We recently published a list of 10 Stocks with Consistent Growth to Buy. In this article, we are going to take a look at where Broadcom Inc. (NASDAQ:AVGO) stands against other stocks with consistent growth to buy.
Currently, financial markets are experiencing a mix of optimism and caution as investors react to changing economic conditions. Many are closely watching trends and data that could impact future growth and stability.
Tom Lee, managing partner and head of research at Fundstrat Global Advisors, recently shared his insights on the current market trends during an interview on CNBC’s ‘Squawk Box’ on October 14. He acknowledged that he underestimated the strength of the market, noting that it has been surprisingly resilient despite expectations of volatility leading up to the 2024 election. Lee highlighted that there is a significant amount of cash—about $6 trillion—sitting on the sidelines, which has contributed to the market’s stability. He observed that many investors had anticipated a recession, but instead, companies have shown strong earnings and resilience.
Lee also mentioned that the Federal Reserve is likely to adopt a supportive stance as inflation data continues to trend toward their 2% target. He believes that regardless of who wins the upcoming election, stocks are likely to perform well in the following year. Lee pointed out that markets tend to thrive on visibility and certainty, suggesting that if one candidate appears to be gaining an advantage, it could lead to a more favorable trading environment before the election. Overall, he remains optimistic about the market’s outlook.
S&P 500 and Dow Reach New Heights Ahead of Election Season
On October 18, both the S&P 500 and the Dow Jones Industrial Average reached new record highs, marking six consecutive weeks of gains for these major indices. As reported by CNBC, the S&P 500 rose by 0.40%, closing at 5,864.67, while the Dow rose by 0.09% and added 36.86 points to close at 43,275.91. The Nasdaq also performed well, increasing 0.63% to close at 18,489.55. This marks the longest winning streak of the year for both the Dow and S&P 500, with notable increases in their overall performance.
As earnings season progresses, over 70 companies in the S&P 500 have reported their results, with about 75% of those companies surpassing expectations. Despite potential market volatility leading up to the upcoming election, some analysts believe that stocks may continue to rise through November.
Rob Williams, a chief investment strategist at Sage Advisory, noted that this trend is unusual for an election year, where markets typically hesitate before improving post-election. He suggested that investors might be optimistic about a possible victory for Republican nominee Donald Trump, whose policies are seen as more favorable for businesses in terms of regulations and taxes.
Methodology
To compile our list of the 10 stocks with consistent growth to buy, we used the Finviz and Yahoo stock screeners. We sorted our results based on market capitalization and picked the top 30 stocks.
Next, we focused on identifying stocks that had demonstrated consistent growth. From the initial list, we narrowed our choices to stocks that have grown their revenue positively over the past 5 years. We further refined our selection to include only those that had positive revenue growth each year in their last five reported annual revenues.
To ensure the reliability of our findings, we consulted reputable sources such as SeekingAlpha, which provided insights into the revenue CAGR over the past five years, and Macrotrends, which offered information on historical annual revenue data. Finally, we have ranked the 10 stocks with consistent growth to buy below in ascending order based on their five-year revenue CAGR.
Additionally, we mentioned the hedge fund sentiment surrounding each stock, which was taken from Insider Monkey’s database of 912 elite hedge funds as of Q2 of 2024.
Why do we care about what hedge funds do? 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).
A technician working at a magnified microscope, developing a new integrated circuit.
Broadcom Inc. (NASDAQ:AVGO)
5-Year Revenue CAGR: 16.03%
Number of Hedge Fund Holders: 130
Broadcom Inc. (NASDAQ:AVGO) is an American technology company that designs, develops, and manufactures a wide range of semiconductor, enterprise software, and security solutions. Some of its solutions include service provider and enterprise networking and storage, mobile device and broadband connectivity, mainframe, cybersecurity, and private and hybrid cloud infrastructure. The company’s product portfolio serves the data center, networking, enterprise software, broadband, wireless, storage, and industrial markets.
The company is strategically positioned to capitalize on the growing demand for AI semiconductors. Broadcom Inc. (NASDAQ:AVGO) has developed specialized AI chip designs tailored to meet the specific needs of hyperscale cloud providers, allowing it to cater effectively to their requirements. The company has secured partnerships with major clients like Google, Meta, and ByteDance for its AI application-specific integrated circuits (ASICs), with Microsoft’s OpenAI expected to join this list soon.
In addition to its semiconductor advancements, the company’s acquisition of VMware has significantly boosted its infrastructure software revenue, which saw a remarkable 200% year-over-year increase. Revenue for infrastructure software was $5.8 billion, with VMware contributing $3.8 billion in Q3 alone. This growth reflects the successful integration of VMware’s offerings, as evidenced by the booking of over 15 million CPU cores of VMware Cloud Foundation (VCF) during the quarter.
Overall, Broadcom Inc.’s (NASDAQ:AVGO) strong performance in both semiconductor and software segments positions it well for future growth, making it an attractive stock option for investors.
Over the last five years, Broadcom Inc. (NASDAQ:AVGO) has maintained a steady revenue increase. This consistent performance underscores the company’s strength in its industry.
According to Insider Monkey’s Q2 2024 database of over 900 hedge funds, 130 hedge funds held stakes in Broadcom Inc. (NASDAQ:AVGO). ClearBridge Investments stated the following regarding Broadcom Inc. (NASDAQ:AVGO) in its “ClearBridge Large Cap Value Strategy” Q3 2024 investor letter:
“In IT, we bought Broadcom Inc. (NASDAQ:AVGO) as we believe the company has a long runway for growth with its custom silicon business, which should be more durable and less volatile than other components within the AI food chain. We also believe the acquisition of VMware creates another opportunity for steady, subscription-based durable growth that is still in its early innings. We believe the stock has an attractive risk/reward profile given the reasonable visibility toward mid-teens EPS growth at a low-20s P/E multiple.”
Overall, AVGO ranks 7th on our list of stocks with consistent growth to buy. While we acknowledge the potential of AVGO, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AVGO 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. This article is originally published at Insider Monkey.