Investors looking to supercharge their portfolios would do well to widen the search aperture. Our hunt for the seven best stocks poised for magnificent earnings growth next year brings up names such as Teradyne (TER) and Triumph Group (TGI) — stocks far less hyped than Nvidia (NVDA) or Apple (APPL) or the other megacap leaders that continue to dominate the stock market.
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What Are The Magnificent Seven Stocks?
These Seven Are Best Stocks For Magnificent Earnings Growth
Micron Technology (MU): The provider of memory and storage solutions serves diverse markets: personal computers, mobile, automotive, industrial and data centers, among them. Further, the chipmaker stands to benefit from the growth of artificial intelligence (AI)-powered PCs and phones. Analysts expect Micron earnings to rebound strongly in fiscal 2024, ending in August, from a collapse in 2023. On a per-share basis, analysts anticipate an 817% earnings surge next year on 50% sales growth. Micron stock earns a superior 91 Composite Rating and near-perfect 98 RS Rating, both out of a best-possible 99. The AI stock struck an all-time high at 157.54 on June 18. It’s up nearly 63% year to date.
Seagate Technology (STX): The company makes solid state drives and enterprise data storage systems. Seagate says it is seeing its markets recover while cloud demand improves. In the current quarter, it expects a return to revenue growth after a two-year slump. Similar to Micron, analysts forecast Seagate earnings will rebound in fiscal 2024, ending in June, from a collapse in 2023. They project a 487% earnings jump next year on 37% revenue growth. Seagate stock holds a 93 Composite Rating and 94 RS Rating. This technology best stock reached a two-year-plus high on June 18. It has jumped 20% year to date.
Uber Drives Onto Best Stocks List
Uber Technologies (UBER): The Uber app pioneered a way to provide ride-hailing and ride-sharing services using smartphones. It, too, has seen its markets recover as pandemic challenges have lifted. Meanwhile, Uber called 2023 an “inflection year,” one in which it delivered an annual profit, as both delivery and mobility bookings jumped double digits. Analysts forecast Uber earnings will dip 3% in fiscal 2024, ending in December, and boom 147% in 2025. Uber stock shows a 77 Composite Rating and 89 RS Rating. It is up 14% year to date.
Triumph Group (TGI): The Boeing (BA) supplier expects to benefit from the narrowbody 737 Max recovery. More generally, Triumph Group sees a boost from “the coming aerospace and defense upcycle” after slashing debt. Triumph swung to an annual loss of six cents per share in fiscal 2024, which ended in March, on worsening sales. Analysts expect Triumph’s earnings to rebound to 49 cents a share in fiscal 2025, and to nearly double, up 97%, the next year. Best stock Triumph bears a 63 Composite Rating, weighed down the recent earnings slump, and an 83 RS Rating, as investors eye the return to growth. It’s down 10% year to date.
Industrial Heavyweights Make The Cut
Coherent (COHR): The Pennsylvania-based company supplies sensors, components and materials used in things like industrial lasers, electric vehicles and artificial reality (AR) headsets. Analysts project that Coherent earnings per share will slump for a third straight year in fiscal 2024, ending in June. They expect a return to 86% growth in fiscal 2025 and a further 41% gain the next year. Coherent stock holds a 73 Composite Rating and 97 RS Rating. It has rocketed 63% year to date.
GE Vernova (GEV): Spun out as an independent company on April 2, GE Vernova houses the gas power and wind energy assets of the old General Electric. This once-embattled energy business is also seeing end markets recover and has guided growth across business segments, helping it join the best stocks list. Analysts expect GE Vernova to swing to EPS of $3.58 per share in fiscal 2024, ending in December, FactSet shows. They see GE Vernova earnings jumping 60% a share next year. GE Vernova stock flourishes an 88 Composite Rating and 91 RS Rating. It’s up roughly 52% since its April debut.
Teradyne (TER): The company makes automated industrial testing equipment and commercial robots. Teradyne says it is benefiting from networking demand driven by AI applications. Analysts forecast Teradyne earnings will grow 6% in fiscal 2024, ending in December, after two straight years of declines around 30%. They expect EPS to vault 56% next year on 23% sales growth. Teradyne stock flourishes an 86 Composite Rating and 95 RS Rating. It’s up 37% year to date.
Universe of S&P 500, S&P 400 and S&P 600 Stocks
A little background on IBD’s process to select the best stocks for magnificent earnings growth:
We began our screening process with the S&P Composite 1500 index, which aggregates the S&P 500, S&P MidCap 400 and S&P SmallCap 600 companies. We chose this index, in part, because it avoids less-liquid, lower-priced and lower-quality names, while efficiently measuring the total U.S. stock market.
Then we limited the stocks on our best stock list to those showing FactSet consensus ratings of overweight or buy, which means analysts expect them to outperform industry peers. Next we further winnowed down the list, setting up a double hurdle: The stocks had to enjoy some of the strongest FactSet earnings growth estimates for the following fiscal year, while also earning high IBD ratings, in terms of their Composite Rating and RS Rating.
The resulting seven best stocks for outsize earnings growth are a quite different set from the Magnificent Seven stocks. At the same time, these stocks are worth watching as much as any of the Mag Seven stocks given their outperformance potential.
To find other ideas for the best stocks to buy or watch, check out IBD Stock Lists and other IBD content.
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