Although the market has had a strong end to 2023, a few stocks haven't seen the enthusiasm. However, there's no good reason for these stocks to be left out of the rally, and they look like strong buys right now to take advantage of their inactivity. However, these picks aren't just for the next month; they're also solid investments for the foreseeable future.
On my list of stocks that are well set up for a bull run are Alphabet (GOOG 9.96%) (GOOGL 10.22%), PayPal (PYPL 2.90%), and dLocal (DLO 0.56%). If you don't have any of these stocks, you may want to consider them.
1. Alphabet
Google parent Alphabet is only up about 5% compared to the Nasdaq-100's 10% rise since Nov. 1. However, within that time frame, Alphabet released the latest version of Gemini, its generative artificial intelligence (AI) model.
This groundbreaking innovation is the first to outperform human experts on massive multitask language understanding, a common benchmark for assessing AI models. It also outperforms its chief rival OpenAI's GPT-4 in nearly every benchmark. This is a huge win for Alphabet and will be something that helps power the company higher for years to come.
Additionally, in Alphabet's third quarter, it delivered 11% revenue growth, marking its return to market-beating growth. Earnings per share (EPS) also increased from $1.06 to $1.55, a 46% rise.
Alphabet is hitting its stride, yet its stock trades for 20 times 2024 earnings compared to its five-year average of about 27 times trailing earnings.
GOOGL PE Ratio (Forward 1y) data by YCharts
Should Alphabet hit analyst projections and end 2024 at its average valuation of 27 times earnings, the stock is slated to rise around 36% next year. That's a fantastic return for one of the world's most dominant and consistent companies.
Because of that, I think Alphabet is set up for a bull run soon.
2. PayPal
I only need to show one chart to get my point across about PayPal.
PYPL PE Ratio data by YCharts
The stock is ridiculously undervalued, trading at 12 times forward earnings. That's far cheaper than the S&P 500's 25 times trailing and 21 times forward earnings. However, PayPal is projected to grow revenue by around 8% in 2024 and earnings by about 12%.
Those are market-matching growth figures, yet PayPal trades at a substantial discount to the market in general. Couple that with a new CEO coming on board who is focused on improving PayPal's profits, and you have a recipe for a stock that is about to explode higher due to hardly any expectations going into 2024.
3. dLocal
dLocal is a company few have heard of, but once you know about it, it's hard to find a flaw. Its software allows its clients to easily sell to countries with less developed financial systems, as dLocal has done all the legwork to set up payment infrastructure in these locations. This allows giants like Amazon, Shopify, Spotify, and Nike to operate in countries including India, Turkey, and Morocco.
Instead of these businesses setting up a specific payment system for each company, they concede a bit of the revenue to dLocal and are given a whole new customer base.
dLocal's growth has been impressive, and Q3 was no different. Total processed volume rose 69% year over year to $4.6 billion, with revenue rising 47% to $164 million. While dLocal is still rapidly growing, it has already achieved full profitability, converting 25% of revenue into profits during Q3.
You'd think the stock would come with an ultra-premium price tag with all factors considered, but dLocal trades for a mere 22 times 2024 earnings.
This stock hasn't received much mainstream attention yet, but when it does, shareholders should be ready for an incredible run.
