There’s more to the market than the vaunted Magnificent 7. Investors are doing themselves a disservice if they limit themselves to the mega-cap stocks of the Nasdaq. Companies outside of tech should be able to do well in 2024, especially if the Federal Reserve starts to cut interest rates in the middle of next year to try and guide the economy toward a soft landing.
So how can investors find compelling bargains in other industries that could be future winners? Stock screening tools can be a valuable way to identify companies that trade at attractive prices and are expected to post strong levels of earnings growth.
I used the free online screen from Zacks Investment Research to look for large-cap companies with relatively low price-to-earnings ratios that also have the potential for solid increases in sales, profits and stock prices. I also made sure that the companies that made it through my screening process had strong enough balance sheets to pay dividends and were also top picks of Wall Street analysts.
Two dozen stocks made it through to my final cut. Of those 24, these five look particularly compelling for 2024…especially if consumers continue to keep spending.
LVMH (LVMUY)
LVMH Moët Hennessy Louis Vuitton (OTCMKTS:LVMUY), the French luxury goods retailer, should benefit from healthy demand for high-end leather, jewelry and cosmetics as well as premium alcoholic beverages. The company owns the Tiffany, Fendi, Givenchy, TAG Heuer and Dom Pérignon brands… among many others.
Sales were up 14% in the first three quarters of 2023 and analysts are forecasting that earnings will increase 18% this year. Despite that, LVMH trades like a relative bargain at just 23 times earnings estimates.
TJX (TJX)
TJX (NYSE:TJX), the owner of the Marshalls, TJ Maxx and HomeGoods retail chains, is thriving as consumers continue to scour for discounts.
The stock is trading near a record high and analysts are still bullish. Earnings are expected to rise more than 20% this year. TJX recently boosted its 2024 sales outlook too, with CEO Ernie Herman saying in the company’s third quarter results that TJX’s “treasure-hunt shopping experience continued to resonate with consumers.”
Sherwin-Williams (SHW)
Sherwin-Williams (NYSE:SHW) is painting a pretty picture for shareholders. The company is benefiting from vibrant consumer demand and a steady housing market.
The recent drop in long-term bond yields, thanks to ebbing inflation fears and hopes for Fed rate cuts, could also help boost demand for housing (and building supplies like paint) as mortgage rates dip. Wall Street is forecasting an 18% jump in profits this year.
Delta Air Lines (DAL)
Delta Air Lines (NYSE:DAL) had a phenomenal third quarter as people kept flying for business and leisure.
Domestic revenue was up 6% while international revenue soared 35% from the same period a year ago, led by strong demand for transatlantic trips. Delta expects planes to be packed during the holidays as well. “Robust demand for travel on Delta is continuing into the December quarter,” said Delta president Glen Hauenstein in the third quarter earnings report.
With that in mind, it’s no wonder that analysts are predicting a 90% surge in earnings for 2023 and continued growth of more than 30%, on average, over the next few years.
Domino’s Pizza (DPZ)
Domino’s Pizza (NYSE:DPZ), like many other food stocks, took a bit of a hit earlier this year due to fears that Ozempic, Wegovy, Mounjaro and other popular injectable weight loss drugs would hurt demand. But those worries may be for naught.
Analysts expect steady earnings growth next year and beyond, thanks to booming demand abroad. International sales were up nearly 10% from a year ago in the third quarter. The pizza giant also could gain new customers after it agreed back in July to finally join the growing third-party delivery trend. Domino’s struck a deal with Uber Eats and its Postmates subsidiary that lets customers order food on those popular apps.
As of this writing, Paul R. La Monica 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.
