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Three Stocks with Potential for a Big 2024 Comeback

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The latest episode of Full Court Finance at Zacks delves into the market rally after the Fed’s rate cut outlook. Despite the Nasdaq and the S&P 500’s strong performance in 2023, many large-cap stocks have underperformed. We discuss three highly-ranked stocks todayβ€”DocuSign (DOCU), Nike (NKE), and Target (TGT)β€”all trading at least 30% below their highs and showing potential for significant comebacks in 2024.

A wave of optimism swept the market as the Fed indicated the possibility of three rate cuts in 2024. The 10-year U.S. Treasury has dropped below 4% (3.92%) following rapid speculation on lower rates by Wall Street.

The newfound dovishness from the Fed has bolstered the S&P 500, potentially hitting new peaks by the end of 2023 or early 2024.

With all this strength, the official Santa Claus rally periodβ€”a surge in stock prices around the last week of December and the first two days of the new yearβ€”has yet to begin.

Despite potential choppiness in the future, more investors are likely to flow into stocks as the investment landscape evolves, creating a sense of urgency around not missing out.

DocuSign, Inc. (DOCU)

DocuSign exceeded our Q3 FY24 EPS estimate on December 7 and raised its guidance, earning it a Zacks Rank #1 (Strong Buy). DOCU stock has surged 30% in the last month, reclaiming its 50-day, 200-day, and 50-week moving averages. Although the e-signature stock is still over 80% away from its record highs, the company responded to slower growth and a higher rate environment by implementing cost-cutting measures and other strategic changes.

Zacks Investment Research

Image Source: Zacks Investment Research

Despite its high valuation, DOCU remains focused on its bottom line. With 1.4 million customers, investors may want to keep an eye on this e-signature and digital document firm, as Wall Street hunts for technology stocks still trading significantly lower than their highs.

Nike, Inc. (NKE)

Nike is trading approximately 30% below its highs ahead of its Q2 FY24 earnings release on December 21. While facing growing competition and consumer discretionary selloff, NKE remains a dominant force in sportswear and one of the most valuable brands globally.

Zacks Investment Research

Image Source: Zacks Investment Research

With Zacks Rank #2 (Buy), Nike’s earnings revisions are promising. Its growth estimates and market performance depict a strong outlook, showcasing the potential for a significant resurgence in the near future.

Target (TGT)

Target delivered impressive Q3 earnings results and a positive outlook, propelling it to a Zacks Rank #2 (Buy). The notable rebound has lifted TGT stock by 30% in the fourth quarter, trading 45% below its highs.

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