The U.S. stock market showcased remarkable resilience in the first quarter of 2024, building off the momentum of the previous year. Wall Street’s bullish rally received an unexpected boost, defying the pessimistic forecasts of numerous financial experts who warned of market overvaluation.
In 2023, the S&P 500 Index surged by 23.9%, setting the stage for a strong start to 2024 by climbing 10.2% in the first quarter, its best performance since 2019. During the previous quarter, the index achieved a remarkable 22 new all-time highs, hitting its most recent peak at 5,264.85 on Mar 28 before a slight pullback of 1.1%.
Despite the overall success of the benchmark, a handful of S&P 500 components significantly underperformed. However, some of these lagging stocks currently hold a promising Zacks Rank. With inflation easing, robust U.S. economic fundamentals, and expectations of an upcoming interest rate cut, these companies are poised to regain momentum in the second quarter.
Factors Driving Growth
The Department of Commerce reported a robust 3.4% growth rate for the U.S. economy in the fourth quarter of 2023, surpassing the initial consensus estimate of 2%. The U.S. GDP grew by 2.5% in 2023 compared to 1.9% in 2022, defying the initial 2% full-year GDP forecast for 2023. The Atlanta Fed GDPNow tracker projected a 2.5% growth in the first quarter of 2024 on Apr 4, signaling no immediate risk of recession.
The CME FedWatch currently indicates a 53% probability of the first Fed funds rate cut occurring during the June FOMC meeting. In a recent address at Stanford University on Apr 3, Fed Chairman Jerome Powell reiterated the central bank’s intention to reduce the Fed fund rate sometime this year. Powell emphasized that the timing of the rate cut would hinge on forthcoming economic data, particularly inflation indicators.
Top Picks for Growth
We have identified five S&P 500 stocks that trailed the index in the first quarter but exhibit high growth potential for 2024. These companies have experienced positive earnings estimate revisions within the last 60 days, each carrying a Zacks Rank #2 (Buy). Explore the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The chart below illustrates the year-to-date price performance of our five selected stocks.
Image Source: Zacks Investment Research
Automatic Data Processing Inc. (ADP) continues to dominate the human capital management market through strategic acquisitions like Celergo, WorkMarket, Global Cash Card, and The Marcus Buckingham Company.
ADP focuses on delivering a comprehensive suite of cloud-based HCM and HR Outsourcing solutions, prioritizing innovation, operational enhancement, and transformation investments. With a robust business model, significant recurring revenues, healthy margins, strong client retention, and low capital expenditure, ADP remains well-positioned.
Automatic Data Processing is projected to achieve revenue and earnings growth rates of 6.3% and 11.1%, respectively, for the current year, ending June 2024. The Zacks Consensus Estimate for current-year earnings has seen a 0.1% improvement over the past 60 days.
Welltower Inc. (WELL) boasts a diversified portfolio of healthcare real estate assets across key markets in the U.S., Canada, and the U.K. Leveraging an aging population and anticipated growth in senior citizens’ healthcare spending, WELL stands poised to capitalize on this positive trend through its seniors housing operating portfolio.
The outpatient medical segment is expected to benefit from favorable outpatient visit trends in the near term. WELL’s strategic reorganization efforts have enhanced operational efficiency, attracting operators and bolstering cash flows. Supported by a solid balance sheet and proactive capital-recycling strategies, WELL is on a positive trajectory.
Welltower anticipates revenue and earnings growth rates of 10.6% and 10.7%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has risen by 0.3% over the past 30 days.
TE Connectivity Ltd. (TEL) is capitalizing on the robust performance of its transportation solutions segment. Favorable trends in electric vehicles (EVs) and escalating content requirements for electronification are driving TEL’s automotive sales. Progress in commercial aerospace, coupled with strong momentum in industrial solutions, is fueling TEL’s growth.
Furthermore, the increasing adoption of interventional procedures is boosting TEL’s medical sales. The company’s strength in transportation and industrial solutions, coupled with solid free cash flow generation, sets a promising outlook for TEL.
TE Connectivity is expected to achieve revenue and earnings growth rates of 0.4% and 12.3%, respectively, for the current year, ending September 2024. The Zacks Consensus Estimate for current-year earnings has improved by 0.3% over the past 60 days.
Host Hotels & Resorts Inc. (HST) stands to benefit from its collection of luxury and upper-upscale hotels in prime U.S. markets and the thriving Sunbelt region, bolstered by strong demand catalysts. The company is anticipated to witness stable operational performance supported by improving group business, gradual recovery in business transient segments, and sustained demand for leisure activities.
These factors are expected to drive revenue per available room (RevPAR) growth for HST, with a projected 4.2% year-over-year increase in comparable RevPAR for 2024. Aggressive capital-recycling initiatives aim to enhance HST’s portfolio quality while its healthy balance sheet positions the company to seize long-term growth opportunities.
Host Hotels & Resorts projects revenue and earnings growth rates of 5.3% and 2.6%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has seen a 2.6% improvement over the past 30 days.
Jack Henry & Associates Inc. (JKHY) is reaping the benefits of increasing service, support, and processing revenues. Rising data processing and hosting fees are driving JKHY’s revenue growth. The company’s card processing solutions are thriving, supported by expanding transaction volumes and growing payment processing and digital revenues.
Moreover, JKHY’s lending platform is gaining momentum, and strength across its Core, Payments, Complementary, and Corporate segments bodes well for its financial performance ahead. The company’s drive for enhanced cost efficiency is set to further fuel its growth prospects.
The Ascending Trajectory of Jack Henry & Associates: A Beacon of Growth Amid Financial Turbulence
Stellar Revenue and Earnings Projections
In the tumultuous sea of financial forecasting, Jack Henry & Associates stands as a beacon of stability and growth. With an anticipated revenue growth rate of 6.9% and an impressive earnings growth projection of 21.8% for the current year, investors are taking notice of this resilient player in the market.
The Zacks Consensus Estimate for current-year earnings has experienced a positive trajectory, improving by 2% over the last 60 days. This upward trend signals a promising journey ahead for the company and its shareholders, hinting at potential profitability in the coming quarters.
Discovering Hidden Gems
Amid the hustle and bustle of Wall Street, where the spotlight often shines on established giants, there lies a realm of hidden gems waiting to be uncovered. The 5 Stocks Set to Double report, carefully curated by Zacks experts, unveils a trove of investment opportunities, with each handpicked stock poised to achieve remarkable gains of 100% or more in 2024.
Previous recommendations from Zacks have seen phenomenal success stories, with some soaring by impressive margins like +143.0%, +175.9%, +498.3%, and +673.0%. These staggering numbers serve as a testament to the astute analysis and unparalleled insights provided by the Zacks team, guiding investors towards potentially lucrative opportunities.
Seizing Opportunities Ahead
As the financial landscape continues to evolve, opportunities arise for astute investors to capitalize on emerging trends and undervalued assets. Many stocks highlighted in the 5 Stocks Set to Double report are quietly flying under the Wall Street radar, presenting a unique chance to enter the market at the ground level.
For those seeking the latest recommendations and in-depth stock analysis from Zacks Investment Research, valuable insights await in the 7 Best Stocks for the Next 30 Days report. By downloading this comprehensive guide, investors can stay ahead of the curve and make informed decisions in an ever-changing market environment.
Among the featured companies in the report are:
– Automatic Data Processing, Inc. (ADP)
– Host Hotels & Resorts, Inc. (HST)
– TE Connectivity Ltd. (TEL)
– Jack Henry & Associates, Inc. (JKHY)
– Welltower Inc. (WELL)
The journey to financial success is paved with informed decisions and strategic investments. By exploring the insights offered by Zacks Investment Research, investors can navigate the volatile waters of the stock market with confidence and clarity.
As we embark on this journey of financial discovery, let us remember that foresight and diligence are the compasses that lead us towards prosperity and growth in the realm of investment.
Are you ready to explore the untapped potential of the market? Embark on this journey with Zacks Investment Research and steer towards a future of financial success!
Remember, the views and opinions expressed here are those of the author and do not necessarily mirror the perspectives of Nasdaq, Inc.
