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 Incyte (INCY) and Alcoa (AA) — stocks far less obvious than Nvidia (NVDA), Meta (META), Amazon (AMZN), Tesla (TSLA) or the other megacap leaders that dominate the market.
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What Are The Magnificent Seven Stocks?
Seven Best Stocks For Magnificent Earnings Growth
Vertex Pharmaceuticals (VRTX): 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 3,346% next year to $18.90 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 91 and RS Rating of 71, both out of a best-possible 99. It has jumped nearly 27% so far this year. Shares topped a 510.63 buy point on Friday. Earlier this week, Vertex stock jumped after posting better-than-expected earnings for the third quarter.
TG Therapeutics (TGTX): A commercial-stage biopharmaceutical company, TG sells a multiple sclerosis treatment called Briumvi. Analysts forecast TG will see a 1,723% 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 78 and RS Rating of 97. It has surged 65% so far this year. Shares regained a 26.41 buy point after a short-lived earnings miss tumble on Nov. 4. They remain far below all-time highs.
Incyte Joins Best Stocks List
Incyte (INCY): Another commercial-stage biopharmaceutical company, Incyte’s key products include Jakafi and Opzelura. Incyte raised full-year guidance on Oct. 29 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 81 and RS Rating of 91. It broke out to highs amid earnings on Oct. 29. Incyte stock is now nearing the profit-taking sell zone. Year to date, INCY stock is up almost 33%.
Alcoa (AA): 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 81 and RS Rating of 93. It has advanced 29% so far this year as investors digest improving fundamentals. Shares broke out on Wednesday after Trump’s presidential election victory but skid on Friday, well below all-time highs.
Best Stocks Include A GE Spinoff
GE Vernova (GEV): 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 94 and RS Rating of 98. It has more than doubled since its April debut.
Semtech (SMTC): 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. Semtech saw an earnings collapse in 2023. Sales are seen rising 3% this year and jumping 21% next year. Semtech stock holds a Composite Rating of 75 and RS Rating of 98. It has more than doubled so far this year, up 137%. Earnings are due later this month.
RadNet (RDNT): RadNet runs diagnostic imaging facilities. Forecasts call for the medical company to grow earnings per share 120% next year, following a big rebound in 2024. RadNet 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 82 and RS Rating of 95. It has rocketed 109% so far this year. Shares rebounded from the 50-day / 10-week moving average with earnings due around 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.
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