When it comes to the best S&P 500 stocks, the largest components of this market-cap weighed stock index may come to mind. For example, “Magnificent Seven” tech stocks, like Apple (NASDAQ:AAPL), Alphabet (NASDAQ:GOOG), and Tesla (NASDAQ:TSLA).
Or, mega cap blue-chip stocks, like Berkshire Hathaway (NYSE:BRK.A,NYSE:BRK.B), ExxonMobil (NYSE:XOM), and Johnson & Johnson (NYSE:JNJ).
Yet while there may be merit in including these names, or other names making up the largest S&P 500 stocks, some of the top components to buy right now may be some of the relatively smaller names that are part of this leading market benchmark.
Scroll down the list of S&P 500 stocks by weight, and towards the end of the list, you’ll stumble upon many great opportunities. This is the case, whether you are a growth investor, a value investor, an investor focused on dividends, or anything in between.
Among these names, however, seven stand out as S&P 500 stocks that could deliver a powerful performance in 2024. This could make buying them now a move worth making.
Hasbro (HAS)
Hasbro (NASDAQ:HAS), is one of the world’s leading toy and game companies. HAS shares have underperformed in recent years, but now may be an opportune time to enter a position in this S&P 500 component.
Why? Yes, Hasbro’s latest quarterly results/updates to guidance disappointed investors. Per one analyst (Citi’s James Hardiman), there’s great uncertainty over how the company will perform this holiday season. Even so, other factors point to better times ahead for HAS stock investors.
As InvestorPlace’s Jeremy Flint discussed last month, the company’s sale of its non-core entertainment business provides Hasbro with $500 million in proceeds. They slated much of this cash to be used to de-lever its balance sheet.
Further turnaround efforts, including a shift in focus toward its tabletop/digital games business, could enable the company to make progress in its goal to increase operating profit by 50% by 2025.
L3Harris Technologies (LHX)
What makes L3Harris Technologies (NYSE:LHX) one of the best S&P 500 stocks? Chalk it up to the attributes I discussed in November, when I called this defense contractor one of the best large-cap stocks to buy and hold for the long haul.
LHX stock is well-positioned to deliver strong long-term total returns to investors. Just a few years away from reaching “dividend aristocrat” status, LHX currently has a forward dividend yield of 2.43%, and a track record of double-digit annual dividend growth.
Additionally, L3Harris, with a forward earnings multiple of 16, is trading at a lower price compared to its peers. This discount may have to do with the high level of debt the company took on when it acquired Aerojet Rocketdyne.
However, divesting non-core businesses to pay down this debt, and likely to continue making synergistic “bolt on” acquisitions, this valuation gap could narrow over time.
Match Group (MTCH)
As the parent company of Match.com, OkCupid, Tinder, Hinge, and PlentyofFish, Match Group (NASDAQ:MTCH) dominates the online dating market. However, with revenue growth plateauing, and profitability declining, the market has “swiped left” on shares in droves.
Yet after tumbling by over 81% since October 2021, “swiping right” on MTCH stock (a component of the S&P 500 index) could prove to be a profitable move. Following its massive decline, Match Group now sports a value stock forward multiple of 11.7 times earnings.
This comes despite the prospect of improved results in the coming year, thanks to a variety of factors detailed in the company’s latest shareholder letter. With expectations set low, you may want to get to know MTCH stock before making a hard yes/no decision. Otherwise, if Match’s operating performance ends up improving, this stock could become the “one that got away.”
Realty Income (O)
If you are bullish that interest rates are coming down sooner rather than later, Realty Income (NYSE:O) is one of the best S&P 500 stocks to buy. Like other real estate investment trusts (or REITs), spiking interest rates have pushed the stock considerably lower since 2022.
But following this sell-off, O stock (which literally holds the trademark on the phrase “The Monthly Dividend Company”) now sports a juicy 5.53% forward annual dividend yield. Funds from operations (the REIT equivalent to earnings) may be only rise by a modest clip next year.
However, as I previously discussed, Realty Income has a REIT merger in the works that’s expected to be accretive to earnings. If interest rates start to come down in 2024, there’s a strong chance O stock will receive a generous re-rating to the upside by the market.
Paramount Global (PARA)
Paramount Global (NASDAQ:PARA), like other media conglomerate stocks, has fallen severely out of favor with the market.
The unfortunate combination of cord cutting, a weak advertising market, and heavy growth spending with its budding streaming business have all resulted in declining earnings for the company, formerly known as ViacomCBS.
Even so, PARA stock may be on the verge of turning a corner. Analysts still expected Paramount Global to report a big rebound in profitability during both 2024 and 2025. Recent talk of Apple bundling its streaming service with this company’s namesake streaming platform could mean an increased chance that better results arrive in the coming years.
While very far from certain, a bundling partnership with Apple could also serve as the prelude to an acquisition by the tech giant. In short, much points to this S&P 500 component performing far better going forward than in the recent past.
Sysco (SYY)
Sysco (NYSE:SYY) is one of the best S&P 500 stocks that fits within the “boring is beautiful” category.
Sysco has long been successful at producing steady results and dividend growth, through its leading position in the admittedly prosaic food distribution industry.
Back in October, I called SYY stock one of the dividend aristocrats built to last. Shares were in a slump, but more recently, investors have become more appreciative of the company’s future prospects, such as the synergies that may result from its acquisition of food service equipment/supplies distributor Edward Don.
Yet while Sysco shares have zoomed from the mid-$60s to the low-$70s, don’t assume the ship has sailed. Still sporting a reasonable forward valuation (17 times earnings), as well as a solid 2.73% forward dividend yield, buying SYY still offers the potential for strong long-term total returns.
Western Digital (WDC)
Compared to the previously mentioned S&P 500 stocks, Western Digital (NASDAQ:WDC) has performed extremely well in 2023. Year-to-date, shares in this maker of hard disk and solid state drives have zoomed 48.9% higher.
But even after this stunning performance, WDC stock could keep climbing for two reasons.
First, as a Seeking Alpha commentator argued a few months back, the company stands to benefit from growing AI-related demand for hard disk drives.
Second, the company is moving forward with plans to spin off its struggling flash memory business. This divestiture could unlock underlying value, fueling further gains.
Analysts have become more bullish on WDC in recent months, with the high end of price targets coming in at $68 per share. That’s around 46.8% above current price levels, suggesting shares could deliver a similar level of performance next year as they have this year.
On the date of publication, Thomas Niel did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Consumer Discretionary, Consumer Staples, Industrial, Defense, Food, Communications, Media, Real Estate, Retail, Social Media, Streaming, Technology
