Investors looking to beef up their portfolios would do well to widen the search. Our hunt for the seven best stocks poised for stellar earnings growth next year brings up names like Artificial (AORT) and Coherent (COHR) — Stocks Much Less Hyped Than Nvidia (NVDA) or Apple (APPL) or the other mega-cap leaders that continue to dominate the stock market.
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What are the seven great stocks?
These Seven Are the Best Stocks for Great Earnings Growth
Micron technology (MU): The memory and storage solutions provider serves a variety of markets: personal computers, mobile, automotive, industrial and data centers, to name a few. The chipmaker also stands to benefit from the growth of artificial intelligence (AI)-enabled PCs and phones. Analysts expect Micron’s earnings to rebound strongly in fiscal 2024, which ends in August, from a 2023 decline. On a per-share basis, analysts expect earnings to rise 694% next year on 53% revenue growth. Micron stock earns a Composite Rating of 96 and an RS Rating of 96, both out of a best-case 99. AI stock hit an all-time high of 157.54 on June 18. It’s up 55% so far this year. Micron stock fell on June 27 after missing guidance after an easy quarterly win. It has since found support at its 50-day moving average.
Seagate Technology (STX): The company makes solid-state drives and enterprise data storage systems. Seagate says it sees its markets recovering as cloud demand grows. It expects revenue growth to return in the current quarter after a two-year slump. Analysts, like Micron, predict that Seagate’s profits will rebound in fiscal 2024, which ends in June, from a slump in 2023. They predict EPS growth of 487% next year on revenue growth of 37%. Seagate shares have a Composite Rating of 92 and an RS Rating of 93. The tech stock hit a more than two-year high on June 18. It has gained 20% so far this year.
Artificial (AORT): The company makes medical devices and implantable human tissues used in heart and vascular surgery. According to FactSet, analysts predict Artivion will post a profit of 1 cent in fiscal 2024, which ends in December, after reporting net losses per share in each of the previous four years. They predict Artivion EPS will rise 400% to 5 cents next year on 10% revenue growth. Artivion shares have a Composite Rating of 93 and an RS Rating of 94. The top medical device stock hit a more than two-year intraday high on July 2. It has risen 43% so far this year.
Uber joins the list of best stocks
Uber Technologies (UBER): The Uber app pioneered ride-hailing and ride-sharing services via smartphones. The market has also recovered as the challenges of the pandemic have eased. Meanwhile, Uber called 2023 an “inflection year,” a year in which it posted an annual profit as both delivery and mobility bookings rose by double digits. Analysts predict that Uber’s earnings per share will fall by a penny in fiscal 2024, which ends in December, and rise 145% in 2025. Uber stock has a Composite Rating of 82 and an RS Rating of 90. It has risen 15% so far this year.
Industrial chip heavyweights make the cut
Coherent (COHR): The Pennsylvania-based company makes sensors, components and materials used in things like industrial lasers, electric vehicles and artificial reality (AR) headsets. Analysts predict that Coherent’s earnings per share will decline for the third straight year in fiscal 2024, ending in June. They expect a return to growth in fiscal 2025, with EPS up 85% and a further 41% jump the following year. Coherent shares have a Composite Rating of 77 and an RS Rating of 97. It hit a more than two-year high on June 18 and has risen 67% so far this year.
GE Vernova (GEV): GE Vernova spun off as an independent company on April 2, housing the gas and wind assets of the old General Electric. The once-embattled energy business is also seeing end markets recover and has led growth across all of its business segments, making it a top-tier stock. Analysts expect GE Vernova to report earnings of $3.58 per share in fiscal 2024, which ends in December, according to FactSet. They expect GE Vernova’s earnings per share to rise 60% next year. GE Vernova stock is booming, with a Composite Rating of 83 and an RS Rating of 88. It has risen 49% since its April debut.
AMD (AMD): The chipmaker and Nvidia rival is poised to capitalize on demand for AI-powered PCs and mobile devices. Analysts predict AMD’s earnings per share will rise 32% in fiscal 2024, ending in December, after a 24% decline in 2023. They expect earnings per share to rise 58% next year on 28% revenue growth. AMD stock is booming, with a Composite Rating of 86 and an RS Rating of 82. It has risen 11% so far this year.
Universe of S&P 500, S&P 400 and S&P 600 stocks
A little background on IBD’s process for selecting the best stocks for great earnings growth:
We began our screening process with the S&P Composite 1500 index, which combines the S&P 500, S&P MidCap 400 and S&P SmallCap 600 companies. We chose this index in part because it avoids less liquid, cheaper and lower quality names while efficiently measuring the total U.S. equity market.
Next, we narrowed down the stocks on our best stocks list to those with FactSet consensus ratings of overweight or buy, meaning analysts expect them to outperform industry peers. We then narrowed the list further, presenting a double hurdle: The stocks had to benefit from some of the strongest FactSet earnings growth estimates for the next fiscal year, while also earning high IBD ratings, in terms of their Composite Rating and RS Rating.
The resulting seven best stocks for outsized earnings growth are a very different set than the Magnificent Seven stocks. At the same time, these stocks are worth watching, as are all of the Mag Seven stocks, given their outperformance potential.
For other ideas on the best stocks to buy or watch, check out IBD’s stock lists and other IBD content.
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