In this piece, we will take a look at the 12 stocks with the potential to explode. If you want to skip our coverage of the latest stock market news and the current economic environment, then you can take a look at the 5 Stocks with Potential to Explode.
As investors and markets make a slow start to 2024, the main question on everyone’s mind is how far can markets go this year. 2023 was a topsy turvy ride that saw major indexes continuously fluctuate in response to the Federal Reserve’s interest rate decisions. At the same time, the mega cap technology sector continued to perform well amidst optimistic estimates for A.I., and the U.S. economy did not tip into a recession. As a whole, 2023 was better than what many might have expected to lay in store at the start of the year, and now, it’s time to take stock of expectations for 2024.
Talking about stocks, several investment banks and research firms are out with their predictions for the flagship S&P 500 index’s performance in 2024. These predictions range from optimistic to cautious, and the analyst opinions range from believing 2024 to be an “average” year to increasing year end targets. Starting from the cautious one first, this voice belongs to Michael Wilson of Morgan Stanley (NYSE:MS). The analyst outlines three scenarios for the market this year, and links all of them to the economy. Starting from best to worst, these assume a soft landing with accelerating growth, a standard soft landing, and a recession. To position a portfolio for the latter two scenarios, the investment bank outlines that a combination of defensive stocks and cyclical stocks can do well for a soft landing. For a recession, defensive stocks only can be a fruitful endeavor.
While Morgan Stanley is urging caution, others are far more optimistic. One such voice is from the teams at UBS Group AG (NYSE:UBS). The UBS analysts set the S&P 500’s highest year end target for 2024 in mid January, as they shared that the index can close at a level of 5,150 points. This marked an upgrade from their earlier estimate of 4,850, placing the firm firmly in the market camp that believes that interest rates will significantly reduce this year. This optimism is also met by teams at The Goldman Sachs Group, Inc. (NYSE:GS) and RBC Capital. Starting from RBC, like UBS, it also started the year by upgrading estimates for the S&P 500. These estimates now match the ones from UBS, and also mark an upgrade over RBC’s previous value of 5,000 points. However, RBC’s Lori Calvasina raised the firm’s year end target for the S&P 500 to 5,150 earlier this month, and Calvasina added that when compared to RBC’s 5,000 target in November that reflected a 10% gain from levels at that time, the new target is actually more conservative as it prices in an 8% appreciation.
Finally, one bank whose predictions in 2022 stood the test of time in 2023 is Goldman Sachs. While several big players on Wall Street were all doom and gloom in 2022 about the prospects of the U.S. economy, Goldman Sachs bucked the trend and wagered that if all went well, then the U.S. economy could very well avoid a recession. The topic of a recession is complex in itself when we consider the current monetary policy environment as the Federal Reserve has rapidly hiked interest rates to cull inflation and wages. A weakening economy increases the pressure on the Fed to cut rates and stimulate growth; however, if the economy is robust, then the central bank can feel comfortable knowing that its policies are not causing damage to businesses.
With this in mind, Goldman Sachs’s latest prediction about America’s economic future is in line with its previous sentiment. In a note released mid January, analysts upgraded their growth forecasts to predict 2.3% in GDP growth for the U.S. in 2024. The economic boost came roughly a month after Goldman had increased its S&P 500 forecast for 2024 to 5,100 points – just 50 points shy of estimates from RBC and UBS. One can speculate that perhaps robust economic growth is behind the 50 point divergence as it could mean that higher for longer rates prevent the stock market from fully spreading its wings this year.
So, as the economic and stock market tea leaves start to orient themselves for another 12 months, we decided to see if any stocks have the potential to explode. Some high ranking names in this list are Marvell Technology, Inc. (NASDAQ:MRVL), Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), and Fidelity National Information Services, Inc. (NYSE:FIS).
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Our Methodology
To make our list of the stocks with the potential to explode, we scanned investment newsletters from Stock Gumshoe and made a list of 15 stocks that are pitched by investment newsletters. Then, they were ranked by the number of hedge funds that had bought the shares in Q3 2023 and the top stocks were selected. For these stocks we have also mentioned hedge fund sentiment. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.
12 Stocks with Potential to Explode
12. Symbotic Inc. (NASDAQ:SYM)
Number of Hedge Fund Investors In Q3 2023: 12
Date Investment Newsletter Was Published On: 12/6/2023
Symbotic Inc. (NASDAQ:SYM) sells robots and associated equipment for logistics use in the U.S. It is one of the best performing stocks as of late, as the shares gained more than 300% on the stock market in 2023.
During last year’s third quarter, 12 out of the 910 hedge funds part of Insider Monkey’s database had held a stake in Symbotic Inc. (NASDAQ:SYM). It joins Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), Marvell Technology, Inc. (NASDAQ:MRVL), and Fidelity National Information Services, Inc. (NYSE:FIS) in our list of stocks that are poised to explode.
11. Getty Realty Corp. (NYSE:GTY)
Number of Hedge Fund Investors In Q3 2023: 12
Date Investment Newsletter Was Published On: 1/3/2024
Getty Realty Corp. (NYSE:GTY) is a real estate investment trust headquartered in New York City. Its portfolio includes more than a thousand single tenant properties. Getty Realty Corp. (NYSE:GTY)’s shares are rated Buy on average and analysts have set an average share price target of $30.80.
As of Q3 2023 end, 12 out of the 910 hedge funds covered by Insider Monkey’s survey had bought and owned the firm’s shares. Israel Englander’s Millennium Management was Getty Realty Corp. (NYSE:GTY)’s largest shareholder as it owned one million shares that are worth $30.2 million.
10. Federal Realty Investment Trust (NYSE:FRT)
Number of Hedge Fund Investors In Q3 2023: 15
Date Investment Newsletter Was Published On: 1/3/2024
Federal Realty Investment Trust (NYSE:FRT) is another REIT. It caters to the needs of thousands of tenants all over the U.S. and is headquartered in Maryland. 2024 has been relatively uneventful for the firm so far, with the only major development being a successful $400 million convertible note offering.
Insider Monkey dug through 910 hedge fund holdings for their September quarter of 2023 shareholdings to find 15 Federal Realty Investment Trust (NYSE:FRT) shareholders.
9. RPC, Inc. (NYSE:RES)
Number of Hedge Fund Investors In Q3 2023: 15
Date Investment Newsletter Was Published On: 1/4/2024
RPC, Inc. (NYSE:RES) is a mid sized backend oil company that provides drilling equipment and other associated products and services to exploration firms in the U.S. Amidst a slowdown in the oil sector last year, the firm’s financial performance leaves much to be desired as it has missed analyst EPS estimates in three out of its four latest quarters.
By the end of 2023’s third quarter, 15 out of the 910 hedge funds tracked by Insider Monkey’s research had invested in the company. Out of these, the biggest RPC, Inc. (NYSE:RES) investor was Mario Gabelli’s GAMCO Investors due to its $27.2 million stake.
8. Enerplus Corporation (NYSE:ERF)
Number of Hedge Fund Investors In Q3 2023: 19
Date Investment Newsletter Was Published On: 12/20/2023
Enerplus Corporation (NYSE:ERF) is a Canadian oil and gas company with operations in the U.S. Despite mixed financial performance over the course of the last four quarters, its shares are rated Strong Buy on average with an average analyst share price target of $20.90.
For their third quarter of 2023 investments, 19 out of the 910 hedge funds covered by Insider Monkey’s research had held a stake in Enerplus Corporation (NYSE:ERF). Phill Gross and Robert Atchinson’s Adage Capital Management was the largest shareholder as it owned $108 million worth of shares.
7. Matador Resources Company (NYSE:MTDR)
Number of Hedge Fund Investors In Q3 2023: 24
Date Investment Newsletter Was Published On: 12/20/2023
Matador Resources Company (NYSE:MTDR) is a diversified American energy company that explores, produces, and transports petroleum products. The firm started 2024 on a good note as it received praise from Mizuho for its ability to consistently generate cash for shareholders.
Insider Monkey scoured through 910 hedge fund portfolios for their September quarter of 2023 shareholdings and discovered that 24 had held a stake in the company. The biggest Matador Resources Company (NYSE:MTDR) investor in our database is Sameer Sethna’s Aventail Capital Group due to its $57.7 million investment.
6. Roblox Corporation (NYSE:RBLX)
Number of Hedge Fund Investors In Q3 2023: 34
Date Investment Newsletter Was Published On: 1/9/2024
Roblox Corporation (NYSE:RBLX) is a California based company that is known for its digital entertainment and connectivity platform often called a metaverse. 2023 hasn’t been a great year for the firm as investors have urged management to cut returns as Roblox Corporation (NYSE:RBLX) is struggling to grow and make money.
As of Q3 2023 end, 34 out of the 910 hedge funds surveyed by Insider Monkey had held a stake in Roblox Corporation (NYSE:RBLX). Catherine D. Wood’s ARK Investment Management was the largest shareholder as it owned 11.9 million shares that are worth $346 million.
Marvell Technology, Inc. (NASDAQ:MRVL), Roblox Corporation (NYSE:RBLX), Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), and Fidelity National Information Services, Inc. (NYSE:FIS) are some top stocks with explosive potential.
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Disclosure: None. 12 Stocks with Potential to Explode is originally published on Insider Monkey.