A year ago, markets were just beginning to recover from bearish times. Growth stocks began to take off and investors wondered when we could officially talk about a bull market. Well, that time is now and it gives us a great start to 2024. The S&P 500 recently reached a new record, confirming that the market is indeed in one of these long-awaited phases of optimism and growth.
In more good news, history shows us Bull markets generally last longer than bear markets, giving our portfolios time to benefit. And to maximize your bull market potential, it's a great idea to buy shares of growth stocks. This is because they tend to excel in bull market environments and times of economic recovery and expansion. These are my top growth stocks to buy in 2024.
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1. Amazon
Amazon (AMZN 0.87%) It is an ideal growth stock because it is a leader in two high-growth markets: e-commerce and cloud computing. The company is also investing heavily in the hot area of โโartificial intelligence (AI), which is boosting profits in two ways.
AI is driving efficiency in Amazon's operations, helping it reduce costs. And Amazon, through the Amazon Web Services (AWS) cloud computing business, offers artificial intelligence tools to customers. Considering the high demand in this area, AWS AI tools could keep these customers coming back, increasing AWS revenue. This is particularly important since AWS has traditionally driven profits at Amazon.
Amazon's recent efforts to revamp its cost structure (to combat rising inflation and other challenges) have been paying off. In 2022, the company reported its first annual loss in about a decade. But early last year, Amazon was already reporting quarterly gains in net income and its cash outflow had become an inflow. In the last quarter, the company's net income more than tripled and Free cash flow improved to reach an entry of more than 21,000 million dollars. Return on invested capital has also been increasing over the past year.
AMZN Return on invested capital data for Y Charts
These measures should also benefit the company in better times. Amazon has improved efficiency in its fulfillment network, for example by switching to a regional model from a national model in the U.S. Shorter delivery distances are driving improvements in Amazon's "cost to serve," and the company sees potential for continued progress in this regard.
So while Amazon stock rose last year, the profit potential is far from over, and the stock could outperform this one. bull market.
2. Carnival
Carnival (CCL -3.89%) It had a tough time at the beginning of the pandemic when travel stopped, but the world's largest cruise operator has since returned to growth. Demand for cruise vacations has skyrocketed, as we can see in Carnival's revenue and bookings. In the most recent quarter, the fiscal fourth quarter, Carnival reported record revenue and bookings in the two weeks around Black Friday hit an all-time high for that period.
For the fiscal year that ended in November, Carnival reported record revenues of more than $21 billion and entered the new year with its best booked position ever, taking into account occupancy and pricing. And this has helped the company make gains in earnings, for example, reporting tighter-than-expected U.S. profitability. GAAP Net Loss of $74 million for the year and positive adjusted net income of $1 million.
Investors' biggest concern about Carnival has been the company's debt levels. As ships docked during the early days of the pandemic, Carnival built a wall of debt just to stay afloat (excuse the pun). But Carnival has made significant progress here as well, reducing debt by $4.6 billion since its peak, and Carnival says continued growth in adjusted free cash flow will help it pay down more debt over time.
Carnival's booking and customer deposit volumes, which have also reached records, are reasons to be optimistic about profits. And the company's other efforts to streamline operations and reduce fuel costs increase earnings growth potential.
That's why now, as Carnival continues its recovery and growth story, is the perfect time to buy this stock.
3. apple
Apple (AAPL -0.90%) It's a market giant thanks to leading products like the iPhone and Mac computers, but that doesn't mean the company has stagnated when it comes to growth. In fact, there are three things that will drive earnings growth going forward.
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The first is the strength of the Apple brand, which helps Apple users repurchase the latest iPhone or Apple Watch instead of trying a rival product. This brand strength is part of Apple's moator competitive advantage, a key element that could keep this company at the forefront over time.
The second driver of growth is Apple's services business, which posted record revenue in the most recent quarter. That's because all those loyal Apple fans also subscribe to certain services through their devices, from digital content to cloud storage. The huge user base that Apple has built over the years (the installed base of active devices exceeded 2 billion) now represents a source of recurring revenue.
And, more importantly, gross margins on services are higher than those on products: 70% compared to 36% in the most recent quarter.
Finally, Apple is still gaining new customers, so it has not yet reached a peak when it comes to gaining market share. In the quarter, half of Mac and iPad buyers were new to those products.
Given all this, Apple's growth story will be a long one, and the new bull market may be one of the most exciting chapters, for the company and for shareholders.
