Growth stocks have done well this year, but heading into 2024, many of them could start to lose steam, especially amid rising valuations. Yet, some businesses still look poised for much more growth in the years ahead, and are likely to continue rising in value next year, regardless of their high prices tags.
Two stocks that look unstoppable heading into 2024 are Eli Lilly (LLY 1.19%) and PDD Holdings (PDD 2.80%). Here's why these stocks have been soaring -- and why they could still perform well in the new year.
1. Eli Lilly
Eli Lilly has been one of the hottest healthcare stocks to own this year as its shares are up over 56% since January. The big catalyst behind the company's success is Zepbound (tirzepatide), which regulators approved last month as a treatment for chronic weight management. In clinical trials, it has shown that it can help people lose close to 27% of their body weight over a period of 84 weeks.
While Eli Lilly has a lot of different drugs in its portfolio as well as a robust pipeline, it's the potential of Zepbound that makes it a truly unstoppable investment. Some analysts believe it may be one of the best-selling drugs ever, pegging its peak sales potential at over $50 billion.
Now that Zepbound is approved, the growth ahead for Eli Lilly could be incredible. Through the first nine months of the year, the company reported revenue of $24.8 billion, which rose 17% year over year. That growth rate should accelerate in 2024 as Zepbound becomes more widely available.
Although Eli Lilly's stock isn't cheap, trading at more than 100 times earnings, the sheer potential behind Zepbound could make that valuation justifiable as the new medication could transform its business. This is a stock that in the long run has the potential to eventually become worth more than $1 trillion.
2. PDD Holdings
Another top growth stock for investors to consider for next year is PDD Holdings. The Chinese e-commerce company offers two highly popular marketplaces: Pinduoduo and Temu. And it's Temu in particular that's likely to help the company continue generating impressive growth next year.
With many items priced at just a few dollars and offering returns within 90 days, Temu stands out from many other cheap marketplaces. It has become so popular that it is even drawing customers away from dollar stores; data from Earnest Analytics suggests that Temu accounts for close to 17% of revenue from the discount store category in the U.S. By comparison, Dollar General accounts for 43%, while Dollar Tree makes up 28% of the category's market share.
Sales have been soaring for PDD Holdings, with the company reporting 94% revenue growth for the period ended Sept. 30 and the top line reaching $9.4 billion. With consumers continuing to feel the effects of inflation and a possible recession still ahead in 2024, the company looks likely to continue growing at a fast pace next year.
At 38 times earnings, the stock's valuation is a bit high, but given the impressive numbers the business has been generating, PDD could still prove to be a cheap buy at its current valuation. Year to date, the stock has risen 82%.
