If you’re looking for stocks to buy that are up 200% or more in 2023, the S&P 500 won’t cut it. Only one name is up that much. I’m talking about the AI king. That would be Nvidia (NASDAQ:NVDA). Its shares have gained 232% year to date (YTD).
But, broaden the search to include all U.S.-listed stocks, and the number increases to approximately 92. If you only have companies with a market capitalization of $2 billion or more, the number of stocks up 200% drops to 24.
Some of these top-performing stocks in 2023 will continue their performance into 2024. However, the probability of more than a handful doing so is low.
It’s always hard to pick the top-performing stocks in one year that will do it again in the next. It’s why the Dogs of the Dow strategy is so successful. The worst-performing Dow stocks in one year will tend to outperform in the next. It’s a form of reverting to the mean and has provided investors with an excellent investment strategy over the years.
However, these three top-performing stocks likely won’t deliver anywhere near the returns in 2024 that they did in 2023. Yet, they’ll probably do just fine in 2024.
Abercrombie & Fitch (ANF)
Abercrombie & Fitch (NYSE:ANF) is up 254% in 2023 and 343% over the past five years, considerably higher than the S&P 500.
According to Finviz.com, out of the 35 apparel retailers in its database, ANF has the third-highest gross margin at 56.72%,. That’s 18 basis points behind Lululemon (NASDAQ:LULU), and 942 basis points behind JJill (NYSE:JILL).
I find that last one hard to believe. However, J Jill’s Q3 2023 gross margin was 71.8%, 190 basis points higher than a year ago. Its gross margin through the first nine months of fiscal 2023 was 71.8%, also 190 basis points higher.
Now, consider Abercrombie generated a 64.9% gross margin in Q3 2023 on more than $1.06 billion in sales. That is about 6-7x of J Jill’s. As the numbers move higher, it gets harder to keep margins high.
Therefore, Abercrombie’s doing an excellent job on this front.
Dream Finders Homes (DFH)
Dream Finders Homes (NYSE:DFH) is a national homebuilder that I came across due to my interest in Warren Buffett.
A few years ago, I read about a small investment company, Boston Omaha (NYSE:BOC). It was extremely interested in Dream Finders. In 2017, BOC invested $10 million in the homebuilder. It included Texas, Florida, and Georgia, and sold all 4.8 million Class A shares by Dec. 31, 2022, for gross proceeds of $81 million.
If it hung on through 2023, its DFH holdings would be worth $149 million, 84% higher. Of course, hindsight is 20/20. It couldn’t have known that DFH stock would go on a 223% run in 2023.
“Home closings of 1,798 and net new orders of 1,535 increased 17% and 38%, respectively, compared to the year-ago quarter,” Dream Finders Homes CEO Patrick Zalupski said regarding Q3 2023.
As interest rates fall, Dream Finders will get even busier in 2024 and beyond.
DraftKings (DKNG)
It’s been a busy year for the sports betting and iGaming company.
DraftKings (NASDAQ:DKNG) started the year with 2.6 million average monthly unique payers (MUPs). Additionally, they averaged revenue per MUP of $109. And, they had mobile sports betting in 20 states representing 42% of the U.S. population. In fact, iGaming in five states represented 11% of the U.S. population. Impressively, mobile sports betting and iGaming in the province of Ontario accounted for 40% of Canada’s population.
Fast forward to Sept. 30.
It had 2.3 million MUPs (up 40% from Q3 2022). The average revenue per MUP is $114 (up 14% from last year). Also, mobile sport betting in 22 states represents 45% of the U.S. population. Additionally, Maine, Puerto Rico, and North Carolina are ready to launch mobile sports betting. Vermont is likely at some point in 2024 or 2025.
The company expects 2023 revenue of $3.70 billion at the midpoint of its guidance. That is 65% higher than it was in 2022. In 2024, its projected revenue is $4.65 billion, 26% higher than in 2023.
No wonder DKNG stock is up 229% YTD.
On the date of publication, Will Ashworth did not have (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.
