Wall Street's 11 favorite stocks to buy for 2024
- Most Wall Street pros missed the mark in 2022 and 2023, but 2024 forecasts have arrived anyway.
- Jeffrey Yale Rubin of Birinyi Associates pored through analyst recommendations and advice for 2024.
- He found 11 stocks that appear more than most on Wall Street's top recommendations for this year.
Every new year, Wall Street pulls out its crystal ball and attempts to foresee what the next 12 months will bring. Some of the smartest strategists in the world put their heads together to determine which stocks will head to the moon, which are worth avoiding, and which way the market will go.
But even the biggest brains on Wall Street can get it wrong.
"Strategists entered the year for the most part in a somber mood with forecasted declines of 10% over the next 12 months common place," wrote Jeffrey Yale Rubin, the director of research at Birinyi Associates, of 2023 stock-market forecasts. "On average the 21 firms that eventually published a 2023 year-end target were looking for a below average gain of 6%."
Of course, the reality was far different than what Wall Street expected. The S&P 500 soared over 24% in 2023, outpacing all but the most bullish forecasts, with a particularly potent Santa Claus rally topping off the unexpectedly strong year.
Unfortunately for the pros, this isn't the first time they have missed the mark in recent memory. As Rubin pointed out, their best guesses weren't good enough in 2022 either, when many entered the year bullish only to be blindsided by a nearly 20% pullback.
Despite these misses, Wall Street isn't giving up on its attempts to prognosticate the market's next move. With January came a deluge of 2024 forecasts, which Rubin parsed through to find signals in all the noise.
"This year there are 22 strategists willing to stick their necks out and throw a dart as to where they think the S&P 500 will be next December," Rubin wrote in early January. "Twelve of the predictions are for the market to head higher, while ten forecast the S&P 500 to decline. The average is for the S&P 500 to end the year essentially unchanged at 4,767!"
Among the many notes he read through, Rubin spotted a few patterns. He pointed out that Wall Street is anticipating a soft landing in 2024, and believes that the Federal Reserve Board (FRB) will begin cutting rates in the first half of the new year.
As for stock picks, Rubin noted that the pros recommend small-cap stocks, as well as value stocks over growth picks. They're also bullish on foreign equities, particularly Japanese stocks, over their US counterparts, he wrote.
The Fed's moves dictated the market's direction in 2023, and judging from Wall Street's focus in their 2024 forecasts, Jerome Powell's words will still hold plenty of weight this year. But Rubin isn't particularly worried about what the Fed is planning — he'd rather focus on catching the market's ongoing rally.
"As for us, we continue to want to own stocks, not because the FRB is done raising rates or because they might begin to start cutting them or even because inflation continues to head lower," Rubin wrote. "We want to own stocks because we are in a bull market and in a bull market that is what you do, you own stocks."
Wall Street's favorite stocks to own in 2024
The only question is which stocks to buy.
As he read through Wall Street's predictions, Rubin compiled analysts' stock recommendations for 2024 into one long list of 267 top picks. Among those stocks are 11 that appear on four or more top investment recommendation lists, which Rubin dubbed Wall Street's favorite stocks.
Those picks are below, along with each company's ticker, how many lists it appeared on according to Rubin, and either recent coverage of analyst commentary or select commentary from a recent Wall Street analyst note when available.
Ticker: AMZN
Number of Mentions: 15
Analyst Commentary:
"Amazon remains our top eCommerce stock as the company is well positioned for margin expansion in 2024 from continued optimization of its regional logistics network, the ramp of advertising opportunity (through Prime Video & 3P partnerships), and reacceleration of AWS revenues. For North America retail, we project 5% GAAP operating profit margins in 2024, approx. 1.5pts y/y, and see upside on increasing utilization of its logistics network and advertising growth. Furthermore, retail share gains are likely to extend into next year as faster delivery speeds are leading to increased purchase frequencies. Finally, we expect AWS revenue growth to reaccelerate to high-teens on easier comps and AI tailwinds."
— Justin Post, Managing Director in Americas Equity Research, Bank of America
Sources: Birinyi Associates, Bank of America
Ticker: NVDA
Number of Mentions: 10
Analyst Commentary:
"Maintain Buy, top sector pick on NVDA on its genAI dominance that can potentially help generate ~ $100bn of incremental free cash flow over the next two years (CY24/CY25E). Of the ~$100bn FCF, we estimate only ~$30-$35bn could be deployed for buybacks (offset equity dilution), leaving a meaningful $65-70bn in ammunition for new organic & inorganic growth initiatives. NVDA's relatively depressed trading multiple – just 24x/20x CY24/25E PE versus 67%/26% pf-EPS growth – is partly due to uncertainty in CY25 growth prospects, and partly due to a very hardware dependent business unlike other large-cap software/internet peers that have recurring revenue profiles. In our view NVDA's solid FCF generation creates optionality in addressing these concerns, and in helping to expand its trading multiple back to its historical median 35x-40x."
— Vivek Arya, Research Analyst, Bank of America
Sources: Birinyi Associates, Bank of America
Ticker: META
Number of Mentions: 9
Analyst Commentary:
"We think AI announcements support our thesis that AI driven innovation at Meta will lead to new user experiences and recurring revenues models. With a massive capex budget, internal AI supercomputer, and inhouse LLM, we think Meta's AI assets are underappreciated in the stock price. In 1Q'24 Street will move to 2025 metrics for valuation, and the stock is trading at 16x Street '25 EPS at $20.02 (below S&P at 17x & Meta's 5yr historical avg. of 19x). Growing optimism on the Meta's AI capabilities could drive multiple expansion for the stock."
— Justin Post, Managing Director in Americas Equity Research, Bank of America
Sources: Birinyi Associates, Bank of America
Ticker: GOOGL
Number of Mentions: 7
Analyst Commentary:
"We remain constructive on Google and expect continued 2H acceleration in Search and YouTube growth driven by macro improvements, new advertiser AI tools, ramping shorts monetization, and FX. Gemini release could be a catalyst, and believe Street is underestimating the benefits of AI integration into search, and potential monetization benefit over time. With re-rating since Feb, stock trades at 21x Street 2024 EPS, slightly below 10-year average at 22x, making estimate revisions and AI innovation (possible multiple expansion) key drivers of stock performance."
— Justin Post, Managing Director in Americas Equity Research, Bank of America
Sources: Birinyi Associates, Bank of America
Ticker: MSFT
Number of Mentions: 7
Analyst Commentary:
"In a nutshell based on our work in the field we believe over the next 3 years over 50% of its MSFT installed base will ultimately be on this AI functionality for the enterprise/ commercial which changes the landscape for Nadella & Co going forward. While AI use cases will build markedly in FY24 its clear FY25 for Redmond remains the true inflection year of AI growth with pricing, beta customers, and use cases all being rolled out over the next 3-6 months."
"We believe the stock has yet to price in what we view as the next wave of cloud and AI growth coming to the Redmond story with FY24 with a strong competitive cloud edge vs. Amazon and Google. Our partner checks have been incrementally strong around Co-Pilot interest/deployments with MSFT customers and ultimately we estimate this could add another ~$20 billion to Redmond's top-line by FY25."
— Dan Ives, Managing Director and Senior Equity Research Analyst, Wedbush Securities
Sources: Birinyi Associates, Wedbush Securities
Ticker: DAL
Number of Mentions: 5
Analyst Commentary:
"Delta is a well-run airline with industry leading operations, consistent pre-tax earnings pre-pandemic, and a focus on staying capacity disciplined. DAL's free cash flow potential the next few years (targets >$2B in 2023 and >$4B in 2024) is the most differentiating factor between DAL and other airlines (LUV and UAL). DAL expects to return to more normalized capex of $5-5.5B per year. This spend is similar to 2018-2019 while other airlines are investing at least twice the levels as pre-pandemic."
— Andrew G. Didora, Research Analyst, Bank of America
Sources: Birinyi Associates, Bank of America
Ticker: AAPL
Number of Mentions: 4
Analyst Commentary:
"We believe Apple will be the first $4 trillion market cap by the end of 2024 given the pace of growth and monetization we estimate for Cupertino over the next year. While there are lingering worries around iPhone shadow government bans in China for now this issue is very containable and has not dented demand for Cupertino in this key region based on our recent checks."
"With Services revenue back to steady double digit growth and iPhone units that should be in the ~225 million range for FY24 we believe the "growth demise story" of Apple being spun by bears is a dynamic we have seen constantly over the past decade and this is just another chapter in that book. With roughly 240 million iPhones in the window of an upgrade opportunity globally now at play for iPhone 15 and Services re-accelerating into FY24 we view this as the golden opportunity to own Apple for the next year."
— Dan Ives, Managing Director and Senior Equity Research Analyst, Wedbush Securities
Source: Birinyi Associates, Wedbush Securites
Ticker: CRM
Number of Mentions: 4
Analyst Commentary:
"We believe Salesforce is well positioned to continue capturing share of the cumulative $200 billion market opportunity. With a combined market share of only 15% and a formidable competitive Moat, stemming from 1) largest installed base of over 150,000 customers in the core sales/front office category, 2) distribution channel of an estimated 14,000 personnel, and 3) breadth and depth of the suite, we believe a long runway exists for Salesforce to continue growing 15%+ organic in the coming years."
— Brad Sills, Research Analyst, Bank of America
Sources: Birinyi Associates, Bank of America
Ticker: DIS
Number of Mentions: 4
Analyst Commentary:
"We believe Disney has turned the corner to sustained positive earnings growth now that streaming losses have peaked and are improving, while the Parks and Experiences segment continues to grow at a healthy, albeit more normalized pace."
"We believe Disney will succeed in navigating the transition of its Entertainment programming businesses from a pure linear model to one that is predominantly streaming. Our view is based on the strength and breadth of Disney's IP, its scale as one of the very largest producers and library owners in both television and film, and the fact that Disney has already scaled Disney+ and Hulu from a subscriber, engagement, and revenue perspective."
— Matthew Barnard, Head of US Company Research, Deutsche Bank
Sources: Birinyi Associates, Deutsche Bank
Ticker: CSCO
Number of Mentions: 4
Analyst Commentary:
Oppenheimer analyst Ittai Kidron reiterated his "buy" rating for Cisco Systems on November 18, though he lowered his price target from $58 to $54. This came two days after Cisco's latest earnings announcement when management told analysts it was lowering revenue guidance after it saw a slowdown in product orders.
Source: Birinyi Associates
Ticker: WBA
Number of Mentions: 3
Analyst Commentary:
In late October, JPMorgan analyst Lisa Gill upgraded Walgreens from neutral to overweight. Her optimism was predicated on news that Tim Wentworth would replace Rosalind Brewer as CEO after a difficult 2023 that saw shares tank on lower-than-expected sales and earnings.
Source: Birinyi Associates