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 Vericel and Alcoa — stocks far less obvious than Meta, Amazon, 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. On a per-share basis, analysts anticipate Vertex earnings will boom 3,596% next year to $18.93 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. Analysts see the top line growing 10% in 2024 and 8% in 2025. Vertex stock earns a Composite Rating of 74 and RS Rating of 52, both out of a best-possible 99. It has undercut the 50-day and 200-day moving averages, paring its advance so far this year to 10%. Earlier in November, Vertex posted better-than-expected earnings for the third quarter.
TG Therapeutics: A commercial-stage biopharmaceutical company, TG sells a multiple sclerosis treatment called Briumvi, which has been driving growth. Analysts forecast TG will see a 1,719% 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 41% in 2024 and 64% in 2025. TG Therapeutics stock shows a Composite Rating of 76 and RS Rating of 97. It has surged 98% so far this year. Shares tumbled on an earnings miss earlier in November. But they surged more than 10% on Nov. 21. That move came as TGTX stock was named No. 1 on the 2024 Deloitte Technology Fast 50 list, which recognizes the fastest-growing companies in North America. Shares remain far below all-time highs.
Biopharma Vericel Joins Best Stocks List
Incyte: Another commercial-stage biopharmaceutical company, Incyte's key products include Jakafi and Opzelura. On Oct. 29, Incyte raised full-year guidance after its 24% Q3 sales jump outpaced views. Analysts expect Incyte earnings to boom 368% next year, recovering from an expected slump in 2024. Sales are seen growing 14% this year and growing 10% next year. Incyte stock holds a Composite Rating of 66 and RS Rating of 80. It broke out to highs after Q3 earnings, then slid. Year to date, INCY stock is now up 12%.
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 positive earnings in full-year 2024, followed by a 314% leap next year. Sales are seen rebounding 10% this year and growing 4% next year, after the company completed its Alumina acquisition in August. Alcoa stock holds a Composite Rating of 82 and RS Rating of 93. It has advanced almost 36% so far this year as investors digest improving fundamentals. Alcoa stock remains far below all-time highs.
Vericel: This biopharmaceutical company makes products for sports medicine and severe burns. Vericel has an uneven profit track record. However, it joins the best stocks list due to a favorable growth outlook. Analysts expect a strong fourth quarter to push Vericel to positive earnings in full-year 2024, after three years of earnings declines. Analysts project Vericel earnings per share will grow almost fourfold next year, vaulting 277%, as sales jump 23%. Vericel stock earns a Composite Rating of 81 and RS Rating of 85. It scored an earnings breakout to multi-year highs in November. VCEL stock is up 62% so far this year. Trading volume is on the lighter side.
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RadNet: RadNet runs diagnostic imaging facilities. Forecasts call for the medical company to grow earnings per share 179% next year, following a big rebound in 2024. RadNet saw earnings crumble in 2022 and 2023. Analysts see sales rising 12% in 2024 and 8% next year. RadNet stock earns a Composite Rating of 86 and RS Rating of 96. It has rocketed 136% so far this year. Shares gapped up 19% on Nov. 11 amid strong earnings but have pulled back since then. The company hiked full-year earnings guidance after AI drove 76% digital health revenue growth in the third quarter.
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, earning it a place in 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 158% per share next year on 6% sales growth. GE Vernova stock flourishes a Composite Rating of 92 and RS Rating of 98. GEV has more than doubled since its April debut.
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.
