In this article, we’re going to talk about the 10 best young stocks to buy now.
Market Uncertainty to Remain Until Elections
A broader market trend observed ever since the Fed announced its September cut rate has been the volatility in the performance of small-caps. However, despite the continuous positive momentum, small-caps have not kept pace with more speculative assets, which experienced significant growth. This trend raises questions about potential implications for monetary policy and its impact on productive economic activities.
Smaller companies often benefit during periods of profit recovery, particularly when accompanied by supportive monetary policies. The prevailing trend among investors, however, still favors larger companies, even as mega-cap stocks exhibit slower growth and higher valuations compared to their smaller counterparts. Analysts maintain their stance on a balanced approach when it comes to investing in mega-caps, or even small-caps, setting the stage for a closer look at top-performing investments in the current year.
However, Stephanie Link, Chief Investment Strategist and Portfolio Manager at Hightower, recently expressed confidence in a soft landing for the economy despite market volatility, joining CNBC on September 21. This highlights a contrasting perspective amidst market volatility and uncertainty. While there are concerns regarding the performance of small-cap stocks and their ability to keep pace with larger, more speculative assets, Link’s optimism suggests that the economy may stabilize without entering a recession, again encouraging a balanced approach to investing.
Link highlighted the importance of confidence. She believes that the Fed is skillfully guiding the economy towards a soft landing, even amidst the expected market fluctuations before the elections.
Just 3 weeks ago, the S&P 500 had dropped by 4%. Still, it rebounded by 4% the following week. It rose another 1% last week, reaching new highs, and expressed optimism about buying opportunities during any market weakness, citing better-than-expected economic growth driven by recent data, including improved retail sales and manufacturing figures, as well as a decline in weekly jobless claims to a 4-month low. This positive economic backdrop supports an estimated growth rate of 2.9%, which is expected to benefit corporate earnings.
The tech sector has recently outperformed others. Link noted a broadening market trend over the past couple of months, indicating that while tech has taken the lead, other sectors such as financials, industrials, materials, and discretionary stocks are also showing strength. She advised investors to remain selective in their choices amidst ongoing volatility.
When discussing specific investment picks, Link highlighted ExxonMobil as a key choice. Despite projections indicating a 64% year-over-year decline in earnings for refining and marketing companies in Q3 and an 11% drop in production, Link believes this company is extremely cheap at a price-to-earnings ratio of approximately 13 times its estimate. She expects it to triple its production in exploration and production (E&P) and aims for organic growth of 10% between now and 2027. Upcoming catalysts include an analyst meeting scheduled for December 11th and several projects that are expected to generate $4 billion in earnings.
While touching on geopolitical factors affecting oil prices, particularly regarding the Middle East, Link suggested that much of this has already been factored into oil market prices and expressed confidence that the American oil and gas corporation would remain profitable even at lower oil prices, generating substantial profits at $30 per barrel and significantly higher returns at $70 per barrel through dividends and share buybacks.
When asked about the Department of Energy’s plans to refill the petroleum reserve at prices below $70 per barrel, Link dismissed this as irrelevant noise. Instead, she emphasized focusing on where companies are generating profits overall rather than getting distracted by short-term fluctuations.
The interplay between economic indicators, sector performance, and geopolitical factors continues to shape investment strategies as stakeholders prepare for future developments, especially as we see that stock performance can still not be accurately measured. On September 26, Tom Lee, Fundstrat Global Advisors managing partner and head of research, joined CNBC’s ‘Closing Bell’ to address the current state of the stock market following the Fed’s recent interest rate cuts.
Since the Fed implemented a significant rate reduction, the market has seen limited movement, with notable activity only occurring last Thursday. Tom Lee explained that the Fed’s actions have initiated an easing cycle, which historically tends to yield positive outcomes for the market 3-6 months down the line. However, he cautioned that stock performance in the immediate future remains uncertain due to ongoing repositioning ahead of the upcoming election in 40 days.
The conversation further explored whether the impending election would disrupt a favorable scenario for stocks to benefit from a post-Fed rally. Lee suggested that while this situation might delay market gains, it is not entirely negative. He noted that many wealth managers and family offices are hesitant to commit capital until after Election Day, preferring to wait until that event is behind them. He expressed optimism about a potential surge in stock prices following the election, stating that November and December typically see strong rallies in election years, especially when markets have already gained more than 10% in the first half of the year.
When discussing investor sentiment regarding the economy and the Fed’s capabilities, Lee indicated that so far, things look promising. He highlighted an upcoming Core Personal Consumption Expenditures (PCE) report expected on Friday, which could confirm that inflation is no longer a pressing concern. However, he noted a significant number of investors believe we may already be in a recession. For investor sentiment to shift back toward a soft landing perspective, evidence must exceed expectations.
Regarding a comment on recent target adjustments for the S&P 500, mentioning Brian Belski’s increase of his target to the highest on Wall Street, Lee acknowledged the potential upside in the next 3-6 months, expressing skepticism about setting aggressive targets like 6,000 for the S&P 500 at this time due to current valuations not being particularly low and having already experienced significant gains. He conveyed confidence in longer-term prospects but indicated caution regarding immediate investments.
As for small-cap stocks represented by the Russell 2000 index, Lee acknowledged some profit-taking after a strong week but maintained that such fluctuations are typical during bottoming phases. He drew parallels to previous market recoveries, such as energy stocks in 2021, suggesting that while current movements may feel erratic, they signal a multi-year growth opportunity for small caps.
The discussion also addressed concerns regarding overcrowded sectors within the market. Some analysts have noted that various sectors like industrials and utilities have reached or are trading near highs, prompting some investors to seek better value in bonds instead. However, Lee argued that equities offer inflation protection and capital appreciation potential that bonds typically do not provide. He emphasized that there are still numerous attractive opportunities within equities.
As the stock market is expected to remain volatile, primarily due to the upcoming elections on top of economic uncertainty, there is potential for growth in the coming months and investors should exercise caution and carefully consider their investment strategies. Such a fluctuating market also opens up opportunities to take bigger risks and diversify your portfolios, which is why we’re here with a list of the 10 best young stocks to buy now.
Photo by Roberto Júnior on Unsplash
Methodology
We used stock screeners to look for companies that went public recently in the past 2 years, with a preference for latest IPOs. We then selected the 10 stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q2 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Best Young Stocks To Buy Now
10. Reddit Inc. (NYSE:RDDT)
Market Cap as of September 26: $11.26 billion
Number of Hedge Fund Holders: 39
Reddit Inc. (NYSE:RDDT) is a social news aggregation, content rating, and forum social network. Registered users submit content to the site such as links, text posts, images, and videos, which are then voted up or down by other members, and are organized by subject into user-created boards called subreddits. It’s known for its user-generated content, viral trends, and active online communities.
The company grew both its users and revenue by about 50% year-over-year in Q2 2024. This revenue equated to $281.18 million. Improvements are being made to make this platform faster, safer, and easier to use. One recent improvement led to a 10% sequential increase in comments viewed.
International expansion remains a top priority. Of the massive user base of ~342 million active users and ~91 million daily active users, 50% of the current users are based outside of the US, with France, India, the UK, and the Philippines taking the lead. International daily active users exceeded 45 million, growing 44% year-over-year and 11% sequentially in Q2.
It recently launched a developer platform to the public beta. Users are creating custom posts like scoreboards and stock tickers, and the company is working on allowing them to earn money from their creations.
The company plans on improving its search results with AI to provide better recommendations and help users discover new content in the remaining part of 2024. It’s also exploring partnerships with search engines like Google and OpenAI to make Reddit Inc. (NYSE:RDDT) more easily searchable.
Reddit Inc. (NYSE:RDDT) presents a promising investment opportunity. Its unique platform, featuring community-driven content and diverse demographics, attracts advertisers seeking to reach specific audiences. The focus on expanding revenue beyond traditional ads, through initiatives like Reddit Premium and innovative advertising formats, positions it for growth.
9. Viking Holdings Ltd. (NYSE:VIK)
Market Cap as of September 26: $14.89 billion
Number of Hedge Fund Holders: 41
Viking Holdings Ltd. (NYSE:VIK) is a travel company that offers meaningful travel experiences on all 7 continents in all 3 categories of the cruise industry: river, ocean, and expedition cruising. It’s known for its high-quality itineraries, comfortable accommodations, and exceptional service.
Recently in August this year, the company sold 95% and 55% of its Capacity Passenger Cruise Days (PCDs) for its Core Products for the 2024 and 2025 seasons, respectively. In Q2 2o204, Capacity PCDs grew by 3.1% year-over-year, and Occupancy was 94.3%. The production capacity for Core Products increased by 5% for 2024 and by 12% for 2025 compared to the previous year.
Overall, the company recorded a 9.1% year-over-year improvement in Q2 revenue, generating $1.59 billion, driven by higher revenue per PCD and an increase in the size of the Company’s fleet in 2024 compared to 2023.
The company acquired a new river vessel, the Viking Hathor, in August, to operate in Egypt. Later, it announced expanding the Asia cruises in 2025 with new itineraries exploring China and Japan, including Tibet. Bookings are open now for September-November departures on the Viking Yi Dun.
Just a few days ago, the company completed its first cruise from Shanghai to Hong Kong (Shenzhen) with the Viking Yi Dun, marking a historic return to China. The new itineraries offer a unique experience for international travelers, featuring rarely-visited destinations and ports along the Chinese coast.
Viking Holdings Ltd. (NYSE:VIK) is a promising investment with a strong market position in the luxury travel industry. The company’s recent financial performance, coupled with its expansion into new markets and increased capacity, suggests a positive outlook for future growth. Its focus on innovation positions it well to capitalize on the growing demand for luxury travel.
8. Veralto Corp. (NYSE:VLTO)
Market Cap as of September 26: $27.40 billion
Number of Hedge Fund Holders: 42
Veralto Corp. (NYSE:VLTO) is a global leader in providing essential solutions for water quality, marking and coding, and packaging and color management. The company operates through 2 main segments: Water Quality and Product Quality and Innovation, where the WQ segment offers precision instrumentation and water treatment technologies, while the PQI segment provides solutions for inline printing, marking and coding, design software, and color management, with the help of ~16,000 associates globally.
The company’s strong performance in Q2 is attributed to increased rigor in deploying its VES system. This has driven growth, expanded margins, and improved overall execution. Revenue for the period was $1.29 billion, with core sales growth of 3.8% year-over-year. Around 85% of these sales are related to water, food, and essential goods.
The WQ segment sales were up 2.8% on a year-over-year basis, while the PQI segment delivered sales rose 2.7%. Overall recurring revenue grew mid-single digits year-over-year and comprised 62% of the total sales.
It showcased its latest innovations at Drupa, including the S2 platform. This cloud-based platform integrates Esko applications, providing customers with access to live data and AI-powered tools.
The company disclosed its greenhouse gas emissions and set a reduction goal of 54.6% by 2033. It’s also working to improve its supply chain sustainability through EcoVadis certification. Veralto Corp.’s (NYSE:VLTO) focus on sustainability is driven by its commitment to preserving the planet and its investment in its people, demonstrating both the durability of its businesses and its potential to grow further.
Aristotle Capital Value Equity Strategy stated the following regarding Veralto Corporation (NYSE:VLTO) in its Q2 2024 investor letter:
“In the fourth quarter of 2023, we received shares of the water and product quality company Veralto Corporation (NYSE:VLTO) when Danaher, a current Value Equity holding, spun off the business. After further assessing the now independently operated Veralto, we decided to exit our position. We believe our other holdings within the water value chain, including Xylem, American Water Works (our most recent purchase) and to some extent Ecolab, are more optimal investments.”
7. Structure Therapeutics Inc. (NASDAQ:GPCR)
Market Cap as of September 26: $2.43 billion
Number of Hedge Fund Holders: 43
Structure Therapeutics Inc. (NASDAQ:GPCR) is a clinical-stage global biopharmaceutical company developing novel oral small molecule therapeutics for metabolic and cardiopulmonary diseases, with a focus on G-protein coupled receptors (GPCRs) as a therapeutic target class. It has a pipeline of promising drug candidates targeting various disease areas, including obesity, diabetes, and chronic obstructive pulmonary disease (COPD).
Structure Therapeutics is a promising company in the obesity treatment market with its oral drug GSBR-1290. It has several approved products for various conditions, including X-linked hypophosphatemia, mucopolysaccharidosis VII, long-chain fatty acid oxidation disorders, and homozygous familial hypercholesterolemia.
It recently announced positive results from phase IIa studies of its obesity drug GSBR-1290. The drug showed promising results in reducing weight and has the potential to become a leading oral treatment for obesity. Based on these results, Structure Therapeutics Inc. (NASDAQ:GPCR) plans to start a larger phase IIb study in Q4 2024.
The company plans to submit an application to the FDA in Q3 2024 to start a phase IIb study on GSBR-1290 for obesity. They also plan to start a study on GSBR-1290 for type II diabetes in the second half of 2024.
It exceeded earnings expectations in 3 out of the 4 last quarters, despite a loss per share of $0.18 in Q2 2024. Its pipeline of innovative drug candidates positions the company for significant growth in the obesity and diabetes markets. The company’s recent positive clinical trial results and development plans suggest a promising future.
Baron Health Care Fund stated the following regarding Structure Therapeutics Inc. (NASDAQ:GPCR) in its fourth quarter 2023 investor letter:
“Structure Therapeutics Inc. (NASDAQ:GPCR) is a biotechnology company dedicated to making oral small molecule medicines to target the obesity and diabetes market. Recent share weakness has been due to two large pharmaceutical acquisitions in the space: Roche’s purchase of Carmot and AstraZeneca’s in-licensing of Eccogene’s GLP-1 asset. These developments were followed by updates from Structure that implied it had a promising asset, but it might be inferior to Eli Lilly’s first-in-class product. Shares fell as analysts reduced the probability of success surrounding potential peak sales. We think it is too early to reach a final conclusion on the company’s oral small molecule GLP-1, as these data sets are limited in total sample size, and there are compelling arguments for both sides. Given how quickly this space changes and our smaller position sizing due to the aforementioned dynamics, we are monitoring our position and making decisions based on our evolving analysis.
We initiated a small position in Structure Therapeutics Inc., a clinical-stage biotechnology company. Structure is developing an oral small molecule GLP-1 with once daily dosing. We think the GLP-1 class of obesity/diabetes drugs has the potential to be the largest drug class ever and that parts of the market will be particularly well suited to oral medications. Some people find oral medications more convenient than injectables, and oral small molecule drugs are cheaper and easier to manufacture than injectables, which could allow for lower pricing and greater access, particularly in international markets. Structure’s drug is still in its early phase of development, but there is reason to think that it could be successful. The drug was designed through the company’s structure-based drug discovery platform and was designed to selectively activate the G-protein signaling pathway, which should lead to a better efficacy/safety profile. In late September, Structure announced promising results from a Phase 1 multiple ascending dose study in non-diabetic overweight/obese individuals. Although there were only a few patients in the study, the drug impressively demonstrated reductions in mean body weight of up to 4.9% placebo-adjusted after 28 days, which would suggest a best-in-class profile. Then, in December, Structure announced results from its Phase 2a study, including a diabetic cohort and a non-diabetic overweight/obese cohort. The interim data from the obesity cohort continued to look competitive with 4.7% placebo-adjusted weight loss after 56 days. The diabetes data was somewhat underwhelming, with a 1.0% placebo-adjusted HbA1c reduction and 3.3% to 3.5% placebo-adjusted weight loss over 84 days (in comparison, Lilly’s orforglipron showed a 1.5% to 1.7% HbA1c reduction and 4.1% to 6.3% placebo-adjusted weight loss in a similar study). Structure is planning to study additional doses and titration regimens to optimize the drug’s profile in diabetes. Overall, we would characterize the early data as supportive of an active GLP-1 drug that has the potential to be among the leaders in the category. At this point we have a small position in the stock while we await more data to evaluate the competitiveness of Structure’s drug.”
6. Atmus Filtration Technologies Inc. (NYSE:ATMU)
Market Cap as of September 26: $3.12 billion
Number of Hedge Fund Holders: 44
Atmus Filtration Technologies Inc. (NYSE:ATMU) manufactures industrial filtration solutions and offers products including fuel and lube, air, crankcase ventilation, hydraulic filters, and coolants filtration products for on-highway commercial and off-highway agriculture, construction, mining, and power generation vehicles. It serves a range of industries, including industrial, commercial, and residential sectors.
Freight activity remains soft, but strong performance in other areas is offsetting some market weakness. Demand in the US is slowing, while India remains strong and China is sluggish. Overall Q2 2024 revenue was $432.60 million, up 4.59% from a year ago period. The increase in sales was primarily driven by higher volumes of 3% and pricing of approximately 2%. The company also benefitted from lower commodity costs and strong execution by its global team. These factors contributed to the growth in sales, gross margin, and adjusted EBITDA.
It’s improving product availability by building its own distribution network. Over 80% of its products are now distributed through Atmus warehouses, and the company expects all of its products to be distributed through this network by the end of this year.
The company continues to win with the winners and has secured new vehicle platforms associated with the 2027 US EPA emission standards. Its leadership in fuel filtration and crankcase ventilation, coupled with its focus on aftermarket growth, positions Atmus Filtration Technologies Inc. (NYSE:ATMU) for continued success. Its ability to provide innovative and high-quality products is driving strong customer demand and contributing to its overall profitability.
5. GE Healthcare Technologies Inc. (NASDAQ:GEHC)
Market Cap as of September 26: $42.61 billion
Number of Hedge Fund Holders: 49
GE Healthcare Technologies Inc. (NASDAQ:GEHC) is a medical technology company that provides a range of medical imaging, diagnostic, and therapeutic technologies and services. It offers solutions for a variety of clinical areas, including radiology, cardiology, ultrasound, women’s health, and oncology, committed to improving patient outcomes and advancing healthcare through innovation and technology.
Much of last year saw growth attributed to its AI-driven innovations in imaging and diagnostics, with tools like Edison True PACS improving radiologist efficiency. As healthcare facilities demand more accurate and efficient diagnostic tools, the company’s AI products have driven both operational efficiencies and revenue gains.
In the second quarter of 2024, the rising demand for its medical imaging and monitoring technologies, especially in hospitals and outpatient settings, helped generate a revenue of $4.84 billion, up 0.46% year-over-year. It delivered 1% organic revenue and 3% orders growth with all segments contributing. Excluding China, global revenue growth was 4%, and orders growth was 6%.
In the US, the company secured ~$800 million in contracts in Q2 for multimodality equipment, software, and services. Additionally, in July, it made notable advancements in developing proprietary AI tools aimed at improving clinical and operational efficiency. This included acquiring the AI division of Intelligent Ultrasound, which focuses on women’s health ultrasound AI, and forming a strategic partnership with AWS to develop foundational models and GenAI tools.
GE Healthcare Technologies Inc. (NASDAQ:GEHC) is a leading medical imaging company well-positioned to expand its market share as healthcare providers upgrade their equipment, while it also continues investing in digital health solutions powered by AI and cloud technology. Strategic partnerships and investments in healthcare infrastructure are driving growth, along with the increasing prevalence of chronic diseases. The focus on sustainability aligns with current market trends and strengthens its reputation. Overall, its expansions make it a promising investment opportunity.
Cooper Investors Global Equities Fund stated the following regarding GE HealthCare Technologies Inc. (NASDAQ:GEHC) in its Q2 2024 investor letter:
“However, we are keen to highlight other Stalwarts and Growth businesses we own that should benefit in a more profound way than hardware makers currently enjoying an initial build-out phase. To paraphrase Salesforce CEO Mark Benioff, if hardware is the picks and shovels of GenAI then data is the real gold.
Another example is GE HealthCare Technologies Inc. (NASDAQ:GEHC), a global leader in diagnostic imaging equipment across multiple modalities. AI algorithms are making image quality better, assisting image analysis via computer vision, and enabling devices to be more accessible for new users. The next stage will be data-driven; via its many points of penetration into the patient journey, GEHC is accumulating large amounts of data across pathology, genomics, and imaging. Harnessing AI tools across that data to drive better patient outcomes should enable improved sales, margins and returns from a more competitive product offering.”
4. Sharkninja Inc. (NYSE:SN)
Market Cap as of September 26: $14.86 billion
Number of Hedge Fund Holders: 52
Sharkninja Inc. (NYSE:SN) is a consumer goods company that designs, manufactures, and markets a range of innovative home appliances, best known for its Shark vacuum cleaners and Ninja kitchen appliances. It offers a variety of products, including high-quality upright vacuums, cordless vacuums, robot vacuums, blenders, air fryers, and coffee makers.
With a compound annual growth rate of 25% from 2019 to 2023, this company makes an attractive investment, as evidenced by Q2 2024 result. The recent quarter, saw a 31% year-over-year increase in sales, generating $1.25 billion in revenue, together with a 34% rise in earnings per share. Sales in food preparation appliances grew by nearly 80% while cooking and beverage appliances rose by 18.2%, supported by its expansion into Europe.
All 4 main product categories experienced substantial increases of over 10% year-over-year. The cleaning category led the way with a 20% growth. Domestic business surged by 35% and the adjusted net sales for international business rose by 46%, primarily due to Germany and France.
The company’s strategic diversification into new product categories with innovations like the Ninja SLUSHi and the Shark FlexBreeze have been well-received by consumers. The Ninja SLUSHi set a record as the fastest-selling new product on Sharkninja Inc.’s (NYSE:SN) D2C platform.
Its global reach and brand recognition are expanding rapidly, with international operations, particularly in EMEA, experiencing substantial growth, and there are promising prospects in Latin America, including upcoming launches in Brazil. With a $120 billion total addressable market, it is well-positioned to grow its less than 4% market share through this strategy.
The company has nearly doubled in 2024 and is near its 52-week high, outperforming the S&P 500. All of these factors position it well to become an industry leader.
Ave Maria World Equity Fund stated the following regarding SharkNinja, Inc. (NYSE:SN) in its Q2 2024 investor letter:
“Top contributors to performance included SharkNinja, Inc. (NYSE:SN) and Taiwan Semiconductor Manufacturing Company Limited. SharkNinja, Inc. is a global product design and technology company focused on creating solutions that increase efficiency, convenience and enjoyment of consumers’ daily tasks and improve everyday lives. The company has built two billion-dollar brands, Shark and Ninja, and has a proven track record of establishing leadership positions by disrupting numerous household product categories, including cleaning, cooking, food preparation, home entertainment and beauty.”
3. Maplebear Inc. (NASDAQ:CART)
Market Cap as of September 26: $10.37 billion
Number of Hedge Fund Holders: 56
Maplebear Inc. (NASDAQ:CART) is a delivery company that operates a grocery delivery and pick-up service in the US and Canada accessible via a website and mobile app. Its app allows users to browse a wide selection of products from various grocery stores, place orders, and have groceries delivered to their doorstep.
In 2023, the company had 14 million active users and a 73% market share in US digital grocery sales. Its grocery delivery business is less cyclical than other eCommerce companies. Its ability to add retailers to its platform expands its delivery network and improves customer satisfaction.
Currently, the company serves households in the US and Canada, partnering with 1,500+ retailers and 85,000+ stores, representing 85% of the US grocery market. Customers in 14,000 North American cities can choose from 1 billion products on Maplebear Inc. (NASDAQ:CART), with 25% of priority orders delivered in under 30 minutes. In Q2 2024, it served 25 million+ customers, fulfilling 70.8 million orders, up 7% year-over-year. Revenue for this period was $823 million.
It is exploring new technologies, including Caper Carts, which can weigh and price items in grocery carts, allowing customers to bypass the checkout process. It has partnered with Aldi on this initiative, and if successful, Caper Carts could become more widely adopted in the market.
It also partnered with Uber to deliver food and launched e-commerce storefronts for 30 retailers. Additionally, it partnered with HVN Travel Group and PetSmart to offer a wider product range.
The company’s overall growth is driven by increasing orders, a consistent factor in the company’s performance. For this reason, it’s also one of our top best young stocks to buy now.
2. Kenvue Inc. (NYSE:KVUE)
Market Cap as of September 26: $44.12 billion
Number of Hedge Fund Holders: 58
Kenvue Inc. (NYSE:KVUE) is a consumer health company. Formerly the Consumer Healthcare division of Johnson & Johnson, it is the proprietor of well-known brands such as Aveeno, Band-Aid, Benadryl, Combantrin, Zyrtec, Johnson’s, Listerine, Mylanta, Neutrogena, Trosyd, Tylenol, and Visine. It focuses on providing essential health and wellness products to consumers around the world.
In the second quarter of 2024, the company generated $4 billion in revenue, down 0.27% from the year-ago period. China’s soft market hurt Dr.Ci:Labo brand to drive some of this drop.
Self-care growth slowed to flat year-over-year, following a 14.2% increase last year, although the company outperformed the global market for the 8th consecutive quarter. Tylenol’s market share grew, widening the gap with competitors. Consumer innovations like Tylenol Easy to Swallow benefited from increased investments. Allergy sales recovered in June.
Kenvue Inc. (NYSE:KVUE) expanded its in-store presence and increased media drove growth. Essential Health grew 7.6% organically, with balanced value and volume growth. Listerine grew 10% globally. Increased marketing investment drove returns for Listerine, despite strong clinical superiority.
Kenvue Inc.’s (NYSE:KVUE) performance was solid, with organic growth at 1.5%, driven by value realization across all segments and volume growth in Essential Health. Value realization contributed 2.1% to growth. Volume declined slightly in Self Care and Skin Health and Beauty. Even with volume growth somewhat constrained (down 0.6% year-over-year), the company’s strategic initiatives and strong financial performance positioned it well for future growth.
Oakmark Fund stated the following regarding Kenvue Inc. (NYSE:KVUE) in its first quarter 2024 investor letter:
“Kenvue Inc. (NYSE:KVUE) became the largest standalone consumer health company following its split-off from Johnson & Johnson in May 2023. The company’s highly recognizable brands, such as Neutrogena, Listerine, Tylenol and Band-Aid, have been market share leaders in their respective categories for generations. However, Kenvue’s first year as a public company was clouded by litigation and market share losses in certain categories. As a result, Kenvue now trades for just 16.5x trailing earnings, a substantial discount to the market and other consumer health and packaged goods companies. We see an opportunity for the company to improve efficiency and re-invest the cost savings into increased product development and marketing, which should help improve its growth and brand equity.”
1. GE Vernova Inc. (NYSE:GEV)
Market Cap as of September 26: $70.30 billion
Number of Hedge Fund Holders: 92
GE Vernova Inc. (NYSE:GEV) is an energy company that provides a wide range of energy technologies and services. It is a subsidiary of General Electric Company, formed in 2023. Now it focuses on renewable energy, gas power, and energy storage solutions with a commitment to helping its customers transition to a cleaner energy future.
In Q2 2024, the company made $8.20 billion in revenue, up 2% year-over-year with continued strength in electrification and power, partially offset by the Wind revenue. Services revenue rose 9% with growth across all segments. The Power unit’s orders for gas and steam turbines increased by 30%, and the electrification business backlog grew by 35% year-over-year. It is now set to capitalize on the growing energy demand from the electrification of transportation and AI-driven electricity demand.
It had a significant installed gas generation capacity of 53 gigawatts in July. This made it a major player in the industry. The gas segment provides the company with a strong competitive advantage due to refurbishment revenue and a strong global brand. As an industrial product company, it also benefits from future cash flow visibility through order backlogs.
The International Energy Agency (IEA) forecasts a 4% increase in global electricity demand in 2024 and 2025, up from 2.5% in 2023. This growth is fueled by the electrification of transportation, like electric vehicles, and the rising demand for power-intensive technologies such as AI systems.
GE Vernova Inc.’s (NYSE:GEV) innovative application of AI for efficient power management and autonomous inspections further strengthens its competitive advantage in the market. It is also expanding its portfolio of onshore and offshore wind (clean energy) projects. It’s not limited to wind energy and participates in the broader transition towards lower carbon energy solutions as well.
Carillon Eagle Mid Cap Growth Fund stated the following regarding GE Vernova Inc. (NYSE:GEV) in its Q2 2024 investor letter:
“GE Vernova Inc. (NYSE:GEV) is a global electric power company that was recently spun out of a much larger industrial conglomerate. The company’s shares performed well in their first quarter as a standalone company, primarily as a result of the increasing outlook for power demand growth, both domestically and abroad. We believe GE Vernova is well positioned to capitalize on this growing trend across its various products and services, but most notably within its large-scale gas turbine equipment and related services, as well as in its high-voltage electrical transmission products.”
While we acknowledge the growth potential of GE Vernova Inc. (NYSE:GEV), our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than GEV but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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