It's that time of year again. Seasoned investors evaluate how their stocks are doing, and new investors consider finally diving in.
It's not so simple this year. (Is it ever?) The S&P 500 is rallying, up 20% as we get close to 2024, and the end of the bear market is in sight. On the one hand, you want to catch great stocks on their way up. On the other hand, you want to stay away from stocks that could already be overvalued as prices rise.
With that in mind, I'm going to recommend 10 amazing stocks. These have each outperformed the S&P 500 this year and have the potential to keep it up in 2024. If you're looking for long-term opportunities, these are all incredible candidates. If you're starting from scratch, you can buy all 10 of these stocks and have a ready-made diversified portfolio.
1. Airbnb: Up 57% this year
Short-term lodging site Airbnb (ABNB 0.75%) is an industry disruptor that has gone far beyond high growth and a better system to become a sophisticated, profitable, cash-flow-positive travel giant. It continues to deliver double-digit revenue growth, with an 18% year-over-year increase in the 2023 third quarter, and it shows no signs of stopping, although it might be slowing down.
However, at this point, it has carved out a large space in its industry and has the cash and dominant position to release pinpointed improvements and bolster its upper hand. It meets demand as it changes, and its agile, asset-light business can grow profitably for years.
2. Amazon: Up 75% this year
Amazon has once again impressed investors with a well-received rebound and a 13% year-over-year increase in revenue in the 2023 third quarter. E-commerce is bouncing back after taking a back seat to physical-store shopping for a few years. But Amazon is also stepping up its cloud computing segment Amazon Web Services (AWS) with robust generative artificial intelligence (AI) that should help pad its lead and keep it in its dominant position.
On top of these growth drivers, advertising has been its highest growth segment recently. And AI capabilities, as well as exposure to Amazon's hundreds of millions of Prime members and customers, keep advertisers interested and spending.
Amazon has several other important businesses, like streaming, and it's investing in healthcare services, which could turn into another massive growth driver.
3. Costco: Up 31% this year
Costco Wholesale (COST 1.01%) operates a differentiated warehouse retail model with membership fees that generate a recurring revenue stream and loyalty and feed a growing bottom line. Although sales growth decelerated last year after two years of unusually high growth, they're increasing again.
Throughout the years, its membership, renewal rates, and volume have increased, with renewal rates continuing to reach records. That should drive continued growth. As inflation moderates, shoppers will go back to buying more-expensive products, driving higher revenue growth as well.
Costco is still opening stores globally, and it recently entered China, where it already has five stores. It has plans for many more, and it opens them at a slow pace, giving the company a long growth runway.
4. Global-e Online: Up 77% this year
Global-e Online (GLBE 2.44%) markets cross-border solutions for e-commerce retailers. These are services every e-commerce retailer can benefit from, opening up their markets to include global customers.
It's an easy integration into a website, and it provides features like localized checkout and customs calculations. It's a no-brainer addition that can increase revenue for clients, and Globel-e continues to onboard an impressive list of high-profile clients. It also has a partnership with Shopify to offer its products to Shopify's millions of merchant clients.
Revenue increased 27% in the 2023 third quarter, and Global-e is demonstrating improved profitability as it scales up. It could be a massive growth stock for many years.
5. Lemonade: Up 34% this year
Lemonade (LMND 1.64%) is the only stock I debated about putting on this list. I'm a shareholder and believe strongly in its long-term potential, but I wasn't sure I could say with confidence that it'll happen this coming year.
However, it's been reporting increasing profitability while it scales up, and it's demonstrating that its AI algorithms work. The stock, which has been volatile and is still down 87% from its highs, is gaining momentum, and I think it could turn around in 2024.
In-force premium, its top-line metric, increased 18% year over year in the third quarter. The main problem for Lemonade is its unstable loss ratio, which decreased to 83% in the third quarter to get closer to its goals. Management explained that older products already have low loss ratios, and as Lemonade's products age and algorithms improve, its stock could soar this year.
6. Lululemon: Up 46% this year
Lululemon Athletica's (LULU 1.31%) premium athleisure clothing has become more than a fad, and they're now mainstream popular apparel and activewear choices. The company posts consistently high growth, resonating with its target population of fitness enthusiasts as well as capturing market share with collections of high-end regular clothing.
Much of its products are not seasonal, which means it doesn't have to mark them down. That helps it maintain industry-leading margins, with customers willing to pay premium prices for its high-quality products made with patented and exclusive fabrics. That leads to robust and increasing profits.
Management released a growth strategy this year after meeting targets early for its previous growth strategy, and investors should expect it to meet those goals as well, and keep up its growth for many years.
7. MercadoLibre: Up 95% this year
MercadoLibre (MELI 3.09%) is the Latin American answer to Amazon, but it's still in a high growth stage. It services 18 Latin American countries with e-commerce, and it also has a fintech segment that offers digital payment solutions and credit products.
It reports high double-digit growth consistently, with a 69% year-over-year increase in 2023's third quarter. It's also reporting increasing profits, with an 18.2% operating margin in the quarter.
It has a massive opportunity as e-commerce growth accelerates and it improves its delivery times, with almost 80% of orders delivered within 48 hours, and same-day or next-day deliveries up 22% in the third quarter. The fintech segment is growing faster, though, as shoppers continue to use its services for payments both on its website and others.
8. Nu Holdings: Up 104% this year
Nu Holdings (NU 1.66%) operates a bank headquartered in Brazil that's demonstrating tremendous growth across its business. It added 5.4 million customers to its platform in the third quarter for a total of 89.1 million, and it reached 90 million as of October, surpassing half of the total adult population of Brazil. It's growing even faster in its newer markets of Mexico and Colombia.
It's also succeeding in its strategy of cross-selling and upselling, leading to even higher growth. Revenue increased 53% over last year in the third quarter, and net income rose from $7.8 million to $303 million. It has a huge opportunity as it continues to onboard customers and they adopt more products.
9. SoFi Technologies: Up 70% this year
SoFi Technologies (SOFI 3.69%) has had a fantastic year as it keeps adding members and increasing revenue. It has successfully expanded well beyond its initial business as a lender, with a large array of financial services, and it's also upselling and cross-selling products to loyal, engaged customers.
Profitability has been improving, with adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) up 121% year over year in the third quarter. And management reiterated that it expects to report positive net income for the first time in the current quarter.
SoFi has a long growth runway as it attracts customers looking for easy-to-use digital banking services with low fees and high rates, converting them into multiple-product users and scaling that up into profits.
10. Visa: Up 23% this year
Visa (V -0.23%) is a natural candidate to round out a diversified stock portfolio (besides the fact it's the last stock in this article alphabetically) since it has so much to offer almost any portfolio. It's the largest credit card network, with more than $14.5 trillion in trailing-12-month volume, and it has posted increasing revenue and net income despite the harsh retail climate.
It also has industry-leading profit margins, which were 54% in its most recent quarter, and tons of growth drivers in new flows, value-added services, new merchants, and new institutional partnerships. It's a perennial market beater that also pays a dividend, and a great stock to own for the long term.
