Kiplinger's annual investing outlook, which includes the best stocks to buy, has been a feature for our readers since 2012. Anne Kates Smith, executive editor for Kiplinger's Personal Finance Magazine, has skillfully authored the piece, surveying the stock market and economy and synthesizing her findings into key takeaways.
That's no small task, given the broad and dynamic nature of the market. Along with conducting plenty of research, Anne relies on the depth of her experience to draw out the most important trends and likely winners for the best stocks to buy in the coming year. "This is my 13th year writing this story, but I've been an investing writer for far longer," says Anne. "I've seen investors through a lot of bull and bear markets."
Over the years, Anne has honed a rigorous process for shaping the outlook, interviewing many economists, market strategists and money managers for their perspectives on what's to come. She also attended several investment webinars and read dozens of pieces of Wall Street research and analysis to inform the outlook this year.
Typically, Anne says, "it takes an enormous amount of reporting just to start hearing common themes come through" on where the market is headed and how investors should respond.
How you can choose the best stocks to buy
But for 2024, amid the usual diversity of opinion among her sources, she quickly encountered broad acknowledgement that the best line of defense for investors in an uncertain macroeconomic environment is being disciplined and selective as they seek out high-quality companies.
That means when investors are seeking out the best stocks to buy, they should look beyond factors such as company size (small-capitalization and large-capitalization stocks, for instance) or investing style (such as growth or value) and search for stocks of companies with consistent profits, good cash flow and other indicators that reflect quality, says Anne.
Anne also points out that although our outlook provides context and advice related to general market trends, individual investors have their own risk tolerance and time horizon to consider. A good financial adviser can help you compose and manage a portfolio that suits your situation. But finding an adviser who has the right expertise, with whom you feel comfortable (both in managing your investments and on a more personal level) and who charges fees that seem commensurate with the services provided can be a challenge.
In Kiplinger's feature, "How to Find the Right Financial Adviser," contributor David Rodeck takes you through the options – especially when it comes to price. He also outlines the pros and cons of various fee structures and offers guidance on finding the right overall match, too. "Hiring an adviser is often a costly undertaking," Rodeck writes. "Just remember that the typical investor who goes it alone underperforms the market, and mistakes such as selling in a panic after a market crash and missing the future rebound contribute to that underperformance."
Best stocks to buy
So, with all of this in mind, here are eight of the best stocks to buy now. To compile the list, we looked for high-quality companies with solid fundamentals like strong earnings and revenue growth, as well as free cash flow, and many with a value tilt as measured by their forward price-to-earnings (P/E) ratios.
The names featured here vary by size and industry and are not meant to compose a diversified portfolio. But all, for one reason or another, are well positioned to benefit in an uncertain market environment.
|Cadence Design Systems
|Delta Air Lines
|Discover Financial Services
|Thermo Fisher Scientific
- Sector: Consumer staples
- Market value: $256.7 billion
- Dividend yield: 3.1%
Coca-Cola (KO) is a stronger company than it was at the start of the pandemic, after slimming its offerings by 600 products and moving away from sugary sodas with acquisitions such as coffee company Costa, says Argus Research analyst Taylor Conrad.
Coke beat analysts' expectations in the most recent quarter. Operating profit margins widened, too, and the firm boosted its guidance for 2023 sales and profits. More of the same is expected in 2024, says Conrad.
Shares are a bargain as well, after slipping nearly 5% in 2023. Coke is one of the best dividend stocks too – it has raised its dividend for 61 consecutive years. At its current price, it boasts a 3.1% dividend yield.
Cadence Design Systems
- Sector: Technology
- Market value: $79.1 billion
- Dividend yield: N/A
Chip designs are increasingly complex, and that's driving demand for Cadence Design Systems' (CDNS) products, which help companies design and test semiconductors. Customers such as Nvidia (NVDA), Broadcom (AVGO) and Tesla (TSLA) can't stay away.
Cadence's sales related to artificial intelligence (AI) tripled in 2023, and analysts at Zacks Investment Research expect even faster growth in 2024. They predict earnings growth of 19% over each of the next three years, which is why CDNS is on this list of the best stocks to buy.
But the tech stock is pricey, so snap up shares on dips. Competition is stiff in the electronic design automation space – Cadence is number two – and that may create opportunities as firms jockey for market share in this fast-growing industry.
- Sector: Energy
- Market value: $28.0 billion
- Dividend yield: 5.1%
Diamondback Energy (FANG), with a market value of $28 billion, is the premier pure-play shale driller in the Southwest's Permian Basin, according to analysts at The Carson Group, an investment management firm. Diamondback has an exceptionally low cost of production, they note, and generates attractive free cash flow – a key factor for those seeking out the best stocks to buy.
"If you're bullish on oil prices, which we are, then Diamondback is a good bet," they say.
Income-oriented investors will appreciate Diamondback's juicy 5.1% yield. And the shares trade at just 8.5 times the consensus of analysts' expected earnings for the next 12 months. The consensus price target for Diamondback's shares is an average $178, which implies a gain of nearly 14% from the energy stock's recent close.
Delta Air Lines
- Sector: Industrials
- Market value: $25.5 billion
- Dividend yield: 1.0%
Despite turbulence elsewhere in the travel industry, Delta Air Lines (DAL) is on a smooth course, with the seatbelt sign switched off for investors, according to analysts at Morgan Stanley, where Delta is a top pick.
Delta should generate per-share earnings of $7-plus in 2024 and more than $10 per share beyond, "which is still not close to being priced into the stock," they say. Domestic flights are "holding up" while corporate and international travel remain "robust."
Morgan Stanley analysts believe Delta's management has been conservative in its guidance about fuel costs but acknowledge potential volatility there. Still, the analysts see the stock soaring to a 12- to 18-month price target of $77 a share – more than 90% above its current price. This potential upside makes DAL one of the best stocks to buy.
Discover Financial Services
- Sector: Financial services
- Market value: $26.7 billion
- Dividend yield: 2.6%
About 70% of Discover's revenue is interest income from its credit cards – a plus if interest rates remain high. He adds that Discover's credit card business has historically generated better results than most of its peers.
If economic wobbles mean consumers spend less – or worse, fail to make their card payments – that's a worry. But Discover is financially strong; Morningstar gives it an "A" for financial health, good news for investors looking for the best stocks to buy. Analysts expect flat earnings growth through 2024 compared with 2023, but they see a 26% jump in 2025, which bodes well for the financial stock.
- Sector: Healthcare
- Market value: $155.1 billion
- Dividend yield: 6.1%
Jefferies analysts say they're being contrarian with their buy call on Pfizer (PFE). Shares of the pharmaceutical giant fell 38% in 2023 through October, largely due to waning demand for COVID-related products.
But the bulls at Jefferies see several catalysts for better days, including a $3.5 billion cost-cutting program that will make earnings targets more achievable. Jefferies sees earnings of $3.19 a share in 2024 and $3.44 in 2025.
Other potential bright spots include the firm's oral obesity drug, currently in clinical trials. If viable, it has annual sales potential of $4 billion, according to Jefferies. The firm's price target for the healthcare stock is $39, implying a 42% gain.
Thermo Fisher Scientific
- Sector: Healthcare
- Market value: $211.5 billion
- Dividend yield: 0.3%
Scientific research may ramp up this year, and that is promising for Thermo Fisher Scientific (TMO), which makes equipment that researchers need to do their jobs. The turnaround may take time, but Thermo Fisher shares are down on a year-over-year, making one of Wall Street's best stocks to buy attractively priced for investors.
The company's solid execution record is a plus, says R.W. Baird analyst Catherine Ramsey Schulte, who rates the stock Outperform, the equivalent of a Buy. A diverse array of customers, including biopharma firms, hospitals, diagnostic labs, universities and research institutions, among others, helps. Some of those end markets have been improving recently.
- Sector: Basic materials
- Market value: $29.6 billion
- Dividend yield: 0.8%
Vulcan Materials (VMC) is the largest U.S. producer of construction aggregates – think crushed stone, sand and gravel. It's also a major producer of asphalt and concrete. The company faces challenges in its residential housing construction business, but that's offset by momentum in highways and other public infrastructure.
"We remain intrigued by the generational increase in funding" for projects driven by the Infrastructure Investment and Jobs Act of 2021, write analysts at investment firm Raymond James.
Vulcan isn't cheap, trading at 29 times earnings estimates from a consensus of analysts. But they see the materials stock trading at $243 within 18 months, up more than 9% from recent levels.
Note: This item first appeared in Kiplinger's Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.
Anne Kates Smith brings Wall Street to Main Street, with decades of experience covering investments and personal finance for real people trying to navigate fast-changing markets, preserve financial security or plan for the future. She oversees the magazine's investing coverage, authors Kiplinger’s biannual stock-market outlooks and writes the "Your Mind and Your Money" column, a take on behavioral finance and how investors can get out of their own way. Smith began her journalism career as a writer and columnist for USA Today. Prior to joining Kiplinger, she was a senior editor at U.S. News & World Report and a contributing columnist for TheStreet. Smith is a graduate of St. John's College in Annapolis, Md., the third-oldest college in America.
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