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After several twists and turns, the S&P 500 has been hitting a series of new highs in 2023, driven by the optimism that the Fed is done with interest rate hikes. The solid trend is likely to continue in 2024, with the Fed turning dovish and several analysts being bullish on the benchmark.
The S&P 500 has gained nearly 23% so far this year but is 3% shy of its record high in late 2021. Investors seeking to tap the bullish momentum should invest in undervalued stocks to gain higher returns. Some of these are Everest Group Ltd. (EG - Free Report) , Comcast Corporation (CMCSA - Free Report) , 3M Company (MMM - Free Report) , Molson Coors Beverage Company (TAP - Free Report) and DaVita Inc. (DVA - Free Report) .
These stocks have a solid Zacks Rank #1 (Strong Buy) or 2 (Buy), a VGM Score of B or better, lower P/E than the industry average and a positive estimated earnings growth rate for 2024. A top rank suggests rising earnings estimates, which indicate an optimistic view on earnings by analysts and hence higher chances of outperformance. You can see the complete list of today’s Zacks #1 Rank stocks here.
Fed Turns Dovish
The Federal Reserve Chair Jerome Powell, in the latest meeting, hinted at a major policy shift as inflation is easing and the economy is holding up better. He signaled three rate cuts for the next year, compared with the previous forecast of two rate cuts in 2024. The federal funds rate is expected in the range of 4.4-4.9%, down from the current 5.25% to 5.50%. This indicates that the Fed will cut rates by a total of 0.75% next year, indicating that the historic rate-hiking campaign might be ending.
Following the meeting, markets have been pricing in a nearly 60% chance that the Fed will begin to cut rates at its March meeting, up from 40% the day prior, per the data from CME Group.
Analysts Turn Bullish
Several analysts and market strategists expect the S&P 500 to touch new highs in 2024. Oppenheimer recently joined a rush of Wall Street analysts who expect all-time highs for U.S. stocks next year. The analyst sees the S&P 500 rising to 5,200 by the end of 2024.
Last month, strategists at RBC Capital Markets and Bank of America expressed their optimism by setting a year-end target of 5,000 for 2024. Their bullish stance is based on several factors — a growing positive sentiment in the stock market, a decrease in geopolitical risks, signs of cooling inflation and anticipation of the Fed’s rate-hiking cycle coming to an end. Other Wall Street forecasters are also optimistic, with Deutsche Bank and Société Générale predicting the S&P 500 to hit new highs in 2024.
Further, Fundstrat Tom Lee, who has been one of the most persistently bullish forecasters on Wall Street this year, expects stocks will surge to a new all-time high in 2024 as the Fed shifts to a less restrictive monetary policy. He anticipates that the S&P 500 could soar to 5,200 by the end of 2024.
Stock Picks for 2024
Everest Group is a property and casualty insurer and reinsurer in all states, the District of Columbia, Puerto Rico and Guam. It underwrites property and casualty reinsurance for insurance and reinsurance companies in the United States and international markets. Everest Group saw a solid earnings estimate revision of $2.58 over the past 30 days for the next year, with an estimated growth rate of 11%.
Everest Group has a P/E ratio of 6.96 versus the industry average of 9.81. It sports a Zacks Rank #1 and has a VGM Score of A.
Comcast is a global media and technology company with three primary businesses: Comcast Cable, NBCUniversal and Sky. It saw positive earnings estimates of a penny for the next year over the past 30 days. It has an estimated earnings growth rate of 9.79%.
Comcast has a P/E ratio of 11.07 versus the industry average of 13.19. It has a Zacks Rank #2 and a VGM Score of A.
3M Company provides diversified technology services in the United States and internationally. The stock saw a solid earnings estimate revision of 7 cents over the past 30 days for the next year, with an estimated growth rate of 8.76%.
3M Company has a P/E ratio of 11.42 compared with the industry average of 17.47. It has a Zacks Rank #2 and a VGM Score of A.
Molson Coors, previously known as Molson Coors Brewing Company, was formed by the merger of Molson Inc. and Adolph Coors Co. in February 2005. The global manufacturer and seller of beer and other beverage products has an impressive diverse portfolio of owned and partner brands. Molson Coors saw a positive earnings estimate revision of 28 cents over the past 60 days for the next year and has an estimated earnings growth rate of 2.59%.
Molson Coors has a P/E ratio of 12.17 compared with the industry average of 18.05. It has a Zacks Rank #1 and a VGM Score of B.
DaVita is a leading provider of dialysis services to patients suffering from chronic kidney failure, also known as end-stage renal disease, in the United States. The company operates kidney dialysis centers and provides related medical services, primarily in dialysis centers and in contracted hospitals across the United States. DaVita saw a solid earnings estimate revision of 30 cents over the past 30 days for the next year and has an estimated earnings growth rate of 4.43%.
DaVita has a P/E ratio of 13.48 versus the industry average of 20.45. It sports a Zacks Rank #1 and has a VGM Score of A.
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5 Undervalued S&P 500 Stocks to Buy for 2024
After several twists and turns, the S&P 500 has been hitting a series of new highs in 2023, driven by the optimism that the Fed is done with interest rate hikes. The solid trend is likely to continue in 2024, with the Fed turning dovish and several analysts being bullish on the benchmark.
The S&P 500 has gained nearly 23% so far this year but is 3% shy of its record high in late 2021. Investors seeking to tap the bullish momentum should invest in undervalued stocks to gain higher returns. Some of these are Everest Group Ltd. (EG - Free Report) , Comcast Corporation (CMCSA - Free Report) , 3M Company (MMM - Free Report) , Molson Coors Beverage Company (TAP - Free Report) and DaVita Inc. (DVA - Free Report) .
These stocks have a solid Zacks Rank #1 (Strong Buy) or 2 (Buy), a VGM Score of B or better, lower P/E than the industry average and a positive estimated earnings growth rate for 2024. A top rank suggests rising earnings estimates, which indicate an optimistic view on earnings by analysts and hence higher chances of outperformance. You can see the complete list of today’s Zacks #1 Rank stocks here.
Fed Turns Dovish
The Federal Reserve Chair Jerome Powell, in the latest meeting, hinted at a major policy shift as inflation is easing and the economy is holding up better. He signaled three rate cuts for the next year, compared with the previous forecast of two rate cuts in 2024. The federal funds rate is expected in the range of 4.4-4.9%, down from the current 5.25% to 5.50%. This indicates that the Fed will cut rates by a total of 0.75% next year, indicating that the historic rate-hiking campaign might be ending.
Following the meeting, markets have been pricing in a nearly 60% chance that the Fed will begin to cut rates at its March meeting, up from 40% the day prior, per the data from CME Group.
Analysts Turn Bullish
Several analysts and market strategists expect the S&P 500 to touch new highs in 2024. Oppenheimer recently joined a rush of Wall Street analysts who expect all-time highs for U.S. stocks next year. The analyst sees the S&P 500 rising to 5,200 by the end of 2024.
Last month, strategists at RBC Capital Markets and Bank of America expressed their optimism by setting a year-end target of 5,000 for 2024. Their bullish stance is based on several factors — a growing positive sentiment in the stock market, a decrease in geopolitical risks, signs of cooling inflation and anticipation of the Fed’s rate-hiking cycle coming to an end. Other Wall Street forecasters are also optimistic, with Deutsche Bank and Société Générale predicting the S&P 500 to hit new highs in 2024.
Further, Fundstrat Tom Lee, who has been one of the most persistently bullish forecasters on Wall Street this year, expects stocks will surge to a new all-time high in 2024 as the Fed shifts to a less restrictive monetary policy. He anticipates that the S&P 500 could soar to 5,200 by the end of 2024.
Stock Picks for 2024
Everest Group is a property and casualty insurer and reinsurer in all states, the District of Columbia, Puerto Rico and Guam. It underwrites property and casualty reinsurance for insurance and reinsurance companies in the United States and international markets. Everest Group saw a solid earnings estimate revision of $2.58 over the past 30 days for the next year, with an estimated growth rate of 11%.
Everest Group has a P/E ratio of 6.96 versus the industry average of 9.81. It sports a Zacks Rank #1 and has a VGM Score of A.
Comcast is a global media and technology company with three primary businesses: Comcast Cable, NBCUniversal and Sky. It saw positive earnings estimates of a penny for the next year over the past 30 days. It has an estimated earnings growth rate of 9.79%.
Comcast has a P/E ratio of 11.07 versus the industry average of 13.19. It has a Zacks Rank #2 and a VGM Score of A.
3M Company provides diversified technology services in the United States and internationally. The stock saw a solid earnings estimate revision of 7 cents over the past 30 days for the next year, with an estimated growth rate of 8.76%.
3M Company has a P/E ratio of 11.42 compared with the industry average of 17.47. It has a Zacks Rank #2 and a VGM Score of A.
Molson Coors, previously known as Molson Coors Brewing Company, was formed by the merger of Molson Inc. and Adolph Coors Co. in February 2005. The global manufacturer and seller of beer and other beverage products has an impressive diverse portfolio of owned and partner brands. Molson Coors saw a positive earnings estimate revision of 28 cents over the past 60 days for the next year and has an estimated earnings growth rate of 2.59%.
Molson Coors has a P/E ratio of 12.17 compared with the industry average of 18.05. It has a Zacks Rank #1 and a VGM Score of B.
DaVita is a leading provider of dialysis services to patients suffering from chronic kidney failure, also known as end-stage renal disease, in the United States. The company operates kidney dialysis centers and provides related medical services, primarily in dialysis centers and in contracted hospitals across the United States. DaVita saw a solid earnings estimate revision of 30 cents over the past 30 days for the next year and has an estimated earnings growth rate of 4.43%.
DaVita has a P/E ratio of 13.48 versus the industry average of 20.45. It sports a Zacks Rank #1 and has a VGM Score of A.