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S&P 500 Index Hits All-Time High: 5 Must-Buy Stocks
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The S&P 500 Index — better known as Wall Street’s broad market benchmark — achieved a milestone as it closed at an all-time high of 4,839.81. The index posted its previous closing high on January 2022. In intraday trading, the index reached 4,842.07, reflecting its new all-time high after January 2022.
S&P 500 Regains Mojo in 2023
Wall Street had a highly disappointing 2022 as the inflation rate had reached a record high and the Fed had initiated an aggressive interest rate rise policy to combat elevated price levels. Accordingly, the S&P 500 lost 19%.
The situation was exactly the reverse in 2023. A gradually declining inflation rate enabled the central bank to pause rate hikes since July 2023. Consequently, the broad-market benchmark witnessed an impressive bull run of 24% last year.
The momentum continues in January 2024 as recently released several economic data like nonfarm payroll, weekly jobless claims, factory orders and retail sales of December clearly indicated that the U.S. economy is nowhere near even a mild recession.
The CME FedWatch tool reveals just a 47.2% probability that the Fed will lower the benchmark lending rate by 25 basis points. This probability was more than 80% three weeks ago. However, the interest rate futures tool is also showing the possibility of five 25 basis- points rate cuts in 2024.
Rally Likely to Continue in 2024
In any case, the Fed is set to initiate an interest rate reduction in 2024. A lower interest rate regime should be beneficial for stock markets. A low risk-free interest rate will reduce the discount rate, thereby increasing the net present value of investment in equities.
Second, the global supply-chain system has been restored slowly since last year as U.S. corporate behemoths are rescheduling their supply-chain system’s bypassing of China. Moreover, the fundamentals of the U.S. economy remain firm despite record-high-inflation and interest rate. The latest report of the Atlanta Fed projected that the U.S. GDP would grow 2.4% in fourth-quarter 2023.
Finally, a preliminary estimate revealed that a massive $1.4 trillion entered U.S. money market funds primarily due to an extremely high interest rate regime, with cash yielding around 5%. A systematic decline in the market interest rate will shift a major part of these gigantic funds to equity markets.
Our Top Picks
We have narrowed our search to five S&P 500 stocks that have strong growth potential in 2024. These stocks have seen positive earnings revisions in the last 30 days. Each of our picks sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Thec chart below shows the price-performance of our five picks in the past three months.
Image Source: Zacks Investment Research
NVIDIA Corp. (NVDA - Free Report) is gaining from the strong growth of artificial intelligence, high-performance computing and accelerated computing, which is boosting its Compute & Networking revenues. The datacenter end-market business is likely to benefit from the growing demand for generative AI and large language models using GPUs based on NVIDIA Hopper and Ampere architectures.
A surge in Hyperscale demand and a solid uptake of AI-based smart cockpit infotainment solutions are acting as tailwinds for NVDA. The collaboration with Mercedes-Benz and Audi is likely to advance NVDA’s presence in the autonomous vehicles and other automotive electronics space.
NVIDIA has an expected revenue and earnings growth rate of 53.7% and 63.1%, respectively, for the current year (ending January 2025). The Zacks Consensus Estimate for current-year earnings has improved 1.1% over the last 30 days.
Regeneron Pharmaceuticals Inc. (REGN - Free Report) discovers, invents, develops, manufactures, and commercializes medicines for treating various diseases worldwide. REGN’s products include EYLEA injection to treat neovascular age-related macular degeneration and diabetic macular edema, myopic choroidal neovascularization, diabetic retinopathy, neovascular glaucoma, and retinopathy of prematurity.
REGN also provides Dupixent injection to treat atopic dermatitis and asthma in adults and pediatrics, Libtayo injection to treat metastatic or locally advanced cutaneous squamous cell carcinoma, Praluent injection for heterozygous familial hypercholesterolemia or clinical atherosclerotic cardiovascular disease in adults, REGEN-COV for COVID-19, and Kevzara solution for treating rheumatoid arthritis in adults.
Regeneron Pharmaceuticals has an expected revenue and earnings growth rate of 5.3% and 3.4%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.1% over the last seven days.
Gartner Inc. (IT - Free Report) is the world’s leading information technology research and advisory firm. IT offers rich domain expertise and technology-related insight necessary for an informed decision-making process. Over the years, IT’s comprehensive services portfolio has enabled customers across the spectrum to research, analyze and interpret the business with greater precision, efficiency and discipline.
Gartner has an expected revenue and earnings growth rate of 7.7% and 9.2%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.1% over the last seven days.
Martin Marietta Materials Inc. (MLM - Free Report) is gaining strength from long-term strategic plans — markedly SOAR (Strategic Operating Analysis and Review) 2025 initiatives. MLM is also benefiting from strong demand trends across a coast-to-coast geographic footprint, given its increased infrastructure investment coupled with strength in heavy non-residential construction, large-scale energy projects and domestic manufacturing. A solid inflow of public funds for infrastructure and manufacturing activities is aiding MLM.
Martin Marietta Materials has expected revenue and earnings growth rates of 9.2% and 13.1%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.1% over the last 30 days.
Arista Networks Inc. (ANET - Free Report) develops markets and sells cloud networking solutions in the Americas, Europe, the Middle East, Africa, and the Asia-Pacific. ANET benefits from the expanding cloud networking market, driven by strong demand for scalable infrastructure. The company recently joined the Microsoft Intelligent Security Association.
Arista Networks continues to gain from solid momentum and diversification across its top verticals and product lines. It is well-poised for growth in the data-driven cloud networking business, with proactive platforms and predictive operations. ANET introduced an enterprise-grade Software-as-a-Service offering for its flagship CloudVision platform.
Arista Networks has an expected revenue and earnings growth rate of 11.5% and 10.1%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.3% over the last 30 days.
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S&P 500 Index Hits All-Time High: 5 Must-Buy Stocks
The S&P 500 Index — better known as Wall Street’s broad market benchmark — achieved a milestone as it closed at an all-time high of 4,839.81. The index posted its previous closing high on January 2022. In intraday trading, the index reached 4,842.07, reflecting its new all-time high after January 2022.
S&P 500 Regains Mojo in 2023
Wall Street had a highly disappointing 2022 as the inflation rate had reached a record high and the Fed had initiated an aggressive interest rate rise policy to combat elevated price levels. Accordingly, the S&P 500 lost 19%.
The situation was exactly the reverse in 2023. A gradually declining inflation rate enabled the central bank to pause rate hikes since July 2023. Consequently, the broad-market benchmark witnessed an impressive bull run of 24% last year.
The momentum continues in January 2024 as recently released several economic data like nonfarm payroll, weekly jobless claims, factory orders and retail sales of December clearly indicated that the U.S. economy is nowhere near even a mild recession.
The CME FedWatch tool reveals just a 47.2% probability that the Fed will lower the benchmark lending rate by 25 basis points. This probability was more than 80% three weeks ago. However, the interest rate futures tool is also showing the possibility of five 25 basis- points rate cuts in 2024.
Rally Likely to Continue in 2024
In any case, the Fed is set to initiate an interest rate reduction in 2024. A lower interest rate regime should be beneficial for stock markets. A low risk-free interest rate will reduce the discount rate, thereby increasing the net present value of investment in equities.
Second, the global supply-chain system has been restored slowly since last year as U.S. corporate behemoths are rescheduling their supply-chain system’s bypassing of China. Moreover, the fundamentals of the U.S. economy remain firm despite record-high-inflation and interest rate. The latest report of the Atlanta Fed projected that the U.S. GDP would grow 2.4% in fourth-quarter 2023.
Finally, a preliminary estimate revealed that a massive $1.4 trillion entered U.S. money market funds primarily due to an extremely high interest rate regime, with cash yielding around 5%. A systematic decline in the market interest rate will shift a major part of these gigantic funds to equity markets.
Our Top Picks
We have narrowed our search to five S&P 500 stocks that have strong growth potential in 2024. These stocks have seen positive earnings revisions in the last 30 days. Each of our picks sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Thec chart below shows the price-performance of our five picks in the past three months.
Image Source: Zacks Investment Research
NVIDIA Corp. (NVDA - Free Report) is gaining from the strong growth of artificial intelligence, high-performance computing and accelerated computing, which is boosting its Compute & Networking revenues. The datacenter end-market business is likely to benefit from the growing demand for generative AI and large language models using GPUs based on NVIDIA Hopper and Ampere architectures.
A surge in Hyperscale demand and a solid uptake of AI-based smart cockpit infotainment solutions are acting as tailwinds for NVDA. The collaboration with Mercedes-Benz and Audi is likely to advance NVDA’s presence in the autonomous vehicles and other automotive electronics space.
NVIDIA has an expected revenue and earnings growth rate of 53.7% and 63.1%, respectively, for the current year (ending January 2025). The Zacks Consensus Estimate for current-year earnings has improved 1.1% over the last 30 days.
Regeneron Pharmaceuticals Inc. (REGN - Free Report) discovers, invents, develops, manufactures, and commercializes medicines for treating various diseases worldwide. REGN’s products include EYLEA injection to treat neovascular age-related macular degeneration and diabetic macular edema, myopic choroidal neovascularization, diabetic retinopathy, neovascular glaucoma, and retinopathy of prematurity.
REGN also provides Dupixent injection to treat atopic dermatitis and asthma in adults and pediatrics, Libtayo injection to treat metastatic or locally advanced cutaneous squamous cell carcinoma, Praluent injection for heterozygous familial hypercholesterolemia or clinical atherosclerotic cardiovascular disease in adults, REGEN-COV for COVID-19, and Kevzara solution for treating rheumatoid arthritis in adults.
Regeneron Pharmaceuticals has an expected revenue and earnings growth rate of 5.3% and 3.4%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.1% over the last seven days.
Gartner Inc. (IT - Free Report) is the world’s leading information technology research and advisory firm. IT offers rich domain expertise and technology-related insight necessary for an informed decision-making process. Over the years, IT’s comprehensive services portfolio has enabled customers across the spectrum to research, analyze and interpret the business with greater precision, efficiency and discipline.
Gartner has an expected revenue and earnings growth rate of 7.7% and 9.2%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.1% over the last seven days.
Martin Marietta Materials Inc. (MLM - Free Report) is gaining strength from long-term strategic plans — markedly SOAR (Strategic Operating Analysis and Review) 2025 initiatives. MLM is also benefiting from strong demand trends across a coast-to-coast geographic footprint, given its increased infrastructure investment coupled with strength in heavy non-residential construction, large-scale energy projects and domestic manufacturing. A solid inflow of public funds for infrastructure and manufacturing activities is aiding MLM.
Martin Marietta Materials has expected revenue and earnings growth rates of 9.2% and 13.1%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.1% over the last 30 days.
Arista Networks Inc. (ANET - Free Report) develops markets and sells cloud networking solutions in the Americas, Europe, the Middle East, Africa, and the Asia-Pacific. ANET benefits from the expanding cloud networking market, driven by strong demand for scalable infrastructure. The company recently joined the Microsoft Intelligent Security Association.
Arista Networks continues to gain from solid momentum and diversification across its top verticals and product lines. It is well-poised for growth in the data-driven cloud networking business, with proactive platforms and predictive operations. ANET introduced an enterprise-grade Software-as-a-Service offering for its flagship CloudVision platform.
Arista Networks has an expected revenue and earnings growth rate of 11.5% and 10.1%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.3% over the last 30 days.