As March begins, the stock market promises a high playground to turn modest investments into massive wealth. Amidst this enthusiasm, three top stock picks for rally stand out as pillars of opportunity. Behind each ticker lies an iceberg of strategic progression and market leads with the potential for high returns.
Learn what these top stock picks for rally mean and their potential to maximize gains. Read more to delve into these companies’ fundamentals, progress and strategic directions and strategies behind the opportunities they present for financial prosperity.
Despegar (DESP)
Despegar’s (NYSE:DESP) top-line, aggressive bookings and B2C focus support its valuation expansion. For instance, in Q3 2023, Despegar attained a record top-line of top-line million. This represents a considerable boost of 22% year-over-year (YOY). This growth is special as it outpaces industry averages and reflects the edge of the company’s commercial execution and solid demand in core markets (such as Brazil and Mexico).
Additionally, the company substantially increased gross bookings, hitting $1.4 billion in Q3, marking a 25% YOY growth. This surge in gross bookings highlights Despegar’s capability to attract customers and generate sales across its various travel offerings. This also indicates strong market leads and progressive execution of growth strategies.
At the bottom-line, Despegar reported a remarkable 106% YOY increase in adjusted EBITDA, reaching $24.7 million in Q3 2023. This improvement in profitability underscores the company’s focus on operational efficiency and cost management, leading to enhanced earnings power and shareholder returns. The significant growth in adjusted EBITDA reflects Despegar’s ability to leverage its revenue growth and drive operational leverage.
At its core, the B2C channel accounts for approximately 85% of Despegar’s gross bookings, indicating its strategic importance in driving direct consumer sales and revenue generation. In Q3 2023, the B2C channel contributed significantly to the company’s record-breaking gross bookings, reflecting strong consumer demand and effective marketing strategies targeting end-users.
Furthermore, Despegar’s B2B and B2B2C channels collectively contributed 15% of gross bookings in Q3 2023, highlighting the company’s efforts to tap into the offline market and provide technology solutions to business partners. Finally, while currently representing a smaller portion of gross bookings compared to the B2C channel, these segments demonstrate considerable growth potential, especially considering their twofold growth rate compared to B2C.
Conagra (CAG)
Conagra (NYSE:CAG) executes vital strategic investments that may continue to support its value growth. For instance, Conagra Brands’ investments in business segments were vital in driving growth and market share gains during Q2 fiscal 2024. The company strategically invested in its frozen business, resulting in substantial lifts and market share gains. Notably, investments in the frozen business led to outstanding responsiveness, with volume trends improving significantly YOY.
During Q2, Conagra deployed high-quality merchandising nationally. This can be observed in its largest frozen business segment, single-serve meals. The results were very encouraging, with lifts up to 60%, ultimately driving meaningful gains in market share. Conagra’s Q2 share in the single-serve meals business approached 51%, eclipsing last year’s gains and setting a new record. This suggests the edge of Conagra’s strategic investments in driving consumer engagement and market share growth.
Additionally, Conagra Brands delivered a solid performance in its international and food service segments. The international segment attained organic net sales growth of 5.6% during Q2, based on solid performance in key markets such as Mexico. On an organic net sales basis, price/mix increased by 2.3%, and volume increased by 3.3%, primarily based on a solid performance in the company’s Mexico business.
Organic net sales in the food service segment increased by 4.3% to $295 million during the quarter. Price/mix increased by 6.8%, primarily due to inflation-driven pricing actions taken in the prior year. While volume decreased by 2.5%, adjusted operating profit increased by 24.3% to $35 million, driven by higher organic net sales, productivity and lower cost of goods sold inflation.
Overall, these trends suggest Conagra’s leadership in executing its international growth strategy and capitalizing on demand in emerging markets.
Organon (OGN)
Organon’s (NYSE:OGN) consolidated performance growth and stability point out its high valuation potential very precisely. For instance, 2023 revenue stood at $6.3 billion, marking a 1% increase as reported and a 3% increase at constant currency. Interestingly, the women’s health franchise grew by 3%. Similarly, the biosimilar franchise delivered solid growth of 24%.
Fundamentally, the diversified revenue growth across various franchises signifies the stability and resilience of Organon’s revenue streams. Despite challenges like loss of exclusivity (LOE) for certain products, revenue growth was achieved through volume expansion and strategic initiatives. Revenue stability was maintained through constant performance across geographies, with China’s business demonstrating notable endurance despite economic slowdowns.
At the bottom line, adjusted EBITDA for 2023 was $1.9 billion, with an impressive adjusted EBITDA margin of 31.0%. As a result, adjusted diluted EPS for the same period was $4.14. The company targets maintaining or improving adjusted EBITDA margins, with a guided range of 31.0% to 33.0% for 2024. Thus, Organon’s solid adjusted EBITDA margin indicates efficient cost management and operational effectiveness, contributing to overall profitability.
Despite revenue growth, the company has demonstrated control over expenses, leading to margin expansion and enhanced financial performance. Similarly, the guided range for adjusted EBITDA margin in 2024 reflects Organon’s focus on sustaining the bottom line while accommodating potential growth initiatives and market shifts.
Looking forward, Organon aims to generate $1 billion of free cash flow before one-time charges in 2024. Finally, the net leverage ratio improved to 4.1 times the net leverage in 2023. Organon’s robust cash flow generation suggests its strength and stability, providing financial flexibility for strategic initiatives. Overall, improvement in the net leverage ratio indicates progress towards attaining targets and boosting the balance sheet’s solidity.
As of this writing, Yiannis Zourmpanos held a long position in CAG. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
