There's no such thing as a surefire stock that can make you richer in 2024. However, a few stocks look set to have a strong 2024, making them excellent stocks to buy right now.
Two on my short list are Twilio (TWLO 1.47%) and MercadoLibre (MELI 3.09%), as both look like strong 2024 picks.
1. Twilio
Twilio has had a strong run in 2023, up around 40%. But that's just the start for this communications company.
Twilio's software is all about communicating with customers, and it offers products that make it easy to integrate text messaging systems, customize email marketing, and turn voice conversations into customer data. But this type of technology isn't in high demand when consumer sentiment dips and it's harder to attract customers.
This weighed on Twilio in 2023, and its revenue growth hasn't been spectacular. In Q3, revenue rose 5% to $1.03 billion and the company gave guidance of 1.5% growth in the fourth quarter. As a result of the slowing growth, Twilio has shed much of its workforce, going through three rounds of layoffs.
This is in an attempt to become more profitable, as Twilio has yet to turn a profit under generally accepted accounting principles (GAAP). But that sets the stage for what I think could be a great 2024.
Twilio has already achieved profitability when stock-based compensation (a noncash expense) is subtracted. With another round of layoffs plus revenue growth returning (Wall Street analysts project 7.4% growth in 2024), Twilio may be able to post its first round of true profits in history. All of this upside can be purchased for a dirt cheap 3.2 times sales.
TWLO PS Ratio data by YCharts
With many tech stocks trading for 10 to 20 times sales, Twilio's reasonable valuation is refreshing.
If consumer sentiment improves in 2024, Twilio's clients will be willing to spend more with them to capture an additional audience. Add in that it's nearing profitability and trading at a cheap valuation, and the stock looks poised for an excellent 2024.
2. MercadoLibre
MercadoLibre has often been characterized as the "Amazon of Latin America." But that's selling the company short. MercadoLibre is much more than that; it also has a consumer lending arm and a thriving fintech business, Mercado Pago.
This combines to create the dominant digital ecosystem in Latin America, and the company's growth backs up those claims.
In Q3, MercadoLibre's revenue rose a currency-neutral 69% to $3.76 billion, with commerce revenue up 76% to $2.13 billion and fintech revenue rising 61% to $1.63 billion. With growth coming from all sides of its business, MercadoLibre is in a great position.
Furthermore, its profit margins have steadily improved over the past few years.
MELI Profit Margin (Quarterly) data by YCharts
This growth has created an incredibly profitable business, and with Wall Street analysts projecting 23% revenue growth in 2024, its profits are set to explode higher.
You'll have to pay up to own MercadoLibre, as it trades for about 50 times 2024 earnings. However, MercadoLibre has consistently beaten expectations on both the top and bottom lines, so its forward PE is likely lower than that figure, making the stock cheaper than it appears
As a result, I think MercadoLibre is a stock that will make you richer not only in 2024, but also in the five years beyond it.
