Attractively valued stocks with solid balance sheets and earnings growth potential make the best long-term investments and help reduce portfolio risk in an unpredictable economy.
For 2024, Wall Street analysts see plenty of investment opportunities in high-quality stocks.
We selected the best stocks based on various factors: the ability to exceed expectations based on MarketEdge technical ratings, a consensus recommendation of “buy” among analysts, earning stability, valuation and earning expectations.
*Market prices as of March 28.
Best stocks to buy
- Alphabet (GOOG, GOOGL).
- Meta Platforms (META).
- Broadcom (AVGO).
- UnitedHealth (UNH).
- ServiceNow (NOW).
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Alphabet (GOOG, GOOGL)
Sector
Communication services
Market cap
$1.94 trillion
YTD performance
8.05%
What you should know
Alphabet is the parent company of Google and YouTube and is the world’s leading online search provider. Alphabet is a market leader in online advertising and one of the top innovators in artificial intelligence technology. In addition, Alphabet has a sizable cloud services business and is the parent company of subsidiaries such as cybersecurity firm Mandiant, wearable fitness device maker Fitbit and autonomous vehicle technology company Waymo.
Alphabet’s stock has been hot in the past year as the company has rolled out its Bard AI chatbot and Gemini AI model in response to OpenAI’s popular ChatGPT. AI technology is a tremendous long-term growth opportunity for Alphabet, but its core businesses also generated a whopping $73.7 billion in profits in 2023.
Pros and Cons
Pros
- Market leader in online advertising and internet search, two secular growth markets.
- Google Cloud is still generating impressive growth.
- AI and autonomous vehicles could be significant future growth sources.
Cons
- Antitrust and other regulatory risks.
- Ad revenue missed consensus analyst estimates in the fourth quarter.
- High-risk innovations in its Other Bets segment are generating losses.
More details
P/E: 28.65.
Meta Platforms (META)
Sector
Communication services
Market cap
$1.25 trillion
YTD performance
37.33%
What you should know
Meta Platforms owns and operates some of the world’s largest social media and messaging platforms, including Facebook, Messenger, Instagram and WhatsApp. As of December 2023, Meta had 3.19 billion family daily active people across all its platforms, up 8% from a year ago. Facebook alone has 2.11 billion daily active users, up 6% year over year.
Facebook’s late 2021 pivot to focusing on the metaverse got off to a rocky start in 2022, and the company’s Reality Labs unit has reported heavy losses as it develops metaverse and virtual reality technologies. Fortunately, Meta is still generating solid revenue and user growth, its net income more than tripled year over year in the most recent quarter, and the company recently implemented its first-ever quarterly dividend.
Pros and cons
Pros
- The world’s largest social media audience generates valuable data.
- Ad revenue per user is growing.
- AI and metaverse technology provide massive long-term growth potential.
Cons
- Regulatory risks associated with collection, storage and usage of user data.
- Fierce competition with Snapchat and TikTok for user engagement.
- Metaverse investments are extremely costly with no guarantee of a long-term payoff.
More details
P/E: 32.10.
Broadcom (AVGO)
Market cap
YTD performance
What you should know
Broadcom is a diversified semiconductor company that designs, develops and supplies a range of analog semiconductor devices. Broadcom makes chips for the data center, broadband, wireless, networking, storage and industrial markets.
Broadcom is highly exposed to the smartphone market, and Apple alone accounts for about 20% of the company’s total revenue. However, Broadcom has been investing in diversifying its business in recent years, including acquiring network gear maker Brocade in 2017, software company CA Technologies in 2018 and the enterprise security business of Symantec in 2019. Broadcom also recently acquired cloud software company VMware (VMW) after a lengthy period of regulatory scrutiny.
Pros and cons
Pros
- Highly exposed to large, high-growth data center, cloud computing and AI technology markets.
- An aggressive acquisition strategy has diversified the business away from core semiconductor sales.
- Business is highly efficient, generating robust cash flow at excellent operating margins.
Cons
- Significant revenue loss potential if Apple (AAPL) eventually drops Broadcom as a supplier.
- Software business focused on smaller, low-growth markets.
- The company relies heavily on acquisitions to expand its business and fuel growth.
More details
UnitedHealth (UNH)
Market cap
YTD performance
What you should know
UnitedHealth is the largest U.S.-managed health care firm. The company provides health insurance via its UnitedHealthcare business and serves as a pharmacy benefit manager via its Optum Rx business, a health care provider via its Optum Health segment and a health analytics firm via its Optum Insight subsidiary.
UnitedHealth is one of the biggest blue-chip health care companies, and the company is targeting long-term annual earnings growth of between 13% and 16%. The health care sector is considered a defensive market sector, meaning long-term investors can sleep easy at night knowing demand and earnings are relatively insulated from economic downturns.
Pros and cons
Pros
- Leading U.S. provider of Medicare Advantage plans.
- Solid balance sheet provides financial flexibility.
- Diversified medical insurance, pharmacy benefits and health care services businesses.
Cons
- COVID-19 variants or other unforeseen outbreaks create risks for health insurers.
- Health insurance and PBM businesses have been targeted by regulators.
- It may be difficult for UnitedHealth to maintain double-digit revenue growth.
More details
ServiceNow (NOW)
Sector
Technology
Market cap
$157.52 billion
YTD performance
7.91%
What you should know
ServiceNow provides software-as-a-service applications to help customers automate and manage business processes and workflows. As businesses grow and digitally transform their operations, their workflows can become increasingly complex. ServiceNow customers can simplify the situation by using ServiceNow’s software to automate processes such as document creation, email correspondence and task assignments.
ServiceNow has extremely high customer retention rates, and more than 75% of its customers have purchased multiple products.
In the fourth quarter of 2023, ServiceNow reported impressive 27% year-over-year subscription revenue growth and 26% overall revenue growth. In addition, current remaining performance obligations were up 24% from a year ago, while transactions over $1 million were also up 33%.
Pros and cons
Pros
- ServiceNow is expanding into other IT operations management markets.
- Customer service and human resources could serve as significant growth sources in the coming years.
- Opportunities to expand margins in the long term.
Cons
- ServiceNow will face intense competition as it expands beyond its core markets.
- It will be difficult to maintain the company’s 20-plus percent annual revenue growth.
- A high forward earnings, indicating earnings growth is already priced in.
More details
P/E: 91.35.
Compare the best stocks to buy now
| COMPANY | SECTOR | MARKET CAP | YTD PERFORMANCE |
|---|---|---|---|
Alphabet (GOOG, GOOGL) | Communication services | $1.94 trillion | 8.05% |
Meta Platforms (META) | Communication services | $1.25 trillion | 37.33% |
Broadcom (AVGO) | Technology | $614.22 billion | 23.64% |
UnitedHealth (UNH) | Health care | $456.08 billion | -7.14% |
ServiceNow (NOW) | Technology | $157.52 billion | 7.91% |
Methodology
The best stocks included above all trade on a major U.S. stock exchange and meet the following criteria:
- Consensus analyst recommendation of “buy” or better. A high number of analyst “buy” ratings indicates an expectation the stock will outperform the overall market.
- Market capitalization of at least $2 billion. If a company has a leading market share and competitive advantages in a sizable industry, it will have a market cap greater than $2 billion. Large-cap and mid-cap stocks are generally considered less volatile, safer long-term investments than small-cap stocks, and they typically have more media and analyst coverage.
- MarketEdge technical rating of “long.” MarketEdge performs institutional-level technical analysis of trading patterns and identifies favorable or unfavorable conditions for buying stocks. MarketEdge uses a scoring system that rates stocks based on factors such as momentum, trading volume and chart patterns, and stocks with a “long” rating are deemed to have a high probability of success.
Why other stocks didn’t make the cut
There are plenty of stocks with significant potential upside in the market today. Still, volatility in the economy and an uncertain outlook for interest rates, inflation and earnings growth means investors should focus on high-quality stocks with stable business outlooks and solid fundamentals.
Elevated interest rates pressure corporate earnings, so selecting profitable companies with compelling earnings opportunities in coming quarters increases the likelihood these stocks will outperform peers and the overall market.
In addition, investing in stocks with attractive fundamental valuations based on earnings, free cash flow and revenue growth can help minimize potential downside if the U.S. economy slows further or slips into a recession.
Related: Best online brokerages
Final verdict
Despite the uncertain macroeconomic environment, analysts are generally optimistic the S&P 500 can continue to grind higher in 2024. Analysts project that the will rise another 9% in the next 12 months.
Jeffrey Buchbinder, chief equity strategist at LPL Financial, said a positive January for the S&P 500 has historically boded well for the rest of the calendar year.
"The January Barometer tells us that stocks are likely to gain ground between now and the end of 2024," Buchbinder said. "Meanwhile, over the course of the year, we expect easing inflation, stable or lower interest rates, and an expected ramp-up in earnings to support additional modest gains for stocks — potentially above our year-end fair value target of 4,950."
What to look for when buying stocks
Before you buy any stock, there are several factors to consider. First, consider whether the stock’s risk profile is appropriate for your portfolio and financial goals.
Check to see if the company has been profitable and if its profits have trended higher over time. If a company is unprofitable, determine the reasons and assess whether it has a reasonable path to profitability in the future.
Compare the stock's valuation to leading peers in its industry by looking at metrics such as P/E ratio, price-to-sales ratio and price-to-book ratio. Finally, look at a company's balance sheet to ensure it is financially solvent.
Frequently asked questions (FAQs)
No, any investor can construct and manage an online investment portfolio without help from a broker. Identify a reputable online brokerage and fully understand how self-directed investing works before attempting to buy and sell stocks independently.
The easiest way to buy stocks online is to open a brokerage account with one of the top online brokerages with an easy-to-use platform, industry-leading features and services, and low fees. Top-rated online brokers include Fidelity and Interactive Brokers.
First, determine your investing strategy based on your investment time horizon, financial goals and risk tolerance.
Once you have determined your strategy, identify stocks to buy using online stock screeners and analysis from qualified equity analysts. If you need more confidence in selecting stocks, consider meeting with a financial advisor or another financial professional.
Wall Street analysts see the most valuation upside in the energy sector and the least upside in the industrials sector. The financial services and energy sectors have historically performed best during U.S. presidential election years.
Wall Street analysts forecast roughly 9% upside for the S&P 500 over the next 12 months.
While stock market performance can be extremely unpredictable over the short and medium term, the S&P 500 has historically generated remarkably consistent positive returns over extremely long-term time horizons of 10 years or more.
Editor’s Note:This article contains updated information from previously published stories:
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- Stock rebound gains traction, Dow jumps
- What to watch: Appetite for stock funds . . . fades?
- Stocks end lower despite good start to earnings season
- 5 key shifts needed to keep bull market going
- Weight Watchers shares soar on deal report
- AmEx shares fall on mixed earnings
- Stocks plunge on China fears, mixed earnings
- Stocks fall in worst first trading day since 2008
