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Momentum is a formidable force in the stock market. Once a stock gains popularity, its climb can defy rationale and result in a stretched valuation. While some trendy stocks plummet within months, others rise to the occasion.
A rapid rebound in 2023 has spilled over into 2024, with the S&P 500 and Nasdaq 100 both showing year-to-date growth. While following the crowd isn’t always prudent, solid fundamentals can validate an investor stampede. These standout stocks are commanding significant attention.
Into the World of E.l.f. Beauty (ELF)
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E.l.f. Beauty (NYSE:ELF) is a beauty brand rapidly expanding its market share and continues to bring wealth to long-term investors. Its stock has surged approximately 1,800% over the past five years and shows a strong start with a 35% year-to-date increase. Trading at an 87 P/E ratio, the shares are currently undergoing a healthy adjustment.
Rapid revenue and earnings growth have been the propellers of the stock over the years. In the third quarter of fiscal 2024, the company reported its 20th consecutive quarter of sales growth with an 85% increase in net sales compared to the previous year.
Net income also saw a robust upsurge, rising by 41% year-over-year. E.l.f. Beauty utilized some of these earnings to acquire Naturism, a rapidly growing high-performance skin brand, funding the purchase with cash and company stock.
The cosmetics company raised its fiscal 2024 outlook across the board. Projections show an expected net sales range of $980 to $990 million, up from $896 to $906 million, with diluted EPS estimated to range from $2.84 to $2.87 per share, compared to the prior $2.47 to $2.50 per share.
Exploring the Phenomenon of Nvidia (NVDA)
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Nvidia (NASDAQ:NVDA) has been a headline-grabber for years, with the artificial intelligence surge sparking a fervor among investors. The stock has soared by over 1,900% in the last five years and has already climbed 82% year-to-date.
Despite a 75 P/E ratio, the chipmaker’s revenue and earnings growth indicate a promising valuation in the near future. Nvidia’s remarkable 265% year-over-year revenue growth and 769% year-over-year GAAP net income growth in Q4 FY24 outpaced the stock’s one-year gain of 249%.
As long as net income growth mirrors the stock’s rise, there is potential for further growth in shares. Nvidia’s profit margins have surged alongside its earnings, with net profit margins exceeding 50% for the past two quarters.
Nvidia has delivered significant gains for many investors. While some may anticipate a correction due to the principle that assets don’t ascend indefinitely, Nvidia still retains financial strength and favorable tailwinds for continued growth. The recent introduction of its latest AI chips has only added more fuel to the rally.
Unveiling the Success of Sterling Infrastructure (STRL)
Sterling Infrastructure Soars with Innovation in E-Infrastructure Sector
Sterling Infrastructure (NASDAQ:STRL) operates as a leading construction company specializing in e-infrastructure, catering to various blue-chip companies in need of services such as developing data centers, e-commerce distribution centers, warehouses, and more. The company’s commitment to innovation and quality has positioned it as a standout player in the industry, with a diversified portfolio that extends to transportation and home building solutions as well.
The company has experienced remarkable growth in recent years, with its stock witnessing a staggering 770% increase over the past five years, and an impressive 25% gain year-to-date. In the fourth quarter of 2023, Sterling Infrastructure reported revenue of $486.0 million and net income of $40.2 million, reflecting robust year-over-year growth rates of 8.3% and 99%, respectively.
Ending the quarter with a substantial $2.07 billion backlog, Sterling Infrastructure has once again outperformed its own metrics, surpassing the $1.97 billion generated in full-year 2023. Despite its remarkable success, the company maintains a modest 24 P/E ratio, with a valuation exceeding $3 billion. Additionally, the stock boasts a reasonable 1.09 PEG ratio, further solidifying its position as a strong investment option for discerning investors.
It’s important to note that the information presented in this article is reflective of the writer’s personal views and does not constitute financial advice.
