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 hunt for the seven best stocks poised for magnificent earnings growth next year brought up names such as Hims & Hers Health and Alcoa — stocks far less obvious than Nvidia, Meta, Apple, Tesla or the other megacap leaders that dominate the market.
Seven Best Stocks For Magnificent Earnings Growth
Vertex Pharmaceuticals: Vertex makes products to treat people with serious diseases, including Trikafta for cystic fibrosis. Analysts anticipate Vertex earnings per share will boom 6,069% next year to $18.70 per share, according to FactSet. This year, views call for Vertex earnings to crater after a huge loss in the second quarter, tied to the purchase of Alpine Immune Sciences. The top line is seen growing 9% in both 2024 and 2025. Vertex stock earns a Composite Rating of 89 and RS Rating of 63, both out of a best-possible 99. It has jumped nearly 16% so far this year. Shares are in a 13-week consolidation, near all-time highs. But they have undercut the 50-day average with earnings due on Monday after the close.
TG Therapeutics: A commercial-stage biopharmaceutical company, TG sells a multiple sclerosis treatment called Briumvi. Analysts forecast TG will see a 1,379% surge in earnings per share in 2025, recovering from a sharp decline this year. The company has made a recent turn to profits. Sales are seen growing 40% in 2024 and 50% in 2025. TG Therapeutics stock shows a Composite Rating of 96 and RS Rating of 96. It has surged almost 58% so far this year. Shares broke out past 26.41 on Nov. 1 ahead of earnings later this month. They remain far below all-time highs.
Alcoa, Hims & Hers Join Best Stocks List
Alcoa: The aluminum company is returning to growth after a challenging period. On Oct. 17, Alcoa delivered earnings of 57 cents per share, its second straight quarter of positive earnings after a seven-quarter slump. Analysts expect Alcoa to swing to earnings of 76 cents per share in full-year 2024, followed by a 314% leap next year. Sales are seen rebounding 10% this year and growing 4% next year. Alcoa stock holds a Composite Rating of 80 and RS Rating of 90. It has advanced 19% so far this year as investors digest improving fundamentals. Shares continue below all-time highs.
Hims & Hers Health: The provider of telehealth platforms also sells cheaper versions of popular obesity and diabetes drugs. Founded in 2017, Hims & Hers Health is growing at a furious pace. Analysts expect the company to swing to an annual profit in 2024. They project earnings will more than double next year to 74 cents per share. Sales are seen jumping 60% in 2024 and 34% next year, though that would be down from even more robust levels in 2022 and 2023. HIMS stock holds a Composite Rating of 82 and RS Rating of 97. It has soared 112% so far this year. Shares plunged 14% on Oct. 30 with earnings due on Nov. 4.
Best Stocks Include A GE Spinoff
GE Vernova: Spun out as an independent company in April, GE Vernova houses the energy assets of the old General Electric. This once-embattled business is seeing end markets recover. GE Vernova has guided growth across business segments, helping it join the best stocks list. GE Vernova delivered a big earnings miss for Q3 on Oct. 23, but reaffirmed 2024 guidance. Analysts expect earnings to boom 148% per share next year on 6% sales growth. GE Vernova stock flourishes a Composite Rating of 94 and RS Rating of 98. It has more than doubled since its April debut.
Semtech: The company supplies high-performance semiconductors and other products for the infrastructure, industrial and consumer markets. Analysts expect Semtech earnings per share to boom 142% next year, after a strong comeback in 2024. It saw an earnings collapse in 2023. Sales are seen jumping 21% next year. Semtech stock holds a Composite Rating of 76 and RS Rating of 97. It has more than doubled so far this year, up 103%.
RadNet: RadNet runs diagnostic imaging facilities. Forecasts call for the medical company to grow earnings per share 120% next year after a big comeback in 2024. It saw earnings crumble in 2022 and 2023. Analysts see sales rising 11% in 2024 and 8% next year. RadNet stock earns a Composite Rating of 84 and RS Rating of 95. It has rocketed 91% so far this year. But shares have undercut the 50-day average with earnings due on Nov. 11.
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 high 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.
