stock that investors should consider for 2024. The 2023 fiscal year is about to come to an end, and American Express has benefited tremendously from higher interest rates.
The consumer has remained strong, with spending contributing to the economy’s resilience. Credit card spending has risen, and consumer credit card debt hit a record $1 trillion in Q3 2023. This has been great news for credit card processing giants such as American Express.
In their latest quarterly financial results, revenue grew 13% YOY to $15.4 billion. EPS rose 34% YOY to $3.30 per share. American Express is tailoring its long-term strategy to the Millenial and Gen Z segment, with spending up 19% from the year prior. Analysts project FY23 EPS in the $11.20 range, reflecting approximately 15% YOY growth. American Express appears to be cheap, making it one of the best soft landing stocks to keep on your radar.
ON Semiconductor (ON)
ON Semiconductor (NASDAQ:ON) is one of the most compelling soft landing stocks for 2024. The company is at the forefront of the global semiconductor chip boom, leading advanced development of silicon carbide modules.
Wall Street has not been pleased with ON Semi’s revenue guidance in FY23. Supply chain constraints and slower EV demand impacted growth, leading to the company’s Q4 revenue guidance coming below estimates. However, when you peel the layer back, ON Semi has still seen significant bottom line improvements.
In Q3 2023, revenue saw a slight decline of 0.54% YOY. However, EPS surged 84% YOY to $1.29 per share. The company has invested significantly in its new SiC factory in Bucheron, South Korea. Their advanced silicon carbide modules have a variety of use cases for the energy storage, electric vehicle (EV), and solar energy markets. With a P/E of only 16, now is a great time to scoop up shares for the long term.
On the date of publication, Terel Miles 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.
