We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
5 Nasdaq Composite Laggards Likely to Gather Pace in 2024
Read MoreHide Full Article
The Nasdaq Composite has been witnessing an astonishing rally in 2023 after a highly disappointing 2022. Year to date, the tech-heavy index has surged 42.4%. With just eight days of trading left to conclude 2023, the index is set to be the clear winner of this year.
Momentum Likely to Continue
U.S. stock markets have soared amid a clear indication from the central bank that the current interest rate hike cycle, which elevated the Fed fund rate to a 22-year high of 5.25-5.50% from 0-0.25% in March 2022, has finally ended.
Moreover, the December FOMC meeting dot plot has shown that on average, Fed officials are expecting at least three rate cuts of 25 basis points each in 2024, followed by four more rate cuts of a full one percentage point in 2025.
The dot plot has also indicated three more rate cuts in 2026, which would take down the benchmark lending rate to the range of 2-2.25%. Following the Fed’s decision, the yield on the benchmark 10-Year U.S. Treasury Note fell less than 4% for the first time since March 2023. The yield topped more than 5% in October.
Fed officials currently expect core inflation to fall 3.2% in 2023, 2.4% in 2024, and then to 2.2% in 2025. Finally, it should decline to the 2% target in 2026. Despite rigorous interest rate hikes, the fundamentals of the U.S. economy remain strong.
On Dec 14, the Atlanta Fed forecast U.S. GDP to grow by 2.6% in fourth-quarter 2023, a notable improvement from the 1.2% estimated on Dec 7. This eliminates the fear of a recession in 2024 thereby boosting investors’ confidence in a possible soft landing for the U.S. economy.
A Few Nasdaq Composite Laggers
Despite a dream run of the tech-laden index, a few large-cap stocks have provided negative returns year to date. A handful of those stocks currently carry a favorable Zacks Rank. These stocks are likely to regain momentum in 2024 as steadily dwindling inflation coupled with a low interest rate regime are expected to help reviving their businesses.
Our Top Picks
We have narrowed our search to five Nasdaq Composite listed laggards of 2023 with strong potential for 2024. These stocks have seen positive earnings estimate revisions in the last 60 days. Each of our picks carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank 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) reported robust second-quarter 2023 earnings results. The results reflect strength and resilience in its diversified portfolio, modernized supply chain, improved digital capabilities, flexible go-to-market distribution systems and robust consumer demand trends. Resilience and strength in the global beverage and food businesses also aided results.
PEP expects organic revenue growth of 10% for 2023 compared with the 8% rise estimated earlier. PEP expects core earnings per share of $7.47 for 2023 compared with the $7.27 forecast earlier.
Zacks Rank #2 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 60 days.
Warner Music Group Corp. (WMG - Free Report) is a music-based content company. WMG’s operating segments consist of Recorded Music and Music Publishing. The Recorded Music segment is involved in the discovery and development of recording artists. The Music Publishing segment owns and acquires rights. WMG operates principally in the United States, the United Kingdom and internationally.
Zacks Rank #2 Warner Music Group has an expected revenue and earnings growth rate of 6% and 23.8%, respectively, for the current year (ending September 2024). The Zacks Consensus Estimate for current-year earnings has improved 6.6% over the last 30 days.
The Kraft Heinz Co. (KHC - Free Report) is gaining on solid pricing initiatives. This was seen in second-quarter 2023, wherein the top and the bottom lines rose year over year. KHC’s sales grew in the North America and International regions and results continued to gain from strength in the foodservice, emerging markets and U.S. Retail Grow platforms. KHC is on track with AGILE@SCALE to enhance shareholders' value. We expect net sales growth of 2%, with an organic sales increase of 4% in 2023.
Zacks Rank #2 Kraft Heinz has an expected revenue and earnings growth rate of 0.8% and 1.7%, respectively, for next year. The Zacks Consensus Estimate for next-year earnings has improved 1.7% over the last 60 days.
BeiGene Ltd. (BGNE - Free Report) develops and commercializes oncology medicines worldwide. BGNE’s clinical-stage drug candidates include BGB-3111, BGB-283, BGB-290, and BGB-A317. BGNE has collaborations with several large biotech companies.
Zacks Rank #1 BeiGene has an expected revenue and earnings growth rate of 21.7% and 15.5%, respectively, for next year. The Zacks Consensus Estimate for next-year earnings has improved 27.2% over the last 60 days.
Insulet Corp. (PODD - Free Report) has been progressing well on its four-pillar strategy with target-focused market expansion and innovation. PODD has been making significant progress with respect to its development roadmap of the Omnipod 5 system. The international rollout of the device continues successfully.
PODD commercially launched Omnipod 5 in the United Kingdom in June and in August, this device reached Germany commercially. Further, Insulet registered continued strong adoption of Omnipod DASH in its international markets.
Zacks Rank #1 Insulet has an expected revenue and earnings growth rate of 19.8% and 30.2%, respectively, for next year. The Zacks Consensus Estimate for next-year earnings has improved 11.2% over the last 60 days.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
5 Nasdaq Composite Laggards Likely to Gather Pace in 2024
The Nasdaq Composite has been witnessing an astonishing rally in 2023 after a highly disappointing 2022. Year to date, the tech-heavy index has surged 42.4%. With just eight days of trading left to conclude 2023, the index is set to be the clear winner of this year.
Momentum Likely to Continue
U.S. stock markets have soared amid a clear indication from the central bank that the current interest rate hike cycle, which elevated the Fed fund rate to a 22-year high of 5.25-5.50% from 0-0.25% in March 2022, has finally ended.
Moreover, the December FOMC meeting dot plot has shown that on average, Fed officials are expecting at least three rate cuts of 25 basis points each in 2024, followed by four more rate cuts of a full one percentage point in 2025.
The dot plot has also indicated three more rate cuts in 2026, which would take down the benchmark lending rate to the range of 2-2.25%. Following the Fed’s decision, the yield on the benchmark 10-Year U.S. Treasury Note fell less than 4% for the first time since March 2023. The yield topped more than 5% in October.
Fed officials currently expect core inflation to fall 3.2% in 2023, 2.4% in 2024, and then to 2.2% in 2025. Finally, it should decline to the 2% target in 2026. Despite rigorous interest rate hikes, the fundamentals of the U.S. economy remain strong.
On Dec 14, the Atlanta Fed forecast U.S. GDP to grow by 2.6% in fourth-quarter 2023, a notable improvement from the 1.2% estimated on Dec 7. This eliminates the fear of a recession in 2024 thereby boosting investors’ confidence in a possible soft landing for the U.S. economy.
A Few Nasdaq Composite Laggers
Despite a dream run of the tech-laden index, a few large-cap stocks have provided negative returns year to date. A handful of those stocks currently carry a favorable Zacks Rank. These stocks are likely to regain momentum in 2024 as steadily dwindling inflation coupled with a low interest rate regime are expected to help reviving their businesses.
Our Top Picks
We have narrowed our search to five Nasdaq Composite listed laggards of 2023 with strong potential for 2024. These stocks have seen positive earnings estimate revisions in the last 60 days. Each of our picks carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank 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) reported robust second-quarter 2023 earnings results. The results reflect strength and resilience in its diversified portfolio, modernized supply chain, improved digital capabilities, flexible go-to-market distribution systems and robust consumer demand trends. Resilience and strength in the global beverage and food businesses also aided results.
PEP expects organic revenue growth of 10% for 2023 compared with the 8% rise estimated earlier. PEP expects core earnings per share of $7.47 for 2023 compared with the $7.27 forecast earlier.
Zacks Rank #2 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 60 days.
Warner Music Group Corp. (WMG - Free Report) is a music-based content company. WMG’s operating segments consist of Recorded Music and Music Publishing. The Recorded Music segment is involved in the discovery and development of recording artists. The Music Publishing segment owns and acquires rights. WMG operates principally in the United States, the United Kingdom and internationally.
Zacks Rank #2 Warner Music Group has an expected revenue and earnings growth rate of 6% and 23.8%, respectively, for the current year (ending September 2024). The Zacks Consensus Estimate for current-year earnings has improved 6.6% over the last 30 days.
The Kraft Heinz Co. (KHC - Free Report) is gaining on solid pricing initiatives. This was seen in second-quarter 2023, wherein the top and the bottom lines rose year over year. KHC’s sales grew in the North America and International regions and results continued to gain from strength in the foodservice, emerging markets and U.S. Retail Grow platforms. KHC is on track with AGILE@SCALE to enhance shareholders' value. We expect net sales growth of 2%, with an organic sales increase of 4% in 2023.
Zacks Rank #2 Kraft Heinz has an expected revenue and earnings growth rate of 0.8% and 1.7%, respectively, for next year. The Zacks Consensus Estimate for next-year earnings has improved 1.7% over the last 60 days.
BeiGene Ltd. (BGNE - Free Report) develops and commercializes oncology medicines worldwide. BGNE’s clinical-stage drug candidates include BGB-3111, BGB-283, BGB-290, and BGB-A317. BGNE has collaborations with several large biotech companies.
Zacks Rank #1 BeiGene has an expected revenue and earnings growth rate of 21.7% and 15.5%, respectively, for next year. The Zacks Consensus Estimate for next-year earnings has improved 27.2% over the last 60 days.
Insulet Corp. (PODD - Free Report) has been progressing well on its four-pillar strategy with target-focused market expansion and innovation. PODD has been making significant progress with respect to its development roadmap of the Omnipod 5 system. The international rollout of the device continues successfully.
PODD commercially launched Omnipod 5 in the United Kingdom in June and in August, this device reached Germany commercially. Further, Insulet registered continued strong adoption of Omnipod DASH in its international markets.
Zacks Rank #1 Insulet has an expected revenue and earnings growth rate of 19.8% and 30.2%, respectively, for next year. The Zacks Consensus Estimate for next-year earnings has improved 11.2% over the last 60 days.