(THREE STOCKS TO BUY IN 2024)
February 7, 2024
Hello everyone,
The stock market has started the year in a positive mode with big tech rallying strongly. The S&P 500 is up around 4% year to date after a 24% rise in 2023.
What could sour the mood?
Political tensions, still-high inflation levels, and uncertainty about when the U.S. Federal Reserve will cut interest rates.
All these factors have raised questions about which sectors – and stocks – will outperform looking ahead.
Let’s concentrate on three, I believe will perform well this year.
1/ Microsoft (Stock Price as of 02/06/24 - $403.66)
This company has a focus on cloud computing and mobile technology. Microsoft’s Windows operating system dominates the PC market globally at around 90%. Robust revenue from other segments like Azure, Office 365, and Dynamic CRM are contributing to revenue.
Last week, Microsoft reported a 17.6% year-over-year increase in its revenue for its quarter ending Dec. 31.
Microsoft has a huge diversity in software applications making it a key player in digital transition. It has a strong presence in cloud infrastructure and ties with Open AI making it well placed to meet the rising demand for generative AI.
Over the last 12 months, shares in Microsoft are up almost 60%. Of 52 analysts covering the stock, 48 give it a buy or overweight rating at an average price of $460.37, according to FactSet data. This gives it an upside potential of almost 12%.
My Recommendation: Buy the stock on dips. Average in.
Option Recommendation: One-year LEAPS out of the money.
2/ ExxonMobil
Despite the mixed sentiment on the energy sector presently, amid ongoing geopolitical uncertainties and fluctuating oil prices, I am optimistic about this stock for the long term.
Last week, the stock reported quarterly earnings that beat analysts’ expectations, but profit fell compared to a year before on lower oil prices.
Let’s scan the long-term horizon for this stock.
# Long-term potential from low-carbon investments.
# Strong balance sheet supporting higher capital returns.
A key catalyst is in the pipeline for Exxon with its acquisition of Pioneer Natural Resources valued at almost $60 billion. The deal is expected to close by mid-2024.
Production volume in the Permian Basin located in West Texas and New Mexico is tipped to more than double to 1.3 million barrels of oil equivalent per day once the deal closes.
Other opportunities include growth prospects from the company’s discoveries in Guyana between 2025 and 2026.
Over the last 12 months shares in ExxonMobil are down over 8%.
Of 29 analysts covering the company, 19 have a buy or overweight rating on the stock at an average price target of $124.94, giving it an upside potential of around 22.5%, according to FactSet data.
My Recommendation: Buy small parcels in this stock now. Average in.
For those who trade Options: One-year LEAPS out of the money. You could look at 105/110 or even 110/115. Expiration: January 17, 2025.
You can buy the stock or do the option or do both.
Analyst Price Projections for ExxonMobil
Barrick Gold (Stock Price as of 02/06/24 - $15.09)
Beyond tech and energy, metals get a big tick also, and I favor Canadian miner Barrick Gold here.
There is a positive outlook on gold due to geopolitical uncertainties, making it a reliable safe haven investment during economic challenges. Spot gold prices are up around 7.5% over the last 12 months.
Kevin Teng, CEO of Wrise Wealth Management Singapore argues that despite the lag in performance among gold miners compared to the rising gold prices since 2023, Barrick Gold, being one of the largest gold miners, is poised to benefit from the expected price recovery.
Teng goes on to explain that he is expecting a “sequential improvement” in the company’s output following the expansion in its production of copper production to 240,000 metric tons from the current 150,000 metric tons in its Lumwana copper mine in Zambia. A similar boost in production levels is also expected at its Reko Diq copper-gold project in Pakistan.
So, it is apparent that Barrick Gold’s expansion plans collectively position it for potential growth in the coming year.
Shares in Barrick Gold are down over 15% over the last 12 months.
Of 23 analysts covering the company, 16 have a buy or overweight rating on the stock at an average price target of 29 Canadian dollars ($21.52), giving it an upside potential of almost 40%.
My recommendation: Buy the stock in small parcels. In other words, average in.
If you trade options, I suggest one-year LEAPS. You could look at the 15/17 January 17, 2025, Bull call spread LEAPS.
You can just buy the stock or just do the option. Some people buy the stock and do the option. It’s your choice as are the number of shares or options you purchase.
Cheers,
Jacquie
