The bull market continues to rage on in 2024, with the tech-centric Nasdaq Composite up 24% year to date. Investors looking for discounted stocks that could join the rally are in the right place. Here are three stocks of industry-leading companies that could be ready for big moves.
1. Carnival
Travel companies have experienced strong demand over the last few years, and Carnival (CCL 0.80%) continues to look like one of the best stocks to profit from this trend. It operates several brands beyond its namesake Carnival Cruise Line.
It owns AIDA Cruises, Costa Cruises, Cunard, Holland America Line, P&O Cruises, Seabourn, and Princess Cruises, which makes Carnival the largest cruise company in the world.
NYSE: CCL
Key Data Points
The stock has doubled since 2022 but is 75% off its pre-pandemic peak. The disruption that the coronavirus caused to the travel industry forced Carnival to take on a lot of debt to fund operations, which has weighed on the stock's performance, but the company's improving prospects on top of healthy demand trends is a catalyst for the shares.
Management is intently focused on improving efficiency throughout the business to boost profits. It has invested in more fuel-efficient ships in recent years and optimized its pricing strategy to maximize margins.
It also announced earlier this year that it will consolidate P&O Cruises Australia into Carnival Cruise Line, which will increase capacity for one of the company's best-performing brands.
The company reported a noticeable jump in operating profit last quarter, and more improvement should benefit the stock. Shares trade at a modest forward price-to-earnings (P/E) of 15.5. This is an attractive valuation considering Wall Street's expectation for earnings to increase sharply over the next few years.
2. Tesla
Tesla (TSLA +0.97%) has grown into one of the most recognized brands in the auto industry, which is a remarkable feat. The electric vehicle (EV) company was generating annual revenue of just over $400 million in 2012, but last year its sales topped $96 billion, which is impressive on its own considering the macroeconomic headwinds like inflation and higher interest rates that have weighed on consumer spending lately.
NASDAQ: TSLA
Key Data Points
After falling 42% from its previous peak, Tesla stock has risen sharply over the last month. While the valuation looks very expensive, currently sitting at a forward P/E of 96, there are a few reasons this could be the beginning of a new bull run.
Higher interest rates have made it more expensive to finance the purchase of a new car, which contributed to slowing sales growth and a slumping share price last year. But the company said second-quarter deliveries were up 15% over the previous quarter, which could be the start of a trend, especially since the company continues to deliver more Cybertrucks.
With only 1.7 million vehicles delivered over the last year, Tesla still has a lot of room to gain market share in an industry with over 80 million vehicles produced each year. This is why management is working on increasing manufacturing capacity, including expanding production of its own batteries to secure the supply chain of this crucial component.
While the company continues ramp up production of the Cybertruck, there are plenty of other looming sales opportunities that could drive the stock higher in the coming years, including the Cybercab, Tesla Semi truck, and humanoid robots -- all reflecting Tesla's growing investment in artificial intelligence (AI).
3. Alibaba
Alibaba Group (BABA +0.53%) is the largest online retail business and cloud service provider in China. It also has an expanding e-commerce presence overseas with AliExpress.
Alibaba doesn't sell goods itself but generates revenue from charging service fees to merchants that list items for sale on its popular e-commerce marketplaces. It is a profitable business that is a screaming buy at these bargain-basement share prices.
NYSE: BABA
Key Data Points
The stock has fallen 75% from its previous high due to slowing sales growth amid a weakened Chinese economy. Alibaba has also faced stiffer competition from rival e-commerce companies like PDD's Temu and JD.com. But sales trends are looking better in 2024.
It's starting to fight back aggressively against competitors. Lower prices helped drive increases in buyers and purchase frequency last quarter. Meanwhile, Alibaba's international expansion efforts are going well, with revenue from the digital commerce segment up 45% year over year last quarter.
Elsewhere, Alibaba's cloud business is still struggling to pull out of its slump. Revenue grew just 3% year over year last quarter, which pales in comparison to the double-digit growth of other world-leading cloud companies.
But recent efforts to lower product pricing and integrate the Tongyi Qianwen 2.0 large language model, a type of AI model that can learn to write text and create images, shows potential for Alibaba Cloud to return to the double-digit growth it enjoyed a few years ago.
The stock is up 17% off its 52-week low, but still trades at an ultra-cheap forward P/E of 9 times this year's earnings estimate. It could double in value and still trade at a discount to the S&P 500's average P/E multiple.
