Yahoo Finance recently named Novo Nordisk (NYSE:NVO) its 2023 Company of the Year. Thanks to its duo of weight-loss drugs, Ozempic and Wegovy, it is now the most valuable company in Europe by market capitalization. Given the demand for these drugs, it could repeat as one of the top stocks for 2024.
As Yahoo Finance points out, NVO stock is up nearly 42% year-to-date, about two times the return of the S&P 500, and 43 times the Health Care Select Sector SPDR Fund (NYSEARCA:XLV), down 1% YTD.
It’s always tough to select names to be the top stocks in the year ahead. That’s because random acts of luck and good fortune often help a stock hit the big time. Novo Nordisk is a perfect example.
Who could have predicted that weight-loss drugs would become all the rage in 2023? With 750 million obese people worldwide, the problem has been around for many years, but for some reason, it has become a healthcare focus for investors.
The top stocks for 2024 are hiding right under our noses, just as Novo Nordisk was entering 2023.
Here are my three obvious stock picks for 2024.
Vanguard Long-Term Bond ETF (BLV)
Goldman Sachs has dubbed 2024 the “Year of the Bond.” The investment bank believes the year ahead will finally be the time for fixed income to shine.
“What we’re seeing right now in the market is not just a slowing of the economy, but inflation that is actually coming down and that sets up a fantastic total return for the bond market,” Goldman Sachs Chief Investment Officer Ashish Shah told CNBC in mid-December.
The argument for bonds centers around that in 2024, you’ll be able to deliver both capital appreciation and income from your bonds despite interest rates falling as the Federal Reserve looks to thread the needle regarding maintaining economic growth next year.
The Vanguard Long-Term Bond ETF (NYSEARCA:BLV) tracks the performance of the Bloomberg U.S. Long Government/Credit Float Adjusted Index, a collection of long-term, investment-grade bonds from the United States.
The fund holds 3,030 bonds in its portfolio with an average yield to maturity of 5.2% and an average effective maturity of 22.6 years. So, while short-term bonds will lose their value as rates come down, the long-term nature of BLV’s holdings will deliver yield and capital appreciation.
I realize BLV isn’t a company, but the premise behind selecting companies of the year is to provide readers with actionable investment ideas that capture the market’s imagination in 2024. I believe BLV will be one of those.
Brookfield Corp. (BN)
Brookfield Corp. (NYSE:BN) is one of the world’s largest owners of alternative assets such as real estate, private equity, infrastructure, private credit, etc. It’s had a decent year in the markets, up nearly 22%, 145 basis points less than the S&P 500. Over the past five years, it’s underperformed the index by 264 basis points, up nearly 93%.
I could see alternative asset managers beginning another long run higher, like the last one that started in the March 2020 correction and ended in December 2021.
In late November, Brookfield’s senior unsecured debt rating was upgraded by DBRS from A (low) to A.
“We are pleased with the credit rating upgrade, which reflects the strength of our franchise through cycles—including the growing scale and diversity of our business, the quality of our cashflows and our fortress balance sheet,” stated Brookfield President Nick Goodman.
“The upgrade is further recognition of our longstanding commitment to conservative financing principles and our differentiated perpetual capital base of $140 billion.”
In the last 12 months ended Sept. 30, Brookfield’s distributable earnings were $5.0 billion. On a per-share basis, they increased 1.0%. That doesn’t sound great. However, what’s most important is the ability to recycle its capital at a profit.
Over the last 12 months, it has sold $35 billion in assets. Most were sold at prices higher than its International Financial Reporting Standards (IFRS). That tells investors two things: First, it’s getting top dollar for its assets, and second, it’s valuing those assets on its balance sheet correctly.
Brookfield is an excellent long-term buy.
Pinterest (PINS)
I see 2024 being the year that Pinterest (NYSE:PINS) dominates social media. This will occur as the digital advertising market begins to recover from its slump over the past 12-18 months.
RBC Capital Markets upgraded PINS stock to Outperform from Sector Perform on Dec. 11, also upping its target price to $46 from $32, 23% higher than where it’s currently trading.
“‘With investors thirsty for non-megacap ideas for ’24, PINS stands out as a way to play the shift of intent-based ad platforms chasing impulse shopping’s $241B ad spend,’ RBC wrote. And though monthly active user growth and the pace of advertiser spending tend to ebb and flow, analysts ‘want to own the potentially seismic long-term platform changes management is making,’” Barron’s reported RBC Capital Markets’ analyst commentary.
Pinterest is rated “Overweight” or “Buy” by 67% of the 36 analysts covering its stock. That’s up from 56% in September.
One of the big reasons analysts have become more interested in Pinterest is the platform’s ad partnership with Amazon (NASDAQ:AMZN), which will see ads sold through Amazon appearing on Pinterest. This should bring a greater variety of ads on Pinterest while generating shopping directly on its platform.
In 2024, PINS could return to the $80s, where it traded in April 2021.
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.
