No one knows for sure how a stock will perform over the next 12 months. There are simply too many variables that can play a role.
That doesn’t mean analysts and investors can’t have good hunches about what certain stocks will do in the short term. And they can certainly have a reasonable idea about how certain stocks will perform in the long term. With those two premises in mind, I’m going to make a prediction: These three phenomenal stocks are going up.
1. DR. Horton
DR. Horton (NYSE: DHI) stocks are already a big winner in 2024. I think the homebuilder’s stock will continue to rise for three main reasons.
Most importantly, the US still faces a severe housing shortage. Zillow recently estimated that the country has a shortage of 4.5 million homes. As the largest homebuilder in the U.S. by volume for more than two decades, DR Horton is uniquely positioned to benefit as this shortage is addressed.
While the housing shortage should provide a long-term tailwind for DR Horton, the stock could rise in the short term if the Federal Reserve cuts interest rates. Many observers expect the Fed to cut rates by at least 0.25% later this month and possibly continue with further cuts. Lower interest rates typically lead to lower mortgage rates, which should boost home sales.
My third reason to be bullish on DR Horton is its valuation. Shares currently trade below 12 times forward earnings with a five-year price-earnings-growth ratio (PEG) of just 0.62. Simply put, DR Horton is dirt cheap given its strong growth prospects.
2. Nvidia
If you see a glass of water as half full, you will likely focus on the fact that from Nvidia (NASDAQ: NVDA) The stock price has skyrocketed this year. If you see a glass of water as half empty, you might rightly note that the stock price has fallen significantly from its peak. However, I believe that more water will be poured into Nvidia’s glass soon.
I’m referring to the upcoming commercial launch of Nvidia’s graphics processing units (GPUs) based on its Blackwell architecture. This GPU platform supports up to 25 times lower costs and power consumption than the company’s market-leading chips that use its Hopper architecture.
Sure, Nvidia has delayed shipments of its Blackwell chips. But CEO Jensen Huang expects the new GPUs to generate “billions of dollars” by 2024. He also thinks Blackwell could be the “most successful” product in Nvidia’s history, and possibly the entire computing industry.
Maybe Huang is being too optimistic; maybe not. Either way, I suspect that Blackwell’s launch will allow Nvidia to reach new all-time highs in the not-too-distant future. And since the company is currently on a year-long product launch cycle, Blackwell should be just the beginning.
3. Vertex Pharmaceuticals
Vertex Pharmaceuticals (NASDAQ: VRTX) has posted the smallest gains of these three phenomenal stocks so far this year, but it’s still up by double-digit percentage points. I believe the biotech stock will shift into high gear soon.
The commercial launch of Casgevy, the first CRISPR gene-editing therapy to receive regulatory approval, is still in the early stages of scaling up. William Blair analyst Myles Minter predicts Casgevy will achieve peak annual sales of at least $3 billion.
There’s even better news for Vertex. The company expects regulatory approval for suzetrigine for acute pain and the vanzacaftor triple-drug combo for cystic fibrosis in early 2025. Suzetrigine should have enormous market potential as a non-opioid that is safe and effective in relieving pain. I predict that the vanzacaftor triple will be Vertex’s best-selling CF therapy to date.
Vertex’s pipeline includes two other promising drugs in late-stage development. Inaxaplin targets APOL1-mediated kidney disease, which affects more patients worldwide than CF. Povetacicept is in phase 3 testing for the treatment of IgA nephropathy, an inflammatory kidney disease. I think both of these could be blockbuster drugs for Vertex if approved.
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Keith Speights has positions in Vertex Pharmaceuticals. The Motley Fool has positions in and recommends Nvidia, Vertex Pharmaceuticals, and Zillow Group. The Motley Fool has a disclosure policy.
Prediction: These 3 Phenomenal Stocks Are Going to Rise was originally published by The Motley Fool
