What a difference a year can make on Wall Street. After enduring two bear markets in less than three years, all three major indexes soared in 2023. The iconic Dow Jones Industrial Average climbed to a record high, while the broad-based S&P 500 and growth-focused Nasdaq Composite rallied by 24% and 43%, respectively. It was a phenomenal year for optimists.
However, putting your money to work on Wall Street isn’t about where stocks have been, so much as where they’re headed next. Based on a handful of predictive tools and money-based metrics, 2024 looks as if it’ll be a more challenging year for equities. In other words, a bit of a stock picker’s market.
The good news is that, regardless of what’s thrown investors’ way in the new year, bargains can still be found. For investors willing to swing for the fences, the following seven magnificent stocks are fully capable of doubling your money in 2024.
1. Fastly
The first superb stock that has all the tools needed to deliver triple-digit returns for investors in 2024 is edge cloud company Fastly (FSLY). Though Fastly offers businesses a number of solutions, it’s best-known for its content delivery network (CDN), which moves content from the edge of the cloud to end users as quickly and securely as possible.
The big knock against Fastly has long been its operating losses. While the company’s sales have been growing by a healthy double-digit rate, its losses compounded throughout 2021 and most of 2022. However, the hiring of Todd Nightingale as CEO appears to have rectified this problem.
Before joining Fastly as CEO in September 2022, Nightingale was the executive vice president and general manager of Cisco Systems‘ Enterprise Networking and Cloud segment. He has keen knowledge of the opportunities that lie ahead for Fastly, but more importantly understands how to reduce expenses, generate positive cash flow, and move the company to recurring profitability. If Fastly can reach recurring profits ahead of Wall Street’s expectations, shares could easily soar in the new year.
It also doesn’t hurt that businesses are shifting their data online and into the cloud at an accelerated pace. The COVID-19 pandemic solidified Fastly’s role as an important CDN, and the burgeoning data-center economy, which is also being fueled by the rise of artificial intelligence (AI), bodes well for the company’s future growth prospects.
As long as the company’s key performance indicators continue to expand — e.g., average enterprise customer spend, total customers, and dollar-based net expansion rate — Fastly is a candidate to deliver triple-digit returns in 2024.
2. Novavax
Over the past four years, biotech stock Novavax (NVAX) has completed a wild round trip. Its involvement in coronavirus vaccine development sent shares from $4 to north of $300 by early 2021. As of the end of 2023, Novavax shares were back below $5.
Although COVID-19 vaccine demand has declined considerably, there are a couple of catalysts that can send Novavax’s stock higher by 100%, or more, in 2024.
The first wildcard is its development of a combination COVID-19/influenza vaccine. Even though the company doesn’t anticipate bringing a combination vaccine to market prior to 2026 (assuming accelerated approval), the simple fact that Novavax is getting its late-stage study under way in the second-half of 2024 should fuel excitement among investors.
Secondly, Novavax’s aggressive cost-cutting campaign has the potential to meaningfully reduce its operating losses. The company’s 2023 operating expenses were nearly halved through September, compared to the prior-year period. Management anticipates shaving another $300 million off of its annual expenditures in 2024.
But the biggest catalyst of all would be a favorable ruling in its arbitration case with Gavi, a nongovernmental vaccine alliance. Gavi is seeking $700 million tied to Novavax’s cancellation of their original agreement to purchase 350 million doses of the company’s COVID-19 vaccine. If Novavax avoids having to pay Gavi $700 million, a monumental weight will be lifted off of the company’s proverbial shoulders.
3. Fiverr International
A third magnificent stock that has the necessary catalysts and competitive advantages to double your money in 2024 is online-services provider Fiverr International (FVRR). Fiverr’s online marketplace connects freelancers with businesses that need their services.
The one thing that could derail Fiverr in the new year is a U.S. recession. It’s not uncommon for the unemployment rate to move higher when U.S. economic growth shifts into reverse. Then again, the U.S. economy grew by 5.2% during the third quarter, which is a blistering pace that favors a continued strong labor market.
Fiverr looks poised to benefit from a seemingly permanent shift in the labor force following the pandemic. While some folks have returned to the office, more people than ever are working remotely. That’s great news for a freelancer-driven platform.
Fiverr’s marketplace also appears to be resonating with businesses. Having freelancers price their services at an all-inclusive cost, as opposed to an hourly rate like many of Fiverr’s competitors, leads to superior cost transparency for buyers. Not surprisingly, spend per buyer has been climbing at a steady pace.
However, the best thing about Fiverr just might be its take rate — i.e., the percentage of each deal negotiated on its platform, including fees, that it gets to keep. Fiverr’s take rate hit 31.3% in the September-ended quarter, which is practically double its peers. As Fiverr continues to scale in 2024, its take rate will power its adjusted earnings higher.
4. StoneCo
Another phenomenal stock that can deliver 100% or greater returns to its shareholders in 2024 is fintech company StoneCo (STNE). StoneCo provides an assortment of payment, banking, and credit solutions to businesses in Brazil.
Putting aside that the 2022 bear market clobbered most high-growth stocks, one of the top reasons the company’s shares shed 90% of their value in less than two years is inflation. Brazil’s central bank raised interest rates from 2% to 13.75% in a little over a year to stamp out sky-high inflation. Since StoneCo’s loan division is backed by debt, and the company was initially unwilling to raise prices on smaller businesses, its profitability took a temporary hit. Thankfully, this is no a longer an issue.
What makes StoneCo so attractive is its evolution as a business. Whereas the company had primarily been focusing on small businesses and micro-merchants, it’s expanded its solutions to also target medium-sized businesses, which are more likely to move its profit needle.
Furthermore, through a combination of acquisitions (e.g., Linx in 2020) and organic innovation, it’s no longer just a payments company. StoneCo now offers banking, software, and credit solutions to micro-, small-, and medium-sized businesses. What’s particularly noteworthy is that StoneCo has seen an uptick in the percentage of its clients that are using multiple services. Add-on service adoption is an easy way to boost the company’s margins and profitability without increasing costs.
Yet the most interesting thing about StoneCo might be that its penetration rate is still relatively low. In many respects, the company’s total payment volume is still just scratching the tip of the iceberg with micro-merchants. This suggests another year of double-digit sales and adjusted earnings growth is on deck for 2024.
5. PubMatic
If the U.S. economy cooperates, adtech stock PubMatic (PUBM) can also make a strong case for delivering triple-digit returns in the new year.
PubMatic operates a cloud-based, programmatic ad platform for publishers. In simpler terms, it’s a sell-side platform (SSP) that helps publishing companies sell their digital display space. Since the ad industry is highly cyclical, a healthy economy is often required to lift year-over-year ad spending.
But it’s worth noting that 2024 is an election year. Based on projections from paid advertising agency GroupM, political ad revenue will near $16 billion in the U.S. this year, which would represent a 31% increase in spending when compared to the 2020 election cycle. PubMatic just happens to be at the center of the fastest-growing aspect of digital advertising: mobile, video, and connected TV. This suggests it’s primed for a strong year.
PubMatic is also benefiting from a wave of consolidation among SSPs. With less in the way of viable competition, it’s grown its share of the SSP space to between 4% and 4.5%.
Perhaps the biggest advantage PubMatic brings to the table is that it designed and developed its cloud-based infrastructure. Choosing to design its own platform, as opposed to relying on a third party, means that it’s able to generate more cash flow and profits as its revenue scales. Expect this ongoing revenue-scaling to be beneficial to PubMatic’s bottom line in 2024.
6. Lexicon Pharmaceuticals
Small-cap biotech stock Lexicon Pharmaceuticals (LXRX) is yet another swing-for-the-fences company whose catalysts could deliver a triple-digit return in 2024.
If you’ve ever followed clinical-stage drug developers, you’re likely well aware of their promise and peril. For example, shares of Lexicon Pharmaceuticals were decimated in 2019 when the U.S. Food and Drug Administration (FDA) rejected sotagliflozin as a treatment for patients with type 1 diabetes. Thankfully for Lexicon, perseverance has paid off.
In May 2023, the FDA approved Inpefa (the brand name for sotagliflozin) as a treatment to reduce the risk of heart failure in patients with the disease, or those that have type 2 diabetes, chronic kidney disease, and other cardiovascular risk factors. Though the initial sales ramp was minimal in 2023, Lexicon is expected to generate meaningful product revenue from Inpefa this year. It’s a drug that’s capable of more than $500 million in annual sales by 2028.
Something else noteworthy about Lexicon’s first approved therapy is that it’s the only SGLT1/SGLT2 inhibitor on the market. While there are other SGLT2 inhibitors on pharmacy shelves (SGLT2 inhibitors block glucose absorption in the kidneys), Inpefa doubles up with SGLT1 inhibition, which blocks glucose absorption in the intestines. This competitive advantage should lead to strong pricing power and potentially better-than-anticipated long-term demand for Inpefa.
Excitement surrounding the development of LX9211 can also drive Lexicon’s shares higher in 2024. This late-stage therapy is an AAK1 inhibitor for patients with diabetic peripheral neuropathic pain. It’s attempting to become the first non-opioid therapy for this indication in over two decades. Lexicon enrolled its first patient in its phase 2b study on Nov. 30.
7. Match Group
Online dating-services company Match Group (MTCH) is the final magnificent stock that can double your money in 2024. Match is the parent company of popular dating apps Tinder, Hinge, OKCupid, and Match.com, to name a few.
Similar to Novavax, Match Group has taken its shareholders on quite the roller-coaster ride. After peaking at north of $150 per share during the COVID-19 pandemic, Match Group’s stock has effectively retraced back to levels last seen over five years ago. Though some of this angst toward Match has to do with a modest decline in the number of paying users, a deeper dive suggests the company’s growth strategy is firing on all cylinders.
One of the ways Match can move the needle is by enhancing the value of its services. In September, it introduced Tinder Select to a small percentage of its users. This exclusive subscription will set users back $499 per month, but comes with an assortment of perks that Plus, Gold, and Platinum users aren’t going to enjoy. Pushing its users toward a subscription-driven model is one of the easiest ways the company can boost its growth rate.
In addition, Match Group hasn’t been shy about increasing the price of its subscriptions. Though losing a small percentage of its paying users to price increases was inevitable, a double-digit increase in revenue per payer (RPP) is more than worth it. RPP rose by 15% in the September-ended quarter from the prior-year period.
Lastly, Match Group has plenty of opportunity to expand overseas. In particular, Hinge is delivering exceptional user growth throughout Europe, with the app ranking either second or third in downloads in most countries. Hinge’s European RPP has essentially doubled over the past three years, which signals the international opportunity that lies ahead for this online-dating juggernaut.
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Source: Motley Fool