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Top 5 U.S. Giants for 2024 That Have Failed to Deliver in 2023
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Wall Street has seen an impressive bull run in 2023 after a highly disappointing 2022. Year to date, the three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — have advanced 6.1%, 18.4% and 36.5%, respectively.
U.S. stock markets have regained momentum in November after three consecutive months of decline. Investors are more confident these days as a large section of market participants are expecting that the Fed is already through with its ongoing interest rate hike cycle. The CME FedWatch tool currently shows a 100% probability the central bank will keep the Fed Fund rate unchanged at the existing level of 5.25-5.5%.
As a result, investors are less worried about a recession in 2024 and more confident that the Fed will opt for the first rate cut after two years in the first half of 2024. Several weak economic data and gradually dwindling inflation rate support this view. As the fundamentals of the U.S. economy remain strong, this may enable the path for the much-hyped soft-landing by the Fed, triggering a year-end rally.
However, irrespective of the bull run so far this year, several U.S. corporate behemoths (market capital > $50 billion) failed to deliver providing negative returns. Meanwhile, a handful of stocks within this basket has strong upside left for 2024. Investment in these stocks with a favorable Zacks Rank should be prudent in 2024.
Our Top Picks
We have narrowed our search to five U.S. corporate giants that have failed to deliver in 2023. However, these stocks have strong potential for 2024 and have seen positive earnings estimate revisions in the last 30 days.
The chart below shows the price performance of our five picks year to date.
Image Source: Zacks Investment Research
PepsiCo Inc. (PEP - Free Report) banks on strength and resilience in its categories, diversified portfolio, modernized supply chain, improved digital capabilities, flexible go-to-market distribution systems and robust consumer demand trends. These factors led to robust third-quarter 2023 results.
PEP also gained from the robust performance of the global beverage and convenient food businesses. For 2024, PEP expects to deliver organic revenues at the upper end of its long-term guidance range of 4-6%, compared with our estimate of 10% growth.
PepsiCo has an expected revenue and earnings growth rate of 4.5% and 7.5%, respectively, for next year. The Zacks Consensus Estimate for next-year earnings has improved 0.1% over the last seven days. PEP currently has a dividend yield of 3.04%.
The Procter & Gamble Co. (PG - Free Report) has been gaining from robust pricing and a favorable mix, along with strength across segments. PG has been focused on productivity and cost-saving plans to boost margins. This led to the top and bottom lines beating the consensus mark for the fourth consecutive quarter in the fourth quarter of fiscal 2023.
Consequently, PG has provided an optimistic view for fiscal 2024. PG anticipates year-over-year all-in sales growth of 3-4% for fiscal 2024, in-line with our estimate of 3.6% growth. PG’s continued investment in the business alongside its efforts to offset macro cost headwinds and balance top and bottom-line growth underscores its productivity efforts.
The Procter & Gamble has an expected revenue and earnings growth rate of 4.1% and 7.9%, respectively, for next year. The Zacks Consensus Estimate for next-year earnings has improved 0.3% over the last seven days. PG currently has a dividend yield of 2.50%.
3M Co. (MMM - Free Report) has benefited from strength in roofing granules, auto original equipment manufacturer and medical solutions businesses. Improvement in supply chains and easier availability of labor and raw materials should drive MMM’s performance in 2023. Pricing actions and restructuring savings are aiding MMM’s margins.
3M has an expected revenue and earnings growth rate of 2% and 8%, respectively, for next year. The Zacks Consensus Estimate for next-year earnings has improved 1.8% over the last 30 days. 3M currently has a dividend yield of 6.32%.
Exxon Mobil Corp.’s (XOM - Free Report) bellwether status and an optimal integrated capital structure that has historically produced industry-leading returns make it a relatively lower-risk energy sector play.
In Stabroek Block, located off the coast of Guyana, XOM has made many major discoveries that significantly improve its production outlook. XOM’s advanced growth projects of Guyana have lower greenhouse gas intensity than most of the oil and gas-producing resources across the globe.
Exxon Mobil has an expected revenue and earnings growth rate of 9.2% and 8.2%, respectively, for next year. The Zacks Consensus Estimate for next-year earnings has improved 0.2% over the last 30 days. XOM currently has a dividend yield of 3.64%.
Gilead Sciences Inc. (GILD - Free Report) maintains momentum as growth in the flagship HIV therapy, Biktarvy, remains strong. GILD’s oncology revenues are driven by its cell therapy franchise and Trodelvy. Solid growth from Yescarta and Tecartus and the label expansion of Trodelvy will further boost GILD’s oncology franchise.
GILD’s efforts to solidify its oncology franchise through internal pipeline development and strategic collaborations have broadened its pipeline. The successful development of differentiated oncology drugs holds the key for GILD.
Gilead Sciences has an expected revenue and earnings growth rate of 1.9% and 10.4%, respectively, for next year. The Zacks Consensus Estimate for next-year earnings has improved 0.7% over the last seven days. GILD currently has a dividend yield of 3.95%.
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Top 5 U.S. Giants for 2024 That Have Failed to Deliver in 2023
Wall Street has seen an impressive bull run in 2023 after a highly disappointing 2022. Year to date, the three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — have advanced 6.1%, 18.4% and 36.5%, respectively.
U.S. stock markets have regained momentum in November after three consecutive months of decline. Investors are more confident these days as a large section of market participants are expecting that the Fed is already through with its ongoing interest rate hike cycle. The CME FedWatch tool currently shows a 100% probability the central bank will keep the Fed Fund rate unchanged at the existing level of 5.25-5.5%.
As a result, investors are less worried about a recession in 2024 and more confident that the Fed will opt for the first rate cut after two years in the first half of 2024. Several weak economic data and gradually dwindling inflation rate support this view. As the fundamentals of the U.S. economy remain strong, this may enable the path for the much-hyped soft-landing by the Fed, triggering a year-end rally.
However, irrespective of the bull run so far this year, several U.S. corporate behemoths (market capital > $50 billion) failed to deliver providing negative returns. Meanwhile, a handful of stocks within this basket has strong upside left for 2024. Investment in these stocks with a favorable Zacks Rank should be prudent in 2024.
Our Top Picks
We have narrowed our search to five U.S. corporate giants that have failed to deliver in 2023. However, these stocks have strong potential for 2024 and have seen positive earnings estimate revisions in the last 30 days.
Moreover, these companies are regular dividend payers, which will act as an income stream if the market moves down. Each of our picks carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The chart below shows the price performance of our five picks year to date.
Image Source: Zacks Investment Research
PepsiCo Inc. (PEP - Free Report) banks on strength and resilience in its categories, diversified portfolio, modernized supply chain, improved digital capabilities, flexible go-to-market distribution systems and robust consumer demand trends. These factors led to robust third-quarter 2023 results.
PEP also gained from the robust performance of the global beverage and convenient food businesses. For 2024, PEP expects to deliver organic revenues at the upper end of its long-term guidance range of 4-6%, compared with our estimate of 10% growth.
PepsiCo has an expected revenue and earnings growth rate of 4.5% and 7.5%, respectively, for next year. The Zacks Consensus Estimate for next-year earnings has improved 0.1% over the last seven days. PEP currently has a dividend yield of 3.04%.
The Procter & Gamble Co. (PG - Free Report) has been gaining from robust pricing and a favorable mix, along with strength across segments. PG has been focused on productivity and cost-saving plans to boost margins. This led to the top and bottom lines beating the consensus mark for the fourth consecutive quarter in the fourth quarter of fiscal 2023.
Consequently, PG has provided an optimistic view for fiscal 2024. PG anticipates year-over-year all-in sales growth of 3-4% for fiscal 2024, in-line with our estimate of 3.6% growth. PG’s continued investment in the business alongside its efforts to offset macro cost headwinds and balance top and bottom-line growth underscores its productivity efforts.
The Procter & Gamble has an expected revenue and earnings growth rate of 4.1% and 7.9%, respectively, for next year. The Zacks Consensus Estimate for next-year earnings has improved 0.3% over the last seven days. PG currently has a dividend yield of 2.50%.
3M Co. (MMM - Free Report) has benefited from strength in roofing granules, auto original equipment manufacturer and medical solutions businesses. Improvement in supply chains and easier availability of labor and raw materials should drive MMM’s performance in 2023. Pricing actions and restructuring savings are aiding MMM’s margins.
3M has an expected revenue and earnings growth rate of 2% and 8%, respectively, for next year. The Zacks Consensus Estimate for next-year earnings has improved 1.8% over the last 30 days. 3M currently has a dividend yield of 6.32%.
Exxon Mobil Corp.’s (XOM - Free Report) bellwether status and an optimal integrated capital structure that has historically produced industry-leading returns make it a relatively lower-risk energy sector play.
In Stabroek Block, located off the coast of Guyana, XOM has made many major discoveries that significantly improve its production outlook. XOM’s advanced growth projects of Guyana have lower greenhouse gas intensity than most of the oil and gas-producing resources across the globe.
Exxon Mobil has an expected revenue and earnings growth rate of 9.2% and 8.2%, respectively, for next year. The Zacks Consensus Estimate for next-year earnings has improved 0.2% over the last 30 days. XOM currently has a dividend yield of 3.64%.
Gilead Sciences Inc. (GILD - Free Report) maintains momentum as growth in the flagship HIV therapy, Biktarvy, remains strong. GILD’s oncology revenues are driven by its cell therapy franchise and Trodelvy. Solid growth from Yescarta and Tecartus and the label expansion of Trodelvy will further boost GILD’s oncology franchise.
GILD’s efforts to solidify its oncology franchise through internal pipeline development and strategic collaborations have broadened its pipeline. The successful development of differentiated oncology drugs holds the key for GILD.
Gilead Sciences has an expected revenue and earnings growth rate of 1.9% and 10.4%, respectively, for next year. The Zacks Consensus Estimate for next-year earnings has improved 0.7% over the last seven days. GILD currently has a dividend yield of 3.95%.