In the world of investing, growth stocks stand out as promising candidates to build wealth. These companies can grow their revenue and earnings at a much faster pace than their competition. These are three growth stocks investors should seriously consider – a missed opportunity could result in regrets down the line.
While these stocks may not provide immediate dividends like their income-focused counterparts, the allure of capital appreciation is undeniable. This exponential growth potential has made them an appealing choice for investors aiming to outperform the market. However, the path to building wealth through growth stocks is rarely smooth, as they are prone to higher volatility and risks, demanding a level head and resilience. With the economy poised for a rebound, these three companies hold untapped potential in 2024.
Novo Nordisk (NVO)
Novo Nordisk (NVO) is a leading European multinational pharmaceutical company headquartered in Bagsværd, Denmark. The company’s focus is on combating chronic diseases such as diabetes, obesity, rare blood diseases, and endocrine disorders. Market sentiment is turning increasingly bullish, as investors evaluate the long-term market opportunities for their diabetes drug, Ozempic.
Novo Nordisk is renowned for developing the first long-lasting human insulin and pioneering glucagon-like peptide-1 (GLP-1) therapies. Notably, the company’s diabetes drug, Ozempic, has been gaining attention due to its potential applications in weight loss treatment. Although not yet FDA-approved for weight loss, Novo Nordisk also offers another therapy called Wegovy, targeting weight management and obesity in adults.
In fiscal year 2023, Novo Nordisk’s revenue soared by 31% year-over-year to $232.26 billion. Net income also witnessed a substantial increase to $83.68 billion, with earnings per share (EPS) rising by 52% to $18.62. Sales of GLP-1 therapies surged by 52% year-over-year, with obesity care sales registering an astounding 154% growth from the previous year. Furthermore, free cash flow swelled to $83.1 billion in fiscal year 2023, solidifying their position with a 54.8% market share in the GLP-1 segment. These robust figures position Novo Nordisk as one of the frontrunners among growth stocks for the year 2024.
Caterpillar (CAT)
Caterpillar (CAT) holds the distinction of being the world’s largest construction equipment manufacturer. Despite the challenging market conditions, the company wrapped up a remarkable 2023 fiscal year, paving the way for continued growth in 2024.
Despite the global slowdown in construction activity and prevailing interest rate risks and supply chain challenges in 2023, Caterpillar managed to achieve impressive revenue, EPS, and free cash flow (FCF) growth. Looking ahead to the next few years, the prospects of lower interest rates and increased infrastructure investment present a favorable outlook for the company’s growth trajectory.
In fiscal year 2023, Caterpillar witnessed a 13% year-over-year revenue surge to $67.1 billion. Operating margins reached 19.3%, a significant leap from 13.3% in 2022. Particularly noteworthy were the extraordinary earnings per share, which soared by 59% year-over-year to $20.12, accompanied by a record-breaking free cash flow of $10.57 billion. These robust figures in the midst of the 2023 challenges set the stage for a swift recovery in end markets and pave the way for accelerated growth through 2024.
First Solar (FSLR)
First Solar (FSLR) is an American solar panel manufacturer headquartered in Tempe, Arizona, United States. Despite the challenges faced by the broader solar and energy storage industry in 2023, First Solar has continued to expand and make significant investments. Notably, the company has augmented its generating capacity through an expansion of its manufacturing footprint in the United States.
While many solar companies, such as Enphase, experienced a challenging year due to reduced discretionary spending by consumers and tightening financial conditions, First Solar wrapped up a robust Q3 in 2023 with a 27% revenue increase and an astonishing 643% surge in EPS. The company has committed $2.8 billion in capital expenditure to new solar projects and has channeled $1.1 billion into its fifth manufacturing facility in the US. With plans to reach 25 GW of generating capacity by 2026, once fully operational, its revenue could soar. Despite slower demand and higher interest rates, the management adeptly controlled costs in fiscal year 2023. With the solar and energy storage markets showing signs of recovery, investors can maintain an optimistic outlook for revenue and EPS growth in fiscal year 2024.
Terel Miles is a contributing writer at InvestorPlace.com, with more than seven years of experience investing in the financial markets.
