In this article, we discuss 10 best stocks to invest in 2024 for beginners. If you want to skip our detailed discussion on the stock market, head directly to 5 Best Stocks To Invest In 2024 For Beginners.
Global stocks reached their highest point in over two years, with the S&P 500 hitting a new record high on February 7, as per Reuters. This was driven by robust earnings, which helped counter concerns surrounding US regional banks and the Chinese markets. Bonds experienced slight pressure, as statements from Federal Reserve officials reinforced the expectation that the central bank might not reduce interest rates in the near future. According to Arthur Hogan, the chief market strategist at B. Riley Wealth:
"We are at the midpoint of the 4Q earnings reporting season, and we would say that there has been more good news than bad."
In 2023, the S&P 500 delivered a total return of 26.29%, recovering from the setback of 18.11% in 2022. In 2024, investors remain optimistic that the same macroeconomic factors driving the stock market's 2023 rally will propel the S&P 500 to achieve new all-time highs. Investors remain hopeful that the Federal Reserve will successfully guide the US economy to a soft landing, transitioning from interest rate hikes to rate cuts. The potential combination of declining interest rates and earnings growth is seen as a positive for stocks. However, analysts express worries about overvalued technology sector stocks, and the upcoming 2024 U.S. presidential election is expected to introduce significant market volatility.
Looking at historical data from 1921 to 2023, Sam Stovall, chief investment strategist of CFRA Research, noted that the average S&P 500 bull market has yielded a return of 157% and lasted over four years. This historical pattern suggests the possibility of the stock market rally continuing in the foreseeable future. One notable success in the current bull market has been the performance of artificial intelligence technology as an investment theme. AI stocks were among the top performers in 2023, contributing to the market's overall positive trajectory. James Demmert, chief investment officer at Main Street Research, commented:
“The market’s recent strength is indicative of a new and very real AI-led bull market and business cycle that could last a decade thanks to the productivity growth and tailwinds from AI.”
On the other hand, Morgan Stanley's Global Investment Committee suggests a more cautious outlook for 2024, anticipating an average year for markets rather than double-digit gains. Concerns include the S&P 500's elevated forward price/earnings ratio and a historically low equity risk premium. Valuations indicate potential sub-par annual stock returns, with estimates pointing to a 4% gain compared to the long-run average of 7%-8%. Analysts' optimistic projections for 2024 U.S. corporate earnings are questioned, with expectations of a tapering in economic growth from 7% to 4%. The market's assumption of a more aggressive Fed rate-cutting stance contrasts with public signals, potentially leading to tighter financial conditions as emergency programs wind down in 2024.
Marko Kolanovic, Chief Global Markets Strategist and Global Co-Head of Research at J.P. Morgan, remarked:
“As we approach 2024, we expect both inflation data and economic demand to soften, as the tailwinds for growth and risk markets are fading. Overall, we are cautious on the performance of risky assets and the broader macro outlook over the next 12 months, due to building monetary headwinds, geopolitical risks and expensive asset valuations.”
Some of the best stocks to invest in 2024 for beginners include Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), and Mastercard Incorporated (NYSE:MA).
Our Methodology
For this list, we used a stock screener and selected stable companies with high single digit or low-teens revenue growth. Then, we arranged them via market cap to get the largest companies. We selected the top stocks for beginners based on revenue growth and hedge fund sentiment as of the third quarter of 2023. The list is sorted in the ascending order of the number of hedge fund holders.
Image by Sergei Tokmakov Terms.Law from Pixabay
10. UnitedHealth Group Incorporated (NYSE:UNH)
Number of Hedge Fund Holders: 104
Quarterly Revenue Growth: 14.10%
UnitedHealth Group Incorporated (NYSE:UNH) is a diversified healthcare company in the United States with four segments – UnitedHealthcare, Optum Health, Optum Insight, and Optum Rx. UnitedHealthcare offers health benefit plans for employers and individuals, Medicaid plans, and children's health insurance.
On January 12, UnitedHealth Group Incorporated (NYSE:UNH) reported a Q4 non-GAAP EPS of $6.16 and a revenue of $94.4 billion, outperforming Wall Street estimates by $0.17 and $2.22 billion, respectively. Revenue for the period increased 14% on a year-over-year basis.
According to Insider Monkey’s third quarter database, 104 hedge funds held stakes worth nearly $11 billion in UnitedHealth Group Incorporated (NYSE:UNH), compared to 111 funds in the prior quarter worth $10.1 billion. Rajiv Jain’s GQG Partners is the leading position holder in the company, with 3.2 million shares worth $1.6 billion.
Like Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), and Mastercard Incorporated (NYSE:MA), UnitedHealth Group Incorporated (NYSE:UNH) is one of the best cheap stocks for beginners.
Wedgewood Partners stated the following regarding UnitedHealth Group Incorporated (NYSE:UNH) in its fourth quarter 2023 investor letter:
“UnitedHealth Group Incorporated (NYSE:UNH) contributed less to portfolio performance than the majority of our holdings during the quarter. The Company reported double-digit revenue, operating earnings and earnings per share growth during their third quarter. The Company has been able to adjust pricing in its health care segment to keep up with medical cost inflation while working with its Optum units to deliver more value-based care that replaces the traditional fee for service health care model. Value-based care is a sensible, long-term growth opportunity for the Company to pursue and also differentiates it from the vast majority of healthcare providers, particularly as it relates to Medicare patients. For example, the Company’s value-based care programs provide more preventative care opportunities and home-based care visits for patients which helps save the U.S. healthcare system billions in unnecessary spending while also providing patients with better outcomes, as diseases and behaviors are caught or corrected at earlier stages. The Company has invested in several core assets over many years to execute this value-based strategy and it will become the standard of care as the proportion of people in the U.S. with healthcare insurance coverage continues to reach new highs.”
9. JPMorgan Chase & Co. (NYSE:JPM)
Number of Hedge Fund Holders: 109
Quarterly Revenue Growth: 11.00%
JPMorgan Chase & Co. (NYSE:JPM) is a global financial services company operating in four segments – Consumer & Community Banking, Corporate & Investment Bank, Commercial Banking, and Asset & Wealth Management. It is one of the top cheap beginner stocks to watch.
On February 6, JPMorgan Chase & Co. (NYSE:JPM) announced that it intends to initiate a substantial expansion over the next three years, involving the commencement of 500 new branches, renovation of 1,700 locations, and the hiring of 3,500 staff members. The expansion will focus on reaching low-income and rural communities in new markets. Upon completion, this initiative will result in over 1,100 added branches and more than 10,500 new hires in its Consumer Bank team since 2018.
According to Insider Monkey’s third quarter database, 109 hedge funds were long JPMorgan Chase & Co. (NYSE:JPM), compared to 106 funds in the prior quarter. Ken Fisher’s Fisher Asset Management is the biggest stakeholder of the company, with 11.3 million shares worth $1.65 billion.
Madison Sustainable Equity Fund stated the following regarding JPMorgan Chase & Co. (NYSE:JPM) in its fourth quarter 2023 investor letter:
“We updated the sustainable scorecard for JPMorgan Chase & Co. (NYSE:JPM). JP Morgan continues to have an Average rating across Governance, Social and Environmental factors. JP Morgan is using its business to improve climate change. JP Morgan has targeted $2.5 trillion in financing between 2021 and 2030 to advance long-term solutions to address climate change and sustainable development. The Board has oversight of corporate responsibility and ESG matters, but ESG and Sustainability are addressed across the firm. JPM does listen to shareholders. After a 31% For Vote on executive compensation in 2022, the Board will not be granting any special awards to Jamie Dimon or Daniel Pinto and if awarded to other Named Executive Officers, there will be a direct performance condition associated with the award. The Compensation Committee limited the cash percentage of Dimon and Pinto’s compensation.”
8. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders: 110
Quarterly Revenue Growth: 10.20%
Advanced Micro Devices, Inc. (NASDAQ:AMD) is a global semiconductor company operating in Data Center, Client, Gaming, and Embedded segments. The company provides x86 microprocessors, graphics processing units (GPUs), chipsets, and other products for data centers, gaming, and embedded applications. It is one of the best cheap beginner stocks to invest in.
On February 1, Citi analyst Christopher Danely observed that Advanced Micro Devices, Inc. (NASDAQ:AMD) has increased its guidance for artificial intelligence-related revenue, anticipating $3.5 billion in sales for the current year, up from the previous estimate of $2 billion. Citi suggested that Advanced Micro Devices, Inc. (NASDAQ:AMD) may intentionally be underestimating, and the company's CEO expressed confidence in surpassing the $3.5 billion figure for this year. The analyst estimated that AMD could generate $5 billion this year and $8 billion next year from its MI300, according to buy-side investors' expectations.
According to Insider Monkey’s third quarter database, 110 hedge funds were bullish on Advanced Micro Devices, Inc. (NASDAQ:AMD), compared to 112 funds in the prior quarter. Philippe Laffont’s Coatue Management is a prominent stakeholder of the company, with 12.4 million shares worth $1.28 billion.
White Falcon Capital Management stated the following regarding Advanced Micro Devices, Inc. (NASDAQ:AMD) in its fourth quarter 2023 investor letter:
“It is important to note that the returns depicted above actually originated in the market turmoil of 2022 and were only realized in 2023. We assess that about 75% of the returns in 2023 were derived from just 35% of the portfolio. Notably, the technology companies we acquired in 2022 – Advanced Micro Devices, Inc. (NASDAQ:AMD), Amazon, Docebo, NU, Rover – performed exceptionally well. In hindsight, the decision to allocate to technology stocks appears straightforward; but it actually demanded courage and conviction to buy and add to these stocks during the fear and uncertainty of the 2022 bear market.
The top 5 positions in the portfolio were: Precious Metals royalty basket, Nu Holdings, AMD Amazon.com and Converge Technology Services. AMD has worked out great for us but we must admit that it has gotten expensive. AI was not part of our original investment thesis and AMD is a great reminder of how one can get ‘lucky’ investing in quality businesses run by competent management teams (ditto for Amazon).”
7. Adobe Inc. (NASDAQ:ADBE)
Number of Hedge Fund Holders: 112
Quarterly Revenue Growth: 11.60%
Adobe Inc. (NASDAQ:ADBE), a diversified software company, operates globally through three segments – Digital Media, Digital Experience, and Publishing and Advertising. The Digital Media segment offers products and services for content creation and promotion, including the flagship product Creative Cloud. The Digital Experience segment provides a platform for brands and businesses to manage and optimize customer experiences. The Publishing and Advertising segment offers various products and services, such as e-learning solutions and Advertising Cloud offerings.
On December 13, Adobe Inc. (NASDAQ:ADBE) reported a Q4 non-GAAP EPS of $4.27 and a revenue of $5.05 billion, outperforming Wall Street estimates by $0.13 and $30 million, respectively. The company repurchased approximately 1.8 million shares during the fourth quarter.
According to Insider Monkey’s third quarter database, 112 hedge funds were bullish on Adobe Inc. (NASDAQ:ADBE), compared to 109 funds in the prior quarter. Ken Fisher’s Fisher Asset Management is the leading stakeholder of the company, with 4.5 million shares worth $2.3 billion.
Here is what Polen Global Growth has to say about Adobe Inc. (NASDAQ:ADBE) in its Q3 2023 investor letter:
“Both Alphabet and Adobe’s businesses continue to perform well. With respect to Adobe, the most recent quarter delivered more of the same with constant currency revenue growing 13%, margin expansion, and over 2% of shares outstanding repurchased for non-GAAP earnings growth of over 20%. We believe its approach to GenAI through Firefly, which guarantees safe content because it trains on Adobe Stock, will continue to be attractive to enterprises. The counter to GenAI, and something we are keeping an eye on with Alphabet and Adobe, is that it requires heavy investment. While both businesses can leverage their scale and manage costs in other areas, we expect the investment in future growth through GenAI will weigh on company-wide margins over the near term.”
6. Salesforce, Inc. (NYSE:CRM)
Number of Hedge Fund Holders: 122
Quarterly Revenue Growth: 11.30%
Salesforce, Inc. (NYSE:CRM) is a global provider of customer relationship management technology, facilitating the connection between companies and customers. The company's services include sales tools for data management, lead monitoring, progress tracking, and analytics. Salesforce also offers a platform allowing businesses to build custom apps, an online learning platform, and Slack for collaboration.
On January 30, BofA designated Salesforce, Inc. (NYSE:CRM) as one of their top picks for 2024. According to BofA Analyst Brad Sills, Salesforce is strategically positioned to further gain market share in the cumulative $200 billion market. Sills highlighted Salesforce's competitive advantage with a significant market share of only 15% and a robust moat derived from its extensive installed base of over 150,000 customers in the core sales/front office category.
According to Insider Monkey’s third quarter database, 122 hedge funds were bullish on Salesforce, Inc. (NYSE:CRM), same as the prior quarter. Ken Fisher’s Fisher Asset Management is the leading stakeholder of the company, with roughly 15 million shares worth $4 billion.
In addition to Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), and Mastercard Incorporated (NYSE:MA), Salesforce, Inc. (NYSE:CRM) ranks 6th on our list of the top cheap stocks for beginners in 2024.
Polen Focus Growth Strategy stated the following regarding Salesforce, Inc. (NYSE:CRM) in its fourth quarter 2023 investor letter:
“In the fourth quarter, the top relative and absolute contributors to the Portfolio’s performance were Netflix, ServiceNow, and Salesforce, Inc. (NYSE:CRM).
Salesforce has continued to grow its revenues at what we see as a healthy rate despite market concerns about the impact of the weaker macroeconomy on its business and penetration rates in its core CRM offering. Even its most mature and largest offerings, Sales Cloud and Service Cloud, are still growing revenue at double-digit rates. In addition, management realized that their cost structure, especially in salespeople, had gotten too bloated. Over the past year and a half, the company has run a much more streamlined expense structure that has led to strong operating margin expansion and earnings growth. Importantly, we do not feel Salesforce has cut into its innovation or sales muscle through these cost cuts but has eliminated unnecessary excess fat from the organization.”
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Disclosure: None.10 Best Stocks To Invest In 2024 For Beginnersis originally published on Insider Monkey.
