After a tumultuous 2023, the stock market is back on its feet this year, putting high-potential stocks in the spotlight. Stocks are climbing steadily, the S&P 500 has been up 17% in the last six months, and inflation rates have cooled. Now, as we reach the midpoint, several companies hope to keep the momentum and end the year with a bang.
The task then comes down to identifying these home-run picks—companies with fundamentally strong businesses and high growth potential. One particularly important metric to assess this is earnings guidance. This is essentially where the company expects to land for the next quarter or year, based on several factors.
It’s important to note that analysts expect an eventual market correction. However, a well-diversified portfolio of strong names will help investors ride out the wave of volatility. On that note, I’ve rounded up three companies well-positioned to finish the year strong.
Nvidia (NVDA)
The tech giant Nvidia (NASDAQ:NVDA) is perhaps most famous for the market impact of its innovative chips. After delivering an impressive financial performance this year, the company looks well-positioned to end 2024 with a bang.
Several factors point to its continued success. For one, Nvidia has fast-tracked its chip development process, announcing the launch of Rubin just months after the release of Blackwell. The Blackwell chip will be more affordable and cater to a wider group of users, while Rubin will play a crucial role in the training of AI models. Neither chip is in circulation, but Nvidia says, “(they) will see a lot of Blackwell revenue this year.”
Looking at the financials, NVDA stock is up a whopping 203% in the last 12 months. This was the result of a massive uptick in revenue, up 262% from a year ago at $26 billion. Its data centers largely fueled the growth, which grew by 409% from the prior year. Going into the company, we expect revenue to grow by 2%.
High-potential stocks like Nvidia provide a compelling case for its long-term growth. The company’s accelerated chip development and strong guidance positions this high-potential stock to end the year with a bang.
Netflix (NFLX)
Netflix (NASDAQ:NFLX), a cornerstone in the streaming service business, has always remained one of the best high-potential stocks on the market. To put things into perspective, investors who bought NFLX stock 20 years ago saw a 14,348% rise in share value. That’s no small feat in the competitive world of on-demand streaming.
Looking at its financials, Netflix shows no signs of slowing down. In the first quarter of 2024, the company beat analysts’ estimates on all counts. Revenue came in at $9.37 billion vs an estimated $9.28 billion. Total memberships also rose by an impressive 16% to 269.9 million. This reflects Netflix’s ability to successfully draw in new viewers and keep existing customers interested.
In terms of guidance, Netflix will keep the momentum going with a 16% revenue growth in Q2. Revenue for the full year will rise by 13% to 15%. The company is also exploring new revenue streams in advertising and extra member features. This means that in the long haul, membership fees will account for one component of its overall revenue.
With its strong financial performance and expanding service portfolio, Netflix is a winning business set to end the year on a high note.
Amazon (AMZN)
Amazon (NASDAQ:AMZN), commonly referred to as “The Everything Company,” is always a good long-term play. However, the tech juggernaut is giving investors even more reason to celebrate this year after hitting an all-time high. Shares of the company closed at $200 on July 2nd—a new record since its listing in 1997. But while share prices are technically at their peak, investors can still anticipate plenty of growth ahead.
Let’s look at past performance for a minute. Net income was up 13% to $143.3 billion while operating income tripled to $15.3 billion from $4.8 billion a year ago. This signals good expense oversight, and the company’s efforts to rein in costs have paid off. Net income, on the other hand, was bolstered by high-margin revenue.
Net sales are expected to rise by 7% to 11% in the next quarter. This growth will be driven by a resurgence in its AWS business and generative AI. According to its CFO, AI is expected to result in “tens of billions of dollars” in the coming years.
High-potential stocks like AMZN may look pricey at the moment. But its optimistic revenue growth and ever-evolving business make it a strong contender for high returns this year.
On the date of publication, Divya Premkumar did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.