STANDOUT SHARES

How 2023 went

The US market, as measured by the S&P 500, soared by 24%, while Australia’s S&P/ASX 200 rose by 7.8%. Returns on the five stocks we highlighted in 2023 were mixed. Some investors could have benefited by locking in their profits when the share price rose by 10% or more. This highlights the need to be nimble if you want to maximise profits. Investors who want a handsoff style of investing should consider ETFs that track either the S&P 500 or the ASX.

In 2023, Woodside shares rose by 11% from January to mid-September, but then fell, ending 2023 12% lower than a year earlier. Investors could have benefited from its shares rising to September, before they fell amid oil price weakness.

Lockheed Martin shares rose by 10.4% from January to April, before falling and ending 2023 down 6.8% amid speculation that defence equipment orders would slow.

Alibaba fell by 12% in 2023 amid the slowdown in consumer spending in China.

Albemarle surged by 28% from January to mid-February, and then fell, ending the year 33% lower on lithium oversupply concerns. BHP rose 10.5%.

Top 5 picks for 2024

The broad US sharemarket looks to be heading for another strong year, but technology stocks will likely shine the brightest.

The reason for this is that inflation has been falling and the US central bank, the Federal Reserve, has vowed to cut interest rates as a result. This will support profits in 2024, helping companies to recover from the slump in 2023.

As such, the five stocks selected that will likely have a strong 12 months are Apple, Nvidia, Tesla, Block and Uber.

Read on...

1 Apple

As one of the largest global companies, Apple’s share price will continue to reach new heights. While it holds a steady but weakening grip on the smartphone market, it will likely venture into new territory and lean on its other revenue streams in the coming years. Currently, Apple generates 52% of its revenue from iPhones, 10% from wearables, 7.4% from Macs and 7.4% from iPads. The remaining 22.2% comes from its services, which hit an all-time revenue high in 2023.

Clearly, Apple has a strong revenue model and plans are already being made to diversify into new products and services. In the coming years, it will develop its first autonomous electric vehicle, and the bets are on that it will be coming after Tesla’s market when it launches in 2026. With the impending interest rate cuts in 2024, Apple has plenty of tailwind behind its market growth, so invest now to cash in on its potential growth spurt.

2 Nvidia

As a global leader in the AI space, the chip maker is expected to generate a $54.98 billion profit this year. Not only is it the company behind the H100 chip used for Open AI’s ChatGPT, but it is also pioneering an advanced graphics processing unit (GPU), the H200, designed for training AI models. At this stage, chips like these are predominantly used in data centres and networks, but once consumers get hold of this technology in their everyday devices, a new generation of AI will be born. Keep a close watch on this key player.

3 Tesla

As the leading electric vehicle producer, Tesla will hold its place in the electrification sector. With 50% of its profit from the US and the remainder sourced internationally, Tesla has been steadily growing its global market share and revenue. Not only have lithium prices fallen, but the price of a Tesla is expected to increase – both will contribute to its goal of $35 billion in profit by 2027. Factor in the broader expectation that consumers will have a bit more cash to splurge after interest rates dip and you’ll see why I think Tesla and the EV market in general are poised to enter a new stage of growth in 2024 and beyond.

4 Block

This is the company behind the Square terminal that you may ‘tap’ to pay for a doctor’s visit, a coffee or a meal. It bought the buy now, pay later app Afterpay and has a mobile payment service, Cash App.

Block makes 33% of its revenue from transactions and 41% from Bitcoin, which includes holding Bitcoin and another 26% from subscriptions. With the cost of living increasing, Square will rake in more and more profits with its 1.6-1.9% fee for every transaction. And as the US central bank cuts rates, that will boost consumers’ discretionary spending, which will increase Block’s revenue. Plus it sees more merchants and businesses using its Square terminal, giving it a growing customer base.

Block will benefit from a rising Bitcoin price, after the US regulator, the SEC, approved the creation of Bitcoin ETFs. This landmark event will give retail and sophisticated investors easy access to the biggest cryptocurrency via ETFs. Increased Bitcoin buying will support the Bitcoin price and Block’s profits. Block’s revenue will also grow after it launched a Bitcoin mobile wallet app.

5 Uber

The global delivery and rideshare company is likely to gain entry into the pin-up index, the S&P 500. Uber has turned its business around and produced two quarters of profit. With new momentum, it just needs another two quarters of profit, which is highly likely, to gain entry into the S&P 500, which is the most bought index in the world. You shouldn’t miss this boat, especially if you missed Tesla’s 89% jump after it was added to the S&P 500 in December 2020.

Uber’s popularity is surging, with revenue expected to grow from $US32 billion ($48 billion) in 2022 to $US36 billion in 2023. This comes from its diversified global business model, which rakes in 44% from ride-hailing, 34% from deliveries and 22% from freight. With all this in mind, growth could continue into 2024.