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S&P 500 Achieves a New Milestone: Top 5 Non-Tech Picks
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U.S. stock markets have been maintaining their northbound journey in the first quarter of 2024 after an impressive 2023. Year to date, the broad-market index — the S&P 500 — is up 9.2% after rallying 23.9% in 2023. Wall Street’s benchmark has posted several all-time highs on both an intraday and a closing basis so far this year. The latest was on Mar 19, as the index closed at 5,178.51, marking a fresh closing high.
The fundamentals of the U.S. economy remain robust. U.S. GDP rose 2.5% in 2023 compared with 1.9% in 2022. At the beginning of 2023, the consensus estimate for full-year GDP was 2%. On Mar 19, the Atlanta Fed GDPNow reported that the U.S. economy would grow 2.1% in first-quarter 2024.
In the January FOMC meeting, the Fed gave enough indications that the much-hyped cut in the benchmark lending rate in March is out of sight. Notably, the central bank paused rate hikes in July 2023 and kept it steady in the range of 5.25-5.5%.
Despite the Fed’s tepid rate cut signal, market participants are hopeful about interest rate cuts to a good extent this year. At present, the CME FedWatch tool shows a 60.1% probability of a 25 basis-point rate cut in June and four more rate cuts of the same magnitude for the rest of 2024.
Meanwhile, the S&P 500 rally of the past 15 months was primarily driven by a massive euphoria on the global adoption of artificial intelligence (AI), especially generative AI. Several AI-centric stocks have skyrocketed in 2024. Aside from tech giants, various non-tech stocks of the S&P 500 Index have popped year to date. Investment in these stocks with a favorable Zacks Rank should be prudent in the near future.
Our Top Picks
We have narrowed our search to five non-tech S&P 500 stocks that have provided double-digit returns year to date. These stocks have strong growth potential for the rest of 2024 and have seen positive earnings estimate revisions in the last 30 days. 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 top picks year to date.
Image Source: Zacks Investment Research
Parker-Hannifin Corp. (PH - Free Report) is benefiting from higher demand from distributors and end users across the oil and gas, material handling, cars and light trucks, and farm and agriculture markets in the North American region within the Diversified Industrial segment.
Higher volume across all businesses, especially the commercial and military aftermarket businesses bolstered PH’s Aerospace Systems unit. Synergies from the Meggitt buyout are also aiding PH. Benefits from the Win strategy are driving PH’s margins.
Parker-Hannifin has an expected revenue and earnings growth rate of 4.4% and 12.3%, respectively, for the current year (ending June 2024). The Zacks Consensus Estimate for current-year earnings has improved 0.1% over the last seven days. The stock price of PH has advanced 16.9% year to date.
Ralph Lauren Corp. (RL - Free Report) has benefited from robust demand and brand strength. RL has been on track with its Next Great Chapter: Accelerate plan. This is evident from RL’s impressive performance in third-quarter fiscal 2024. Both metrics have also improved year over year. A favorable product mix and lower freight costs contributed to the bottom line. For fiscal 2024, RL anticipates revenue growth (cc) in the low-single digits.
Ralph Lauren l has an expected revenue and earnings growth rate of 4.2% and 9.5%, respectively, for the current year (ending March 2025). The Zacks Consensus Estimate for current-year earnings has improved 0.7% over the last 30 days. The stock price of RL has jumped 27.8% year to date.
Eaton Corp. plc’s (ETN - Free Report) ongoing research and development are allowing it to develop new products for providing efficient power management solutions. ETN will benefit from improving end-market conditions, increasing demand from the new AI data center and contributions from its organic assets.
ETN is expanding via acquisitions and its rising backlog shows demand for its products. ETN's strategy to manufacture in the zone of sale has helped it cut costs. Our model projects total revenues to improve in the 2024 to 2026 time period.
Eaton has an expected revenue and earnings growth rate of 7.5% and 12.4%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.1% over the last seven days. The stock price of ETN has climbed 25.8% year to date.
eBay Inc. (EBAY - Free Report) is benefiting from the solid momentum among advertising offerings. EBAY’s strong traction across its Promoted Listings remains a positive. This is driving EBAY’s momentum among first-party advertising products.
We note that strength in advertising business and managed payments offerings is one of EBAY’s key growth drivers. Additionally, growth initiatives based on enhancing seller experience through innovative seller tools and structured data, are major positives.
eBay has an expected revenue and earnings growth rate of 1% and 8%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 3.6% over the last 30 days. The stock price of EBAY has rallied 18.8% year to date.
The Cigna Group’s (CI - Free Report) revenues have been increasing consistently for the past few years, driven by buyouts, superior operating performance and a high-quality product portfolio. CI expects adjusted revenues to jump 20% in 2024. Value-enhancing divestitures will help CI to focus on core growth areas.
High membership on the back of a diversified portfolio, a wide agent network and superior service are the key positives. For 2024, CI expects adjusted EPS of at least $28.25, up 12.6% year over year. CI has been resorting to prudent capital deployment through share repurchases and dividend payments.
The Cigna Group has an expected revenue and earnings growth rate of 20.4% and 13%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.1% over the last 30 days. The stock price of CI has advanced 17.6% year to date.
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S&P 500 Achieves a New Milestone: Top 5 Non-Tech Picks
U.S. stock markets have been maintaining their northbound journey in the first quarter of 2024 after an impressive 2023. Year to date, the broad-market index — the S&P 500 — is up 9.2% after rallying 23.9% in 2023. Wall Street’s benchmark has posted several all-time highs on both an intraday and a closing basis so far this year. The latest was on Mar 19, as the index closed at 5,178.51, marking a fresh closing high.
The fundamentals of the U.S. economy remain robust. U.S. GDP rose 2.5% in 2023 compared with 1.9% in 2022. At the beginning of 2023, the consensus estimate for full-year GDP was 2%. On Mar 19, the Atlanta Fed GDPNow reported that the U.S. economy would grow 2.1% in first-quarter 2024.
In the January FOMC meeting, the Fed gave enough indications that the much-hyped cut in the benchmark lending rate in March is out of sight. Notably, the central bank paused rate hikes in July 2023 and kept it steady in the range of 5.25-5.5%.
Despite the Fed’s tepid rate cut signal, market participants are hopeful about interest rate cuts to a good extent this year. At present, the CME FedWatch tool shows a 60.1% probability of a 25 basis-point rate cut in June and four more rate cuts of the same magnitude for the rest of 2024.
Meanwhile, the S&P 500 rally of the past 15 months was primarily driven by a massive euphoria on the global adoption of artificial intelligence (AI), especially generative AI. Several AI-centric stocks have skyrocketed in 2024. Aside from tech giants, various non-tech stocks of the S&P 500 Index have popped year to date. Investment in these stocks with a favorable Zacks Rank should be prudent in the near future.
Our Top Picks
We have narrowed our search to five non-tech S&P 500 stocks that have provided double-digit returns year to date. These stocks have strong growth potential for the rest of 2024 and have seen positive earnings estimate revisions in the last 30 days. 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 top picks year to date.
Image Source: Zacks Investment Research
Parker-Hannifin Corp. (PH - Free Report) is benefiting from higher demand from distributors and end users across the oil and gas, material handling, cars and light trucks, and farm and agriculture markets in the North American region within the Diversified Industrial segment.
Higher volume across all businesses, especially the commercial and military aftermarket businesses bolstered PH’s Aerospace Systems unit. Synergies from the Meggitt buyout are also aiding PH. Benefits from the Win strategy are driving PH’s margins.
Parker-Hannifin has an expected revenue and earnings growth rate of 4.4% and 12.3%, respectively, for the current year (ending June 2024). The Zacks Consensus Estimate for current-year earnings has improved 0.1% over the last seven days. The stock price of PH has advanced 16.9% year to date.
Ralph Lauren Corp. (RL - Free Report) has benefited from robust demand and brand strength. RL has been on track with its Next Great Chapter: Accelerate plan. This is evident from RL’s impressive performance in third-quarter fiscal 2024. Both metrics have also improved year over year. A favorable product mix and lower freight costs contributed to the bottom line. For fiscal 2024, RL anticipates revenue growth (cc) in the low-single digits.
Ralph Lauren l has an expected revenue and earnings growth rate of 4.2% and 9.5%, respectively, for the current year (ending March 2025). The Zacks Consensus Estimate for current-year earnings has improved 0.7% over the last 30 days. The stock price of RL has jumped 27.8% year to date.
Eaton Corp. plc’s (ETN - Free Report) ongoing research and development are allowing it to develop new products for providing efficient power management solutions. ETN will benefit from improving end-market conditions, increasing demand from the new AI data center and contributions from its organic assets.
ETN is expanding via acquisitions and its rising backlog shows demand for its products. ETN's strategy to manufacture in the zone of sale has helped it cut costs. Our model projects total revenues to improve in the 2024 to 2026 time period.
Eaton has an expected revenue and earnings growth rate of 7.5% and 12.4%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.1% over the last seven days. The stock price of ETN has climbed 25.8% year to date.
eBay Inc. (EBAY - Free Report) is benefiting from the solid momentum among advertising offerings. EBAY’s strong traction across its Promoted Listings remains a positive. This is driving EBAY’s momentum among first-party advertising products.
We note that strength in advertising business and managed payments offerings is one of EBAY’s key growth drivers. Additionally, growth initiatives based on enhancing seller experience through innovative seller tools and structured data, are major positives.
eBay has an expected revenue and earnings growth rate of 1% and 8%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 3.6% over the last 30 days. The stock price of EBAY has rallied 18.8% year to date.
The Cigna Group’s (CI - Free Report) revenues have been increasing consistently for the past few years, driven by buyouts, superior operating performance and a high-quality product portfolio. CI expects adjusted revenues to jump 20% in 2024. Value-enhancing divestitures will help CI to focus on core growth areas.
High membership on the back of a diversified portfolio, a wide agent network and superior service are the key positives. For 2024, CI expects adjusted EPS of at least $28.25, up 12.6% year over year. CI has been resorting to prudent capital deployment through share repurchases and dividend payments.
The Cigna Group has an expected revenue and earnings growth rate of 20.4% and 13%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.1% over the last 30 days. The stock price of CI has advanced 17.6% year to date.