Growth stocks made a big comeback in 2023, outperforming value stocks by 31%. This is the second biggest outperformance on record (data goes back to 1979) — only 2020 saw a bigger outperformance.
Can the rally in high-growth stocks continue into 2024? With the economy remaining strong, interest rates poised to move lower and a soft landing coming into view, there’s every reason to believe that growth will again outpace value in the year ahead.
While the market’s performance has been choppy to start 2024, conditions appear to favor a continued rally in the coming months, especially with employment remaining strong and consumers continuing to spend. The first big test of the year will come when companies report their financial results for the fourth and final quarter of 2023 in coming weeks. As we wait for those results, here are seven high-growth stocks to boost your portfolio in 2024.
Nvidia (NVDA)
What a difference a day can make. After being rangebound over the past few months, shares of chipmaker Nvidia (NASDAQ:NVDA) have broken out and hit a new record high on a split adjusted basis. On Jan. 8, NVDA stock jumped 6.4% higher to finish trading at $522.53 per share. As of this writing, NVDA’s price is now in the $541 range. These new record highs were achieved after the company announced new microchips that will power artificial intelligence (AI) on personal computers (PCs).
Investors exchanged over $32 billion worth of NVDA stock on Jan. 8, making it the most traded stock on Wall Street. Previously, Nvidia’s stock had been rangebound, trading between $475 and $500 per share. The share price had been unable to break above the resistance it encountered at $500 until now. Nvidia’s stock more than tripled in 2023 and the company’s market value stands at $1.3 trillion. The new breakout begs the question: How high will NVDA stock go in 2024?
Fair Isaac (FICO)
For a high-growth stock that is not part of the Magnificent Seven, look to data analytics company Fair Isaac Corp. (NYSE:FICO). The company responsible for everyone’s credit score saw its stock rise 95% in 2023. Over five years, FICO stock has gained 460%. The 70-year-old company behind the FICO score has seen demand for its consumer credit risk services skyrocket among customers that include banks and mortgage lenders as inflation and interest rates remain elevated.
Consequently, Fair Isaac’s earnings have steadily grown. The company’s most recent print, for what was its fiscal fourth quarter, beat Wall Street forecasts across the board. Revenue totaled $389.7 million, which was up 12% from $348.7 million a year earlier. On the bottom line, the company reported net income of $101.4 million, or $4.01 per share, compared with $90.7 million, or $3.55 a share, a year earlier. With the housing market remaining strong, demand for Fair Isaac’s credit scores is expected to remain robust.
Coinbase Global (COIN)
The cryptocurrency market continues climbing higher, and so too does the stock of crypto exchange Coinbase Global (NASDAQ:COIN). In the last 12 months, COIN stock has risen 304%, including a 90% gain in the past six months. The rise in Coinbase Global has coincided with a stampeding bull run in cryptocurrencies, which has been led by Bitcoin’s (BTC-USD) 170% increase. Sentiment towards crypto has turned positive on expectations that exchange-traded funds (ETFs) are coming to the sector in the U.S.
Beyond the hype related to the likely approval of spot Bitcoin ETFs in America, Coinbase Global continues to grow and expand its reach around the world. In December, the company announced that it has secured a license to operate in France as it pushes further into the European market. The move into France is part of Coinbase’s global expansion strategy that the company calls “Go Deep, Go Broad.” Coinbase is also in discussions with regulators in Abu Dhabi about a potential operating license there.
Honda (HMC)
Now for an automaker that has been flying under the radar. Global automotive giant Honda (NYSE:HMC) has gotten little attention in the media, but has quietly outperformed most other auto stocks heading into 2024. In the last 12 months, HMC stock has risen 30%. That compares with a 7% decline in the share price of rival Ford (NYSE:F). Yet despite the strong run, Honda’s stock still looks cheap trading at only eight times 2024 earnings estimates.
Honda also pays a strong quarterly dividend of 25 cents a share, giving the stock a yield of 3.24%. Looking to the year ahead, Honda has big plans for its electric vehicle (EV) sales in North America. News just broke that Honda is planning to invest $14 billion to build a new EV plant in neighboring Canada as it looks to grow its presence in North America and target the U.S. market more aggressively. HMC stock offers the benefits of good value and high-growth to investors.
Meta Platforms (META)
Another mega-cap technology stock that remains a solid bet is Meta Platforms (NASDAQ:META). While META stock enjoyed a big run last year, the company’s shares still look affordable trading at about 30 times future earnings estimates, which is a historically low price-to-earnings (P/E) ratio. The company’s year of efficiency has proven to be successful and the stock has gained 175% over the last 12 months. With the digital advertising market expected to rebound in 2024, there’s reason to remain bullish on the Facebook parent company.
Meta Platforms is also going all-in on AI, launching last fall a new virtual reality headset and several AI applications. Hopes are high for the Quest 3 virtual reality headset that’s priced at $499 and went on sale in time for the holidays. Meta is also launching several generative AI chatbots, as well as a text-to-image platform called “Emu” that will be integrated with the Messenger app, and new AI photo editing tools for Instagram. META stock has gained 300% since bottoming in November 2022.
Chipotle Mexican Grill (CMG)
If there’s a restaurant stock likely to outperform in 2024, it is Chipotle Mexican Grill (NYSE:CMG). The popular restaurant chain has been a high-growth stock since its market debut in 2006. During 2023, CMG stock rose an impressive 65%. Through five years, the company’s share price has risen 342%. An aggressive and consistent growth strategy and earnings outperformance are largely responsible for the strong returns to shareholders.
In its most recent earnings print, covering Q3 2023, Chipotle topped Wall Street estimates due to higher prices and brisk sales of its burritos and tacos. Earnings per share (EPS) came in at $11.36 compared to $10.55 that was the consensus expectation of analysts. Revenue amounted to $2.47 billion, which was in line with forecasts. Same-store sales rose 5%, beating estimates of 4.6%. Chipotle said it expects to open 315 new restaurants in 2024 and reiterated its forecast for same-store sales growth in high single digits.
Costco Wholesale (COST)
Another strong outperformer heading into 2024 is Costco Wholesale (NASDAQ:COST). The company just reported solid holiday sales that drove its revenue up nearly 10% from a year earlier to $26.2 billion in December. The sales increase in December was double the 5% revenue increase seen in November. Same-store sales gained 8.5% from a year earlier, which was more than double the 3.5% growth seen in November. Costco reports its sales figures monthly rather than quarterly.
With discounts offered on both food and discretionary items, foot traffic at Costco’s stores increased 6.5% in the U.S. and 7.5% globally during the month of December. Gifts cards, jewelry, and gold bars remain big sellers at the company’s retail outlets. E-commerce sales at Costco also continue to thrive, fueled by discretionary purchases. E-commerce sales rose 17.7% year-over-year in December. COST stock is up 38% in the past 12 months and has gained 215% through five years.
On the date of publication, Joel Baglole held long positions in NVDA and FICO. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
