It's been a good year for some investors. A lot of stocks have more than doubled so far. History dictates that the baton of market leadership is always changing hands, but some of this year's top gainers have percolating catalysts to keep the upticks coming in the year ahead.
Roku (ROKU -10.29%), Nu Holdings (NU 1.66%), and Dream Finders Homes (DFH 2.69%) have more than doubled this year. Let's go over some of the reasons why they can double again in 2024.
Roku
You probably didn't know that Roku has more than doubled this year. Shares of the leading platform for streaming video services on TV have soared 105% in 2023, fueled by a return to accelerating top-line growth and a bullish reversal of some previously negative trends. Last week's blowout financial update helped catapult the stock to a triple-digit year-to-date return.
There are now 75.8 million active accounts leaning on Roku as their gateway to TV streaming, and they're glued to the set when the Roku remote is in their hands. The average account is streaming nearly four hours a day on North America's most popular operating system. Revenue surged a better-than-expected 20% in last week's Q3 report, Roku's third straight quarter of accelerating revenue gains.
Image source: Getty Images.
Roku is turning the corner on many fronts. After a year of seeing average revenue per user decline sequentially due to softness in the connected TV advertising market, that key metric turned higher. It also posted positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), snapping a streak of negative returns in its five previous updates.
Despite more than doubling this year, the stock is still well below its peak from the summer of 2021. Roku's audience has continued to grow, and usage gains are outpacing the active accounts. A slowdown in the ad market has kept financials in check, but if the recovery picks up the pace in 2024, there is no reason for the stock gains to stop coming, with strong revenue growth amplifying recent cost controls to boost the bottom line.
Nu Holdings
You'll have to pack a passport to find a 2023 winner among fintech stocks. Nu Holdings runs Nubank, a fast-growing digital financial services provider that has exploded in popularity in Brazil over the past decade. A whopping 49% of adults in the country have a Nubank account, and when it reports third-quarter results next week, it should announce that more than half of Brazilian adults are Nubank customers.
Revenue has been spectacular, up 60% on a foreign exchange neutral basis in its previous quarter. It's not just a Brazil play. It rolled out a couple of years ago in Mexico and Colombia, and it's growing even faster in those new markets on a percentage basis than on its established turf. Its customer accounts have risen 28% to 83.7 million over the past year. Despite investing in growth, Nu has managed to turn a profit for four consecutive quarters. The stock is trading at 24 times next year's profit target, a deep discount to its stellar growth.
Dream Finders Homes
The biggest gainer on this list is also the one trading for the lowest earnings multiple. Dream Finders Homes is a real estate developer trading for less than 9 times trailing earnings. To be fair, most homebuilders are trading at single-digit profit multiples. Business has been booming as the "golden handcuff" effect is keeping existing homeowners from selling their properties and giving up their mortgage rates that are much lower than today's rates hovering near 8%. If you want or need to buy a home, new construction is the way to overcome the thin volume of real estate listings.
As brutal as the overall state of the real estate market is, Dream Finders Homes found a way to grow its revenue and pre-tax profits 14% and 27%, respectively, in last week's third-quarter report. The year ahead may prove sobering, especially with housing affordability at its least attractive point in 39 years. However, an asset-light model and a backlog of 5,025 sold homes yet to be delivered (and valued at $2.4 billion) provides a near-term runway for continuing outperformance.
