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After the big stock selloff in July, the S&P 500 index has clawed back most of its losses. The prospects for interest rate cuts beginning in September have re-energized the market.
While last year was marked by the Magnificent 7 stocks carrying the market to new heights, it is more broad-based in 2024. Although most of that small group of tech stocks is still performing well, the sector selloff last month took the wind out of their sails. Almost all aren't even in the top 20 best performances this year let alone leading the popular index higher.
While tech still dominates the best S&P 500 stocks in 2024, they are not all the same names. The following three companies are up an average 126% so far this year. With the market now a bit choppier, are they still the top stocks to buy for the last four months? Let's dive in to find out!
24/7 Wall St. Insights:
- The tech sector selloff last month and earlier this month knocked a lot of previous high-fliers from their perch.
- Most of the tech stocks that led the S&P 500 to record highs last year are not repeating their performance in 2024.
- If you want to pick up some of the most high upside stocks in the market “on sale,” check out our brand-new “The Next NVIDIA” report that lays out the next megatrends in AI and the companies we’re confident can dominate them.
Super Micro Computer (SMCI)
Two people in fatigues walking through a data center
It's a testament to just how far Super Micro Computer ( NASDAQ:SMCI ) had run earlier this year that the maker of AI-optimized computers, servers, networks, storage solutions, and data center workstations is still one of the three best S&P 500 stocks in 2024. The stock has lost half its value since its March high and is 38% lower over the past six months.
Despite that, Super Micro stock is up almost 113% this year. The reason the former tech juggernaut has fallen hard was its earnings report that indicated a slowdown in AI adoption was developing.
Fiscal fourth quarter results handily beat analyst expectations as revenue soared 38% to $5.3 billion generating adjusted earnings of $6.35 per share, a 78% year-over-year increase. The problem was last year revenue growth was 70% while profits rocketed 115% higher.
As a result, Super Micro Computer stock is extremely deeply discounted. Shares trade at 13 times next year's earnings, which Wall Street expects to grow 30%. Long-term earnings growth is pegged at 62% annually. That means SMCI is trading at a fraction of those growth rates and makes its stock a buy.
Vistra (VST)
Vistra's Comanche Peak nuclear power station
Utilities have been one of the best-performing sectors this year, with the S&P 500 Utilities Sector up 18% only trailing tech and communications stocks. Texas utility operator Vistra ( NYSE:VST ) is leading the pack. Despite its stock pulling back 22% from recent highs, shares are still up 116% in 2024.
Much of that growth is due to electricity demand soaring in the Lone Star state. The U.S. Energy Information Administration says Texas is experiencing one of the largest growth trajectories over the last five years, surpassed only by Virginia. It has seen 13 billion kilowatt hours (BkWh) of electricity demand added since 2019. Data center growth is spurring on much of the growth.
Vistra was formed from the bankruptcy of Energy Future Holdings in 2015. Today, it is a key renewable energy stock. It has the country's second-largest nuclear fleet after acquiring Energy Harbor in March. But Vistra also possesses a substantial fossil fuel asset base with more than 20,000 megawatts of natural gas generation capacity.
With its stock going for 11 times earnings estimates and less than twice sales, Vistra is also an attractive stock to buy.
Nvidia (NVDA)
Nvidia computer chip
To no one's surprise, Nvidia ( NASDAQ:NVDA ) is reprising its role as the stock market's leading performer. Shares of the AI chipmaker are up 150% year-to-date and that's after falling 12% from its peak. And it comes after the stock soared 240% in 2023. In fact, over the past five years, NVDA stock is up an astounding 2,790%. An investor who put $1,000 into Nvidia in 2019 would have more than $28,860 today.
Of course, that raises the question: is NVDA still a buy after that remarkable run? Unlike the other two stocks discussed, shares trade at a premium. The chipmaker goes for 72 times trailing earnings, 32 times estimates, and more than 38x sales. That looks pricey.
Yet where Nvidia's sales multiple is historically very high, its earnings multiple is actually below average. And Wall Street forecasts Nvidia will expand its profits at a compounded annual growth rate of 46% for the next five years. It means the stock trades at a fair valuation to that expected growth.
While I wouldn't back up the truck for Nvidia stock, taking a small stake in the tech leader might be worthwhile.
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