From monetary policy tightening in 2022 and 2023, the world is moving towards expansionary monetary policies next year. The Bank of America (NYSE:BAC) expects that central banks globally will cut rates 152 times in 2024. Besides excess liquidity potentially supporting asset markets, the likely rate cuts will boost global growth. I would therefore remain optimistic about equities and I expect the coming year to be good for growth stocks. Of course, it’s important to consider at least 40% portfolio exposure to blue-chip dividend stocks.
If we go back to 2021, the year was one of the best in recent times for growth stock investing. However, sentiments turned significantly negative in 2022 and growth stocks plunged. This year has been characterized by movement in quality growth stocks and not a broad-based rally.
Something similar is likely in 2024 with specific stocks likely to surge higher. The markets will look for value and this column discusses three stocks that look attractive.
Let’s discuss the reasons to be bullish on these best growth stocks to buy for 2024.
Arm Holdings (ARM)
Arm Holdings (NASDAQ:ARM) stock was listed in September. The stock trend has been positive after listing and I expect the bullish momentum to be sustained next year. ARM stock is still under the radar and business developments point to the potential for long-term value creation.
As an overview, Arm Holdings develops and licenses high-performance, low-cost, and energy-efficient CPU products. With industry and geographic diversification, the Company has a big addressable market that’s likely to ensure robust revenue growth. It’s worth noting that Arm has a presence in the mobile, automobile, IoT, consumer electronics, and cloud markets. Further, AI-enabled solutions provide an edge.
For Q2 2024, Arm Holdings reported revenue growth of 28% on a year-on-year basis to $806 million. While royalty revenue was down by 5%, the Company’s license revenue surged by 106% to $388 million. As revenue swells, Arm Holdings will be positioned to deliver robust free cash flows. Currently, the annualized FCF is likely to be in the range of $700 to $800 million.
DraftKings (DKNG)
Towards the end of 2022, it seemed like no one wanted to hold DraftKings (NASDAQ:DKNG) stock. The story is different as the markets inch closer to the end of 2023. DKNG stock has already delivered multibagger returns in the last 12 months. Further, since the rally was from deeply oversold levels, the positive momentum is likely to be sustained for this high-growth stock.
For Q3 2023, DraftKings reported revenue growth of 57% on a year-on-year basis to $790 million. For the full year, the Company has guided for revenue of $3.7 billion. Besides a robust guidance for the year, DraftKings expects revenue growth of 26% on a year-on-year basis to $4.65 billion.
However, revenue growth was never a problem for DraftKings. The iGaming and sports betting market is significant in size as more states pursue legalization. Cash burn was the factor that depressed the stock in 2022. The good news on that front is that DraftKings expects a positive adjusted EBITDA of $400 million for 2024. As the EBITDA margin improves, DKNG is positioned to rally further.
Miniso Group (MNSO)
After a big rally to highs of almost $30 per share, Miniso (NYSE:MNSO) stock has declined to current levels of $19. I see this sharp correction as a good accumulation opportunity with the stock trading at an attractive forward price-earnings ratio of 21. Further, Miniso initiated dividends this year and the current yield of 2.15% is attractive.
For Q1 2024, Miniso reported healthy revenue growth of 36.7% on a year-on-year basis to $519.6 million. EBITDA margin for the quarter was healthy at 26.8%. Therefore, headline growth numbers have been attractive and I believe that strong growth will be sustained.
It’s worth noting that Miniso reported store growth of 819 on a year-on-year basis and 324 on a quarter-on-quarter basis. The Company has been aggressively expanding in China and overseas. This is the reason to be bullish on robust revenue growth coupled with higher same-store sales growth.
I must add here that attractive pricing is a differentiating factor for Miniso. Additionally, the Company has a dynamic portfolio of lifestyle products. These points add to the bullish thesis for MNSO stock.
On the date of publication, Faisal Humayun 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.
