One of the pitfalls that can trip up even the best investors is holding on to absolute ideas. That’s not to say you shouldn’t have rules for your buying and selling decisions. But if the rules are too rigid, you can wind up missing out on some gains from the most popular stocks to buy. That’s what many investors found out with Nvidia (NASDAQ:NVDA) in 2023 and then again in early 2024.
But what makes a stock popular? The meme stock movement made it clear that many investors have their own definition of stock popularity. So before reading on, let’s get on the same page.
For the purposes of this article, popular stocks to buy are those whose price is rising and that are trading consistently at or above their average trading volume. That’s the combination that gets analysts and investors bullish on a company. It’s also a rule that you can apply that can allow you to chase a stock higher rather than wait for a dip.
Broadcom (AVGO)
Much of the focus in the chip sector has been on Nvidia and with good reason. But Broadcom (NASDAQ:AVGO) continues to be one of the most popular stocks to buy. The stock has consistently been trading above its average volume of 3.07 million shares.
And the trading has been bullish. AVGO stock is up more than 98% in the last 12 months and 14.3% in 2024 alone. The company provides the software solutions for many industrial applications, including chip manufacturing.
Broadcom posted year-over-year (YOY) revenue and earnings growth in every quarter of its fiscal year 2023. And, in its first quarter of 2024, it’s been more of the same. Analysts are projecting a potential gain of 19% in AVGO stock in the next 12 months.
Also, speculation abounds that Broadcom could be a candidate for a stock split. The company hasn’t split its stock since it was acquired by Avago in 2016.
JPMorgan Chase (JPM)
Contrary to some investors’ beliefs, higher-for-longer interest rates are a double-edged sword for bank stocks. Even a top stock in the sector, JPMorgan Chase (NYSE:JPM) struggled last year under the uncertainty of the pace and direction of inflation. February’s hot CPI and PPI readings had some investors concerned that inflation was reigniting.
However, in his remarks after leaving interest rates unchanged, Federal Reserve chair Jerome Powell talked about the necessity for the central bank to take the long view on inflation. That long view still supports possible rate cuts.
Rate cuts would be bullish for JPM which would see a higher spread on its commercial and consumer loans. Not that the company has been having much problem with what was expected to be a troubled commercial loan sector. The bank’s Commercial Banking segment generated $4.02 billion in revenue in the fourth quarter that was an 18% YOY gain. Investors are bullish on JPM stock which is trading right around its average volume of 9.12 million shares.
Caterpillar (CAT)
Caterpillar (NYSE:CAT) stock is up 62% in the last year with most of that coming in the last six months. That performance is supported by the stock’s current trading volume of 2.56 million shares, which is just above its average volume. Caterpillar continues to benefit as funds from the Inflation Reduction Act start to filter into the economy.
That activity is evident when you look at the performance of industrial sector ETFs such as the Industrial Select Sector SPDR Fund (NYSEARCA:XLI) which has been among the top performers in the last year. Not surprisingly, Caterpillar is the fund’s top holding.
And, with the Federal Reserve still talking about lowering interest rates up to three times in 2024, expect steady demand in 2024. This means that CAT stock will continue to be one of the most popular stocks to buy.
On the date of publication, Chris Markoch 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.
