In this piece, we will take a look at 10 stocks that will skyrocket.
The primary lure of investing, as you’re likely to know, is to make money. Every day thousands of investors pour into the market to pick out what they believe will be winners to make them rich. And, the market delivers as well. This has been quite clear in 2024, with the hype surrounding artificial intelligence having delivered previously unthinkable returns. Wall Street’s favorite AI stock, the chipmaker that’s responsible for providing the industry with GPUs to run AI workloads, has gained a whopping 636% since ChatGPT was released in November 2022. This stock ranks 4th in our list of Analyst Says These 10 AI Stocks Have More Upside Potential, so if you haven’t guessed by now, then do take a look.
Looking at these spectacular returns, one would be hard pressed to conclude that if you want to make money on the stock market, then growth is the way to go. But as is the case with most things in life, details are lurking under the hood that go against this simple supposition. On this front, professors from the University of Illinois looked at the returns of large cap and small cap value and growth stocks starting from 1969 and ending in 2001. Taking a geometric mean of these returns, they revealed that large cap growth (‘glamour’) stocks delivered mean returns of 4.5%, 7.9%, and 3.8% between 1969-2001, 1979-2001, and 1990-2001, respectively. On the other hand, large cap value stocks delivered returns of 16.4%, 20.4%, and 18% over the three respective time periods. What’s more, is that the returns offered by the value stocks during 1969 and 2001 also surpassed the returns of the S&P 500 index which sat at 11.4%!
But what about small caps? After all, small caps are all the hype on Wall Street these days as investors position themselves for an interest rate cut. July 11th saw the S&P’s flagship index bleed 91 basis points, with the technology heavy NASDAQ shedding 1.98%. The NASDAQ’s drop was led by its 100 most valuable non financial companies which shed 2.15% during the same day. On the other hand, the rising fortunes of small cap stocks accelerated on the 11th. The leading small cap stock index gained 2% during the day and nearly matched this during the first half an hour of trading on the 12th by gaining 1.6% as it opened significantly higher after the after and pre market trading sessions.
Looking at these gains, you might be wondering which small cap stocks might be worth their while. Well, we looked at analyst sentiment as part of our coverage of 8 Best Small-Cap Stocks Ready to Explode According to Analysts and hedge fund sentiment as part of 15 Small-Cap Stocks with High Potential so you should check them out if you’re interested in small cap stocks.
Coming back to the professors’ research, during 1969-2001, 1979-2001, and 1990-2001, small cap growth stocks, were down by 2.8%, 1.8%, and 6.2%, respectively. On the other hand, small cap value stocks delivered geometric mean returns of 18.3%, 22.8%, and 17.7%, respectively. Seems like over the long term, investing in value stocks appears to be just as, if not more, worthwhile while large cap growth stocks appear to fare better than their small cap. peers.
While you might be thinking that these stats do not apply to the current market, it’s also true that they are relevant to an extent especially since 1990 to 2001 was characterized by soaring valuations fuelled by internet stocks. Right now, AI is all that anyone can talk about, even as investors are moving out of big ticket technology names into the under appreciated small caps. Back then, the shares of a California based internet connectivity equipment provider soared by a whopping 53,207% between January 1991 and April 2000. So, this would have seen $1,000 invested during the start soar to $533,000 at the peak, which, fair to say, is life changing money for most of us. Yet, those same shares are down by 36% since then and had tumbled by as much as 79% by February 2009. If you’re interested in knowing what this stock is, it ranked 8th on our list of the 10 Best Communication and Media Stocks To Buy According to Hedge Funds.
At the same time, not all growth stocks end up lower. Some of the biggest examples that weathered the storm after the dotcom bubble popped are the largest companies today. They belong to the eCommerce, consumer and enterprise software, and the broader technology industries. Today’s mega cap stocks have gained anywhere between 6,455% to 203,377% and 437,010% since they were listed for trading. Safe to say, these ‘fads’ of the time weren’t fads and the market knew what it was doing.
Their returns are also what drive growth investors in droves to the stock market. While eCommerce and consumer technology were trends of the past, there are dozens of trends that newsletter publishers have embraced with open arms these days as they promise the next stock capable of delivering 10x or even 100x in returns. Since you’re likely to be aware of AI at this point, we’ll skip it out and list some other ideas. One of the biggest, and perhaps underreported ideas that newsletters have been pitching is quantum computing. Quantum computing expands the amount of data that a traditional computer can compute, and while its stocks haven’t delivered strong returns yet, publishers believe that the future is bright. You can look at some quantum computing stocks and a broader industry overview by reading 12 Best Quantum Computing Stocks To Invest In.
One trend that has delivered returns is weight loss. Since March 2023, these stocks have delivered as much as 173% in returns, and with newer products such as pills under development, some folks believe that there’s more room left for growth. Another highly pitched trend is energy, specifically nuclear energy, uranium miners, and energy infrastructure stocks. All these will benefit from the growth in electricity consumption from AI data centers, according to newsletter publishers.
So, amidst this hunt for the big winners, if you’re interested in which stocks might skyrocket, we’ve got just the list for you.
Top 20 Countries that Owe the US Money
Our Methodology
To make our list of the stocks that might skyrocket, we scanned investment newsletters from Stock Gumshoe and narrowed down 20 stocks from newsletters dated back as far as June 13th. These were ranked by the number of hedge funds that had bought the shares in Q1 2024 and the top ten stocks were chosen. Stock Gumshoe’s thesis and the date of each newsletter are also mentioned.
We also mentioned the number of hedge funds that had bought these stocks during the same filing period. 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. 10x Genomics, Inc. (NASDAQ:TXG)
Number of Hedge Fund Investors in Q1 2024: 33
Date of Newsletter: June 26th
The hype for this newsletter stock is quite strong, as Alexander Green shares that this firm could very well be one of the next Magnificent 7. This stock is a “leader in cutting edge technology;” its technology is “protected” by patents; it has had “massive sales growth;”and comes with the “potential for dozens of blockbusters launches.” By the looks of it, all of us are going to be very rich if we buy this stock. This stock, in particular, “has 1750 patents on a cutting-edge technology that’s used by every single one of the top 100 global research institutions,” and it’s gone from “from $298 million in sales in 2020… to $618 million in sales last year.”
This stock, according to Stock Gumshoe, is 10x Genomics, Inc. (NASDAQ:TXG), an American firm that provides raw materials and other equipment for genetic analysis and testing. It is a loss making firm that has not turned a profit in its five financial years since being a publicly listed company. Evaluating 10x Genomics, Inc. (NASDAQ:TXG) means that an investor has to analyze its technological products in great detail and then compare them with its competitors such as Illumina, Inc. (NASDAQ:ILMN). One way to analyze firms like 10x Genomics, Inc. (NASDAQ:TXG) is to see what the analysts are saying. As Stock Gumshoe highlights, analysts expect the firm to grow its revenue over the next couple of years, and these growth estimates have jumped to range between 10% to 15% from sitting at 5% in the previous quarter.
9. EQT Corporation (NYSE:EQT)
Number of Hedge Fund Investors in Q1 2024: 41
Date of Newsletter: July 1st
Motley Fool, one of the most well known financial websites, sent a recent Stock Advisor newsletter. This newsletter pitched a stock that it described as utilizing an energy source that is “taking the world by storm.” As if this weren’t enough, it also points out that the investor of investors, Berkshire Hathaway also spent a cool $1.3 billion on a facility for this energy source in Maryland. This stock, which is likely involved in liquefied natural gas, has returned “an average of 120% per year to investors” since 2020 to add to its strong “639% returns to date.”
According to Stock Gumshoe, this stock is EQT Corporation (NYSE:EQT) – a natural gas company that produces gas in the Appalachian Basin. Digging deeper into its business, Stock Gumshoe shares that EQT Corporation (NYSE:EQT) offers a mixed bag. On one end, the firm has managed to control its costs well over the past couple of years of high interest rates and inflation. EQT Corporation (NYSE:EQT) has managed to acquire pricey equipment at affordable price tags, and it has also pre sold its gas inventory and controlled production at a time when natural gas prices are low. However, EQT Corporation (NYSE:EQT) is facing trouble when it comes to shipping its gas to areas with large populations and sizeable demand.
8. Cloudflare, Inc. (NYSE:NET)
Number of Hedge Fund Investors in Q1 2024: 44
Date of Newsletter: June 26th
An investment newsletter from the Oxford Club is looking at ways to let subscribers invest in the next set of Magnificent 7 stocks. After all, the current list of these stocks is worth trillions of dollars, so it’s unlikely that they will be able to match this growth in the future. One of these ‘new Magnificent 7’ stocks has more than “300 data centers located in cities across the world” according to the newsletter. Data centers are quite a hot commodity these days because of the need for AI systems to rely on them. This stock, says the Oxford Club, is the “fastest network provider in most of the world’s countries,” and as a testament to its network speed, not only do “30% of the Fortune 1000 companies” work with this firm but this list includes big ticket names like “IBM, H&M, Doordash, Walmart, Best Buy, Lenovo, Dell, Etsy, and Nike.”
Seems like quite a pitch if you ask us. So what’s this magical stock? It’s none other than the cloud computing networks, network security, and broader networking services provider, Cloudflare, Inc. (NYSE:NET). Stock Gumshoe shares that the firm’s shares have been in trouble recently as the market focuses on software stocks that are geared towards AI products. If IBM, H&M, Doordash, Walmart, Best Buy, Lenovo, Dell, Etsy, and Nike are able to perform as management expects, then the firm could have operating and cash flow margins of 25% and 20%. Growth has stalled to 20% recently, and a buy decision might have to wait based on future growth.
7. The Hershey Company (NYSE:HSY)
Number of Hedge Fund Investors in Q1 2024: 44
Date of Newsletter: July 2nd
Whitney Tilson’s Stansberry investment newsletter highlights a set of stocks that he believes are part of a “perfect portfolio.” Some of his stock picks five years ago were Meta, Amazon, and Google, so it’s safe to say there’s some merit to the stocks being pitched. The first company in the fresh stock list is one that he believes few people have the depth to understand correctly despite the fact that it’s a well known name. It’s not a new company either, as the firm has flourished “for over 100 years,” according to Tilson. This performance includes growth during times of significant economic turmoil, including the 2008 recession, the 2020 coronavirus pandemic, and the 2021 inflation boom.
For those who worry about the volatility in the stock market, seems like this is really the perfect stock pick. This stock is The Hershey Company (NYSE:HSY), which is one of the biggest confectionery companies in the world. Stock Gumshoe has bought The Hershey Company (NYSE:HSY)’s shares this year as they’ve been weak due to inflationary pressures taking a bite out of the demand for its products. The firm has a strong return on equity of 53%, which has impressed Tilson, and it is also valued well at 18x earnings. The weak share price has increased the dividend yield to 3%.
6. CME Group Inc. (NASDAQ:CME)
Number of Hedge Fund Investors in Q1 2024: 60
Date of Newsletter: July 2nd
Seems like Tilson’s stock picks are finding favor with the hedge funds too as not only are four out of ten stocks on our list part of his newsletter, but Hershey is immediately followed by another Stansberry stock pick. This ‘perfect’ stock is one of the “oldest and most trusted” financial market institutions, and the “backbone” for “an average value of $1 quadrillion trading every year.” Seems to be quite a stable firm that can see nothing go wrong if you ask us. Tilson claims that the “world’s financial system” would “shutter” down if this firm were to vanish from the face of the Earth, and like Hershey’s, this firm’s revenue also grew during the three recent financial crisis.
This leads Stock Gumshoe to speculate that the stock can be CME Group Inc. (NASDAQ:CME). The Chicago Mercantile Group operates one of the biggest trading platforms in America, with a wide range of commodities trading on its platform every day. The stock is trading at close to a 10 year valuation low of 22x of earnings, and naturally, this has also spiked the dividend yield to 4.5%. However, as Gumshoe notes, the stock dropped to 10x valuation during the financial crisis which is unsurprising as investors seek refuge in the dollar and gold during an economic downturn.
5. CyberArk Software Ltd. (NASDAQ:CYBR)
Number of Hedge Fund Investors in Q1 2024: 63
Date of Newsletter: June 26th
Coming back to the list of Oxford Club’s new Magnificent 7 stocks that are also favored by hedge funds, this particular stock seems to have taken an early lead in a niche AI industry. By doing so, it’s tied its fortune to the growth of the broader business world and relied on AI to expand its product portfolio. This firm “uses AI to protect companies from identity theft and security breaches.” These products seem to have caught on with some of the biggest companies in the world, as the future Magnificent 7 stock “provides cybersecurity for. . . even NASA” according to the Oxford Club.
The magical AI cybersecurity stock is CyberArk Software Ltd. (NASDAQ:CYBR) according to Stock Gumshoe. In today’s era of high interest rates, CyberArk Software Ltd. (NASDAQ:CYBR) is valued at 17x of its annual recurring revenue, which sat at $622 million on an annualized basis recently. The firm is currently valued at 100x of its expected 2024 earnings, and it has also grown revenue by an average of 17% over the past five years. Stock Gusmshoe cautions that these high multiples can leave the stock volatile in the future as the fundamentals will take some time to catch up with market expectations.
4. CrowdStrike Holdings, Inc. (NASDAQ:CRWD)
Number of Hedge Fund Investors in Q1 2024: 76
Date of Newsletter: July 9th
The next stock comes from Louis Navellier who believes that not only is its underlying technology the next big world changer but also shares that Amazon founder Jeff Bezos is involved in it. This technology is QaaS, or Quantum as a Service. This stock could be a “6-figure” payday, according to Navellier, and it was also “the first company to hit $1 billion in revenue” on Amazon’s AWS marketplace. It is also “one of the most profitable in the entire industry” so looks like we’ve got another jackpot on our hands.
This stock is CrowdStrike Holdings, Inc. (NASDAQ:CRWD). The firm’s revenue is expected to grow between 25% to 30% over the next couple of years, and it’s also got a high valuation which sits at 100x forward earnings. To boot, CrowdStrike Holdings, Inc. (NASDAQ:CRWD)’s compounded annual growth rate (CAGR) for its revenue has been 70% since 2017, allowing it to grow its revenue from a mere $50 million to $3 billion.
3. Berkshire Hathaway Inc. (NYSE:BRK-B)
Number of Hedge Fund Investors in Q1 2024: 119
Date of Newsletter: July 2nd
Coming back to Whitney Tilson, this stock is so good he’d be willing to bet not only his future but also his children’s future on it by putting 50% of their inheritance in it. This stock can “generate more returns than annuities, life insurance, gold, or a house,” so looks like it’s relevant to just cut to the chase and see what the hype is all about.
The hype, it appears, is about Warren Buffett’s investment holding company Berkshire Hathaway Inc. (NYSE:BRK-B). It has a fortress of a balance sheet with $38 billion in cash and it is also the most recognizable investment brand name in America. Tilson’s buy point for Berkshire Hathaway Inc. (NYSE:BRK-B) is $407, and Gumshoe also speculates that Tilson is also being a bit disingenuous in promoting the stock since it’s traded above the intrinsic value for quite some time. While Buffett will be a centurion in a couple of years, Berkshire Hathaway Inc. (NYSE:BRK-B) has some of the best investment professionals on its team. It might not be the stock for the growth junkies though, as Warren Buffett’s secret investment sauce is built on gradual value accretion through compounding.
2. Visa Inc. (NYSE:V)
Number of Hedge Fund Investors in Q1 2024: 166
Date of Newsletter: July 2nd
The final Tilson stock on our list is one that he believes is “a cash machine.” Not only does this stock get a “royalty” on “practically everything” but it’s “rolling in dough.” He also adds that this cash machine is insulated against pitfalls that other firms in the manufacturing industry suffer from, and its business model lends it a hefty “operating profit margin of about 65%.” This stock could very well lead to “generational wealth,” so without much ado, let’s take a look at this guarantor of your future financial stability according to Tilson.
This stock is Visa Inc. (NYSE:V) says Stock Gumshoe. It trades at 25x to 30x of its earnings, and coupled with its smaller rival Mastercard, the two effectively control the global digital payments market. While this isn’t cheap, it’s below the average of 50x during the coronavirus pandemic. Visa Inc. (NYSE:V) has also endured multiple financial crises and financial downturns, but the stock suffers from the curse of heft as its growth rate fails to keep up with the market.
1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Investors in Q1 2024: 293
Date of Newsletter: July 9th
Coming back to Navellier, this stock had a “cash flow of $9.1 billion” in Q4 2023 which puts it on track to become the “largest company in the world for at least the next 10 years.” Safe to say, this isn’t a small cap stock or a startup. Some hints about its business model include the firm’s operations in “cloud computing, cybersecurity, software, gaming, hardware, search,” and we’ll make it easy for you by sharing that it isn’t Google parent Alphabet. If you’re an avid follower of the technology industry, you should have guessed it by now, but if you haven’t, then Navellier reminds you that this stock can provide the “perfect mix of stability and low risk.”
This stock is the mega cap technology giant Microsoft Corporation (NASDAQ:MSFT). Navellier’s latest stocks are all about QaaS, and Gumshoe also notes that two of China’s largest technology conglomerates, Alibaba and Baidu have both given up on their quantum investments lately. Microsoft Corporation (NASDAQ:MSFT)’s forward P/E of 36x does make it expensive, and investing in an S&P linked fund could provide exposure to its stock coupled with other tech heavy weights.
MSFT tops our list of best investment newsletter stock pitches. However, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than MSFT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None.
