Investors looking to supercharge their portfolios often benefit from a broader stock search. One simple way to do that is to look at year-ahead earnings forecasts. Our picks for the seven best stocks for magnificent earnings growth next year include Vericel, RH and Geo Group — stocks far less obvious than Meta, Amazon, Tesla or other megacaps that dominate the market.
Seven Best Stocks For Magnificent Earnings Growth
TG Therapeutics: A commercial-stage biopharmaceutical company, TG sells a multiple sclerosis treatment called Briumvi, which has been driving growth. On a per-share basis, analysts forecast TG will see a 2,470% surge in earnings in 2025, recovering from a sharp decline this year. The company has made a recent turn to profits. Sales are seen jumping 41% in 2024 and 64% in 2025. TG Therapeutics stock shows a Composite Rating of 75 and RS Rating of 96. It has surged 89% so far this year. That includes a 33% jump this quarter despite weak earnings. TGTX stock tanked amid a Fed-induced broad market rout on Wednesday but rallied on Friday.
Vericel: This biopharmaceutical company makes products for sports medicine and severe burns. Vericel has an uneven profit track record. However, it enjoys a favorable growth outlook, helping it join the best stocks list. Analysts expect a strong fourth quarter to push Vericel to positive earnings in full-year 2024, after three years of earnings declines. They project Vericel earnings per share will vault 278% next year, as sales jump 23%. Vericel stock earns a Composite Rating of 79 and RS Rating of 88. VCEL stock has leaped 60% so far this year. That includes a 30.5% earnings-driven jump this quarter. Trading volume is relatively light.
AI Plays GE Vernova, Lumentum, Semtech
GE Vernova: The General Electric energy spinoff is seeing end markets recover. It has guided growth across business segments, earning GEV a place on the best stocks list. William Blair analysts call Vernova stock "a "top pick" for 2025, as artificial intelligence (AI) data centers consume vast amounts of energy. Wall Street expects Vernova earnings to boom 164% per share next year on 5% sales growth. GE Vernova stock flourishes a Composite Rating of 88 and RS Rating of 97. It has nearly tripled since its March debut. That includes a 30% gain in Q4 amid robust earnings. On Thursday, IBD named GEV Stock Of The Day on a strong rebound off a key level, offering investors a buy opportunity.
Lumentum: The company makes products for optical networking and laser applications, supporting rapid data needs driven by artificial intelligence and machine learning. Lumentum is poised for an earnings comeback starting in the current quarter after three years of hefty declines. Analysts project earnings will recover 55% per share in the fiscal year ending in June. They expect a 136% earnings leap the next year on a 28% sales surge. Lumentum stock flourishes a Composite Rating of 75 and RS Rating of 95. In 2024 so far, LITE stock has rocketed 63%. That includes a 33% gain this quarter alone amid a big earnings beat.
Semtech: Semtech supplies high-performance semiconductor products, driving efficiency in AI data centers. Analysts expect Semtech earnings per share to boom 134% next year, after a strong comeback in 2024. Semtech saw an earnings collapse in 2023. Sales are seen rising almost 5% this year and jumping 22% next year. Semtech stock holds a Composite Rating of 85 and RS Rating of 98. Semtech stock has nearly tripled in 2024 to date, vaulting 190%. That includes a 40% earnings-driven surge in the fourth quarter.
RH, GEO Join Best Stocks List
RH: The retailer, formerly known as Restoration Hardware, taps the high-end home furnishings market. It's poised to more than double earnings next year, earning it a spot on the best stocks list. Analysts forecast a 122% EPS increase after three years of expected and actual declines. Revenue is seen rising 14% next year, quickening from an expected 5.6% gain in the current year, ending in January. RH gave a bright revenue outlook in December despite a challenging housing market. As a result, this upscale retailer enters the list of stocks for magnificent growth. RH stock shows a Composite Rating of 84 and RS Rating of 90. It holds a 37% gain in 2024 including a 16% surge this quarter.
Geo Group: Another new entry to the best stocks list, Geo owns and manages correction and detention facilities. Private prison stocks could benefit from tougher immigration enforcement under President-elect Donald Trump. Analysts project that Geo's earnings will nearly double next year, leaping 83%, after declines in 2023 and 2024. Sales are seen rising 0.4% this year and jumping 12.4% next year. Geo stock holds a Composite Rating of 87 and RS Rating of 98. It has more than doubled this year, rocketing 155%, after soaring in November on Trump's U.S. election win.
Universe of S&P 500, S&P 400 and S&P 600 Stocks
A little background on IBD's process to select the best stocks for magnificent earnings growth:
We began our screening process with the S&P Composite 1500 index, which aggregates the S&P 500, S&P MidCap 400 and S&P SmallCap 600 companies. We chose this index, in part, because it avoids less-liquid, lower-priced and lower-quality names, while efficiently measuring the total U.S. stock market.
Then we limited the stocks on our best stock list to those showing FactSet consensus ratings of overweight or buy, which means analysts expect them to outperform industry peers. Next we further winnowed down the list, setting up a double hurdle: The stocks had to enjoy some of the strongest FactSet earnings growth estimates for the following fiscal year, while also earning solid IBD ratings, in terms of their Composite Rating and RS Rating.
The resulting seven best stocks for outsize earnings growth are a quite different set from the Magnificent Seven stocks. At the same time, these stocks are worth watching as much as any of the Mag Seven stocks given their outperformance potential.
To find other ideas for the best stocks to buy or watch, check out IBD Stock Lists and other IBD content.
