In this article, we’re going to talk about the 10 best-performing stocks in 2024.
Dow Breaks Record
The Dow Jones Industrial Average has recently made headlines by closing above the 42,000 mark for the first time, a significant milestone that reflects a surge in investor confidence following a substantial interest rate cut by the Fed. This momentous achievement occurred on September 19, when the Dow jumped over 500 points, closing at 42,063.36. This rise was part of a broader trend in the stock market, with major indices experiencing overall gains throughout the week, largely fueled by optimism surrounding the Fed’s decision to lower interest rates by 0.5%.
On September 21, Edward Yardeni, president of Yardeni Research, while acknowledging that the market tends to keep rising, also discussed the warning signs of a melt-up, in the context of the markets’ response to the September rate cut on CNBC’s ‘Closing Bell’. He doubted the necessity of such a large rate cut, suggesting that the economy is currently growing at about 3% year-over-year and could potentially grow even faster. Yardeni noted that while productivity gains are expected to be more pronounced shortly, he would have preferred to see the market stabilize for a while instead of continuing its upward trajectory.
Yardeni provided his forecast for the market’s potential growth. In his base case scenario, he predicted that the Dow could reach 5,800 possibly by next week. However, he also entertained an alternative scenario where the market might exceed 6,000 before experiencing a correction. Still, he does not foresee a bear market as a recession is unlikely.
While discussing investment strategies, Yardeni highlighted that with small-cap and mid-cap stocks showing signs of improvement in valuations, there is an indication that investors should consider diversifying their portfolios beyond large-cap stocks. However, concerns remain regarding mid-cap earnings, which have not shown significant growth recently. Lower interest rates might eventually provide some uplift to these earnings.
Chicago Fed President Austan Goolsbee has indicated that many more rate cuts may be necessary over the next year due to signs of weakness in the manufacturing sector. CNBC’s Rick Santelli, who was reporting on September 23, noted that while manufacturing has faced challenges, there are indications it might be recovering slightly, as evidenced by a recent production increase of 0.8%.
He referenced comments from Treasury Secretary Janet Yellen, who stated that the economy is experiencing strong growth and robust consumer spending, which he believed contradicted the concerns raised by Goolsbee. Santelli pointed out that the Dow Jones Industrial Average is currently at all-time highs, suggesting that market sentiment remains positive despite underlying economic weaknesses.
Further discussing the economic landscape, he remarked on the currency markets, noting that the US dollar has fallen to its lowest level since March 2022. In contrast, the euro has reached its strongest level since April 2022. This shift in currency dynamics reflects broader economic trends, with Santelli suggesting that Germany’s economic situation appears significantly weakened compared to its previous state.
On the topic of interest rates, Santelli reported that since Tuesday’s market close and following the Fed’s easing on Wednesday, two-year note yields have decreased by 3 basis points, while ten-year note yields have increased by ~9 basis points. He emphasized the importance of monitoring these changes closely as they could indicate shifting investor sentiment regarding future economic conditions.
While Santelli’s discussion underscores a complex economic environment where mixed signals from various sectors create uncertainty, the Dow continues to hover around its record highs and investor sentiment remains cautiously optimistic. Market participants are closely monitoring economic indicators and Fed policies to capture future trends. In this context, we’re here with a list of the 10 best-performing stocks in 2024.
Methodology
We used stock screeners to look for companies trading over $10 billion. We then selected the top 10 stocks with the best year-to-date performance and that were also the most popular among elite hedge funds. The stocks are ranked in ascending order of their year-to-date performance.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Best Performing Stocks in 2024
10. Sprouts Farmers Market Inc. (NASDAQ:SFM)
Year-to-Date Performance as of September 23: 123.67%
Market Cap as of September 23: $10.77 billion
Number of Hedge Fund Holders: 35
Sprouts Farmers Market Inc. (NASDAQ:SFM) is a supermarket chain and specialty grocer that offers a wide selection of natural and organic foods, including fresh produce, bulk foods, and vitamins. It is known for its commitment to providing healthy and affordable food options to all of its customers.
Cymbiotika, a new line of supplements featured in the company’s Innovation Center, was a successful product that helped it educate customers about its benefits. The private label brand, Sprouts, also expanded with over 200 new products during the first half of the year, driving sales growth that outpaced the company average.
Two major business strides in the recent quarter include fully repaying the $125 million revolving loan and using $104 million to buy back approximately 1.6 million shares of stock. Now there’s $15 million left to spend under the new $600 million stock buyback program.
In the second quarter of 2024, the company made $1.89 billion in total sales, recording a revenue increase of 11.89% year-over-year. This growth was fueled by a 6.7% increase in sales from existing stores and the opening of new locations.
The performance was consistent across all key areas, including in-store traffic and average purchase amounts, e-commerce and brick-and-mortar sales, newer and older stores, and all geographic regions. Online sales rose by 30%, making up 14% of the total revenue. The private-label brand accounted for 22% of the sales during the quarter.
Management anticipates a total revenue growth of 9% to 10%, with same-store sales increasing by 4% to 5%. The company also plans to open around 35 new stores, mostly in the final quarter of this year. As Sprouts Farmers Market Inc. (NASDAQ:SFM) monetizes opportunities like the successful Cherry Festival in Q2, it positions itself well to use marketing and operations to make leaps in the industry.
FPA Queens Road Small Cap Value Fund stated the following regarding Sprouts Farmers Market, Inc. (NASDAQ:SFM) in its Q2 2024 investor letter:
“Sprouts Farmers Market, Inc. (NASDAQ:SFM) is a natural grocer with great merchandising and best-in-class gross margins.19 The company has attractive returns on capital, great new store economics, and they are accelerating their unit growth from 12 stores a year to 35 stores in 2024 on a base of roughly 400 stores. Over the past year, the stock has performed well after reporting strong operating results and from a low initial valuation. The stock price jumped when the company reported 2023Q4 results and gave strong 2024 guidance on February 22, 2024. We have maintained our position and allowed it to appreciate. Although SFM’s share price has increased faster than bottom line results, we believe SFM still trades in the “range of reasonableness” for a high-quality, non- cyclical franchise that can reinvest capital at attractive rates of return.”
9. Insmed Inc. (NASDAQ:INSM)
Year-to-Date Performance as of September 23: 131.04%
Market Cap as of September 23: $12.29 billion
Number of Hedge Fund Holders: 74
Insmed Inc. (NASDAQ:INSM) is a global biopharmaceutical company on a mission to transform the lives of patients living with serious and rare diseases by developing and commercializing innovative therapies for rare lung diseases. It has a pipeline of drug candidates that target specific pathways involved in lung inflammation and fibrosis.
The company is making progress on Brensocatib, a potential treatment for bronchiectasis and other inflammatory diseases. Recent clinical trial results were positive, and the company plans to submit a new drug application for Brensocatib by the end of 2024, potentially in Q4.
Its Phase 2 study for TPIP in pulmonary arterial hypertension (PAH) is progressing well, with over 75% of patients enrolled. Topline results are anticipated in the second half of 2025, and early data from the trial have shown promising improvements in pulmonary vascular resistance and exercise capacity, indicating the potential for TPIP to be a significant treatment option for PAH patients.
The ENCORE study of ARIKAYCE, conducted by this company is an ongoing clinical trial aimed at evaluating the efficacy and safety of ARIKAYCE in patients with newly diagnosed or recurrent Mycobacterium Avium complex (MAC) lung infections. The primary endpoint, agreed upon with the US FDA, focuses on measuring changes in respiratory symptom scores from baseline to Month 13 of treatment, ensuring the trial meets regulatory standards for demonstrating the drug’s effectiveness.
Overall, these developments resulted in a Q2 2024 revenue improvement of 16.98% year-over-year, primarily driven by the sales of ARIKAYCE, the company’s flagship product for treating refractory MAC lung disease.
Management has highlighted the company’s significant growth during the second quarter of 2024, as it transitions to a mid-sized biotechnology company, expressing optimism about Insmed Inc.’s (NASDAQ:INSM) strategic direction, making it a promising investment in the biopharmaceutical sector.
Columbia Acorn Fund stated the following regarding Insmed Incorporated (NASDAQ:INSM) in its Q2 2024 investor letter:
“Insmed Incorporated (NASDAQ:INSM) is a commercial-stage biopharmaceutical company focused primarily on treatments for pulmonary disease. The stock meaningfully outperformed during the quarter following positive Phase III data for its Brensocatib (Brenso) drug in treating non -cystic fibrosis bronchiectasis (NCFB). While the stock has roughly doubled since the beginning of the year, we are maintaining the overweight position as Brenso could be a potential game changer for the company, given a multi-billion-dollar total addressable market and no other approved NCFB therapies on the market.”
Hedge Fund Resource Center