7 Stocks to Buy if You Want to Beat the Market in 2024
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The stock market has shown remarkable resilience in the first half of 2024, with the S&P 500 and Nasdaq hitting record highs despite economic uncertainty. Chipmakers and AI-related companies have been standout market-beating stocks. Meanwhile, other sectors like technology, healthcare and consumer discretionary are also driving much of the index’s gains.
Here are seven market-beating stocks that have high growth potential and are starting to outperform the stock market and still have room to run higher.
Super Micro Computer (SMCI)
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Super Micro Computer (NASDAQ:SMCI) has been on a tear lately. Most growth investors are kicking themselves for not buying shares sooner. The stock has tripled year-to-date, recently hitting fresh highs above $900.
SMCI is riding major tailwinds from the AI boom. It produces critical server technology, and partners closely with Nvidia (NASDAQ:NVDA) to power data centers. Some analysts even view Super Micro as an “AI proxy” that could attract investors if enthusiasm for Nvidia starts to wane.
The company’s financials look stellar too, with revenue surging over 200% last quarter. And I don’t see this slowing down anytime soon. Super Micro has its finger on the pulse of several key megatrends like cloud computing, AI and data centers that should provide a long growth runway.
Sure, the stock isn’t cheap at 38 times forward earnings, but I think that’s more than justified, given the explosive growth. A few analysts have lofty price targets of up to $1,500. Of course, there are risks, but all things considered I’m very bullish.
Broadcom (AVGO)
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Broadcom (NASDAQ:AVGO) is a semiconductor powerhouse that provides chips for a wide range of applications. The company’s stock has surged over 21% in the past month alone and nearly doubled over the past year.
Broadcom recently posted a strong earnings beat primarily driven by insatiable demand for its AI-focused chips. Management is now forecasting $11 billion in AI-related revenue for the full year. Thus, Broadcom is now one of the market-beating stocks for investors looking to ride the AI megatrend alongside Nvidia.
While the analyst community is largely bullish, with a “Strong Buy” consensus and a flurry of price target hikes, I do have some reservations about Broadcom’s lofty valuation. The stock is priced for perfection with a forward P/E ratio pushing 37x.
So, where do I stand? I believe Broadcom’s strong positioning in AI and cloud computing can power robust growth ahead. As long as the AI hype stays, AVGO should outperform.
Microsoft (MSFT)
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Microsoft (NASDAQ:MSFT) is the company behind the current AI rally, as it initially made large investments into OpenAI. It also has productivity tools that the white-collar sector cannot survive without. It is hard to find a single tech field in which this company is not, or has not, competed.
The tech giant’s Azure cloud platform is rapidly gaining ground on market leader Amazon Web Services. Azure gained 31% market share last quarter thanks in large part to surging demand for AI services. Microsoft’s close partnership with OpenAI and its Copilot AI offerings are also fueling excitement. Nearly 60% of the Fortune 500 already using Copilot.
Analysts are largely bullish, with Piper Sandler recently reiterating a “Buy” rating and $465 price target on the stock. However, some caution Microsoft’s valuation is getting stretched, with the average analyst price target implying just 7% upside from current levels.
Nonetheless, I believe Microsoft’s strong positioning in AI, cloud and other growth markets should continue to propel shares higher. The company’s ability to drive synergies across its sprawling product portfolio is a key competitive advantage that the market still underappreciates.
HEICO Corporation (HEI)
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HEICO Corporation (NYSE:HEI) has been riding high lately, and I believe the aerospace and defense powerhouse is well-positioned to continue its impressive run. The company recently reported stellar Q2 2024 results. Earnings per share of 88 cents handily beat estimates by 8 cents. And, revenue soared 39% year-over-year to $955 million. The Flight Support Group has been the key driver of this growth.
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HEICO is benefiting from several powerful megatrends in its core markets. Air travel demand has come roaring back post-pandemic. This has driven strong sales of HEICO’s cost-saving aftermarket parts to airlines looking to keep aging fleets flying. The company is also seeing robust growth in its defense business as geopolitical tensions and the war in Ukraine spur higher military spending globally.
Analysts are taking notice of HEICO’s momentum. In recent months, the stock has scored a slew of price target hikes from top firms like Bank of America, Truist, and RBC Capital. While HEICO shares don’t come cheap at 64 times forward earnings, I believe the premium valuation is justified given the company’s exceptional growth profile, high-margin business model, and significant runway in both commercial aerospace and defense.
Intel (INTC)
![Intel (INTC) logo is seen outside of the Robert Noyce Building at Intel Corporation's headquarters in Santa Clara, California.](https://investorplace.com/wp-content/uploads/2024/04/intc1600-1-300x169.png)
Intel (NASDAQ:INTC) has faced its share of challenges, from losing market share in desktop CPUs to AMD to delays in getting its AI chips to market. But there are also some promising tailwinds that could help turn things around.
For one, Intel is getting a major boost from the U.S. government to the tune of $8.5 billion in funding from the CHIPS Act to bolster its AI capabilities. That’s a huge vote of confidence. Intel is also generating buzz with its upcoming Lunar Lake chip, which is supposed to deliver big performance gains for AI workloads in laptops. Analysts at Melius Research even predict Intel could be poised for a second-half rebound as an “AI laggard” that’s ready to play catch-up.
If Intel can execute on its product roadmap, ride the coattails of the generative AI megatrend, and make the most of its government support, I wouldn’t be surprised to see the stock surprise to the upside. It’s a high-risk, high-reward bet, but one that I believe could pay off for patient investors willing to look past the near-term noise.
AeroVironment (AVAV)
![The logo for AeroVironment (AVAV) is seen through a magnifying glass on the company's website.](https://investorplace.com/wp-content/uploads/2022/03/aerovironment-avav-1600-300x169.png)
AeroVironment (NASDAQ:AVAV) has been riding high, and I’m quite bullish on the stock. The drone and missile maker reported stellar Q4 results that blew past expectations, with earnings of 43 cents per share crushing estimates. Revenue also hit a record $197 million. Looking ahead, AeroVironment sees clear skies, guiding for nearly 12% top-line growth in fiscal 2025.
The company is benefiting from soaring demand for its cutting-edge drone tech, especially its Switchblade loitering munitions that have proven highly effective on the battlefield. With rising geopolitical tensions, military spending should provide a nice tailwind. UnCrewed and Loitering Munitions segments have seen exceptional growth.
![AVAV UnCrewed Systems sales chart](https://investorplace.com/wp-content/uploads/2024/07/chart-40.png)
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That said, not everyone is sold. Some analysts argue the impressive headline numbers mask underlying concerns about profitability. Shares dipped nearly 4% after the report.
Regardless, the Street is getting more optimistic, with earnings upgrades and price target hikes. Given AeroVironment’s strong positioning in the fast-growing drone space and ability to outpace the broader industry, I think the long-term trajectory remains positive. This is one of the market-beating stocks that is worth keeping on your radar.
Adobe (ADBE)
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Adobe (NASDAQ:ADBE) has been aggressively pushing into AI, but not everyone on Wall Street is convinced just yet. The creative software giant recently posted solid Q2 2024 earnings that beat expectations, driven by strong growth in its Digital Media segment. Adobe is betting big that AI will expand its addressable market with innovations like its Firefly generative AI and new AI-powered tools for Photoshop, Acrobat and more.
However, despite the recent spike, the stock is still down by 2% year-to-date. There are worries about rising competition from rivals like Canva and Microsoft in the generative AI space. Some analysts have also expressed skepticism about how quickly Adobe can monetize its AI investments. Citi warned that consensus estimates for the second half look “somewhat aggressive.”
That said, I remain optimistic about Adobe’s long-term prospects. The shift to digital creativity and marketing shows no signs of slowing. Adobe’s entrenched market position and strong brand give it a major advantage as it races to infuse AI across its product suite. Recent partner enthusiasm around offerings like GenStudio and Firefly Services is also encouraging. While the stock may stay volatile in the near term, patient investors could be rewarded as Adobe is among the market-beating stocks riding the AI wave.
On the date of publication, Omor Ibne Ehsan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or
indirectly) any positions in the securities mentioned in this article.
Omor Ibne Ehsan is a writer at InvestorPlace. He is a self-taught investor with a focus on growth and cyclical stocks that have strong fundamentals, value, and long-term potential. He also has an interest in high-risk, high-reward investments such as cryptocurrencies and penny stocks. You can follow him on LinkedIn.
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