Investors looking to supercharge their portfolios would do well to widen the search aperture. Our hunt for the seven best stocks poised for magnificent earnings growth next year brings up names such as Vericel and Semtech — stocks far less hyped than Nvidia, Tesla, Apple or the other megacap leaders that have dominated the stock market.
These Seven Are Best Stocks For Magnificent Earnings Growth
Micron Technology: The provider of memory and storage solutions serves diverse markets: personal computers, mobile, automotive, industrial and data centers, among them. Further, the chipmaker stands to benefit from the growth of artificial intelligence (AI)-powered PCs and phones. Analysts expect Micron earnings to rebound strongly in fiscal 2024, ending in August, from a collapse in 2023. On a per-share basis, analysts anticipate a 686% earnings surge next year on 53% sales growth. Micron stock earns a Composite Rating of 89 and RS Rating of 92, both out of a best-possible 99. The AI stock has rocketed 37.6% year to date. But Micron stock has plunged below the 50-day moving average in the market rotation out of tech high-flyers into small caps and other potential rate-cut beneficiaries.
Seagate Technology: The company makes solid state drives and enterprise data storage systems. Seagate says it is seeing its markets recover while cloud demand improves. In the current quarter, it expects a return to revenue growth after a two-year slump. Similar to Micron, analysts forecast Seagate earnings will rebound in fiscal 2024, ending in June, from a collapse in 2023. They project a 484% earnings per share jump next year on 37% revenue growth. Seagate stock boasts a Composite Rating of 90 and RS Rating of 92. This technology stock has jumped 21.2% year to date.
Artivion: The company makes medical devices and implantable human tissues used in cardiac and vascular surgical procedures. According to FactSet, analysts predict Artivion will swing to earnings of one cent in fiscal 2024, ending in December, from net losses per share in each of the prior four years. They project Artivion EPS will leap 400% to five cents the next year on 10% revenue growth. Artivion stock holds a Composite Rating of 95 and RS Rating of 96. The medical device maker has bounded 51.3% higher year to date.
Biopharmaceutical Companies Among Best Stocks
Vericel: A new entry to the best stocks list, this biopharmaceutical company makes products for sports medicine and severe burns. Vericel has an uneven profit track record. However, it is growing the top line by double digits and shows two quarters of slightly accelerating sales growth. It should deliver EPS of 10 cents in fiscal 2024, ending in December, after three years of earnings declines. Analysts project Vericel earnings will surge 381% a share next year as sales jump 25%. Vericel stock earns a Composite Rating of 93 and RS Rating of 87. It is up 43.9% year to date. Trading volume is on the lighter side.
Sarepta Therapeutics: Sarepta makes treatments for rare disorders. Analysts forecast Sarepta earnings per share will swing to $4.16 in fiscal 2024, ending in December, from a sharp loss last year. They expect earnings to jump 198% next year to $12.42 a share as sales surge 62%. Sarepta Therapeutics stock shows a Composite Rating of 97 and RS Rating of 87. The biopharmaceutical play, an IBD 50 top growth stock, is up 49.1% year to date.
Semtech Joins Uber On Best Stocks List
Uber Technologies: The Uber app pioneered a way to provide ride-hailing and ride-sharing services using smartphones. It, too, has seen its markets recover as pandemic challenges have lifted. Meanwhile, Uber called 2023 an "inflection year," one in which it delivered an annual profit, as both delivery and mobility bookings jumped double digits. Analysts forecast Uber earnings per share will dip by a penny in fiscal 2024, ending in December, and soar 142% in 2025. Uber stock shows a Composite Rating of 71 and RS Rating of 81. It is up 7.9% year to date.
Semtech: Another new entry to the best stocks list, Semtech supplies high-performance semiconductors and other products for the infrastructure, industrial and consumer markets. Semtech earnings are expected to rebound in fiscal 2025, ending in December, from a collapse last year. "Our semiconductor business continues to grow, and we believe our hardware business has reached bedrock, with expectations for a recovery profile in the second half of the year," management said on June 5. Analysts expect Semtech earnings to leap 144% next year as sales surge 21%. Semtech stock holds a Composite Rating of 70 and RS Rating of 89. It has soared 48.2% year to date. Like Micron Technology stock, Semtech and Uber have undercut the 50-day line in the latest market rotation.
Universe of S&P 500, S&P 400 and S&P 600 Stocks
A little background on IBD's process to select the best stocks for magnificent earnings growth:
We began our screening process with the S&P Composite 1500 index, which aggregates the S&P 500, S&P MidCap 400 and S&P SmallCap 600 companies. We chose this index, in part, because it avoids less-liquid, lower-priced and lower-quality names, while efficiently measuring the total U.S. stock market.
Then we limited the stocks on our best stock list to those showing FactSet consensus ratings of overweight or buy, which means analysts expect them to outperform industry peers. Next we further winnowed down the list, setting up a double hurdle: The stocks had to enjoy some of the strongest FactSet earnings growth estimates for the following fiscal year, while also earning high IBD ratings, in terms of their Composite Rating and RS Rating.
The resulting seven best stocks for outsize earnings growth are a quite different set from the Magnificent Seven stocks. At the same time, these stocks are worth watching as much as any of the Mag Seven stocks given their outperformance potential.
To find other ideas for the best stocks to buy or watch, check out IBD Stock Lists and other IBD content.
