My Top 10 Stocks to Buy in 2024 Are Beating the Market by 48%. Should You Buy Them for 2025?

By Investor Empires On Dec 7, 2024

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In January 2023 I wrote about My top 10 stocks To buy for the new year. I ended up being proud of my list because if I had invested $1,000 in each of the 10 stocks on the day the article was published, you would have finished 2023 with $13,301, including dividends. If you instead put your $10,000 in Standard & Poor’s 500 (SNPINDEX: ^GSPC) With the index fund, you would have only $11,900 at the end of the year. In other words, the total return from my stock picks beat the broad market by 74%.

Last December, I updated my list of the top 10 stocks for 2024, which once again outperformed the market. With $10,000 invested equally in those 10 stocks at the beginning of the year, you would have $14,281 as of market close on December 5. The equal investment in the S&P 500 index fund is $12,890. That’s a total return difference of 48%.

This is an encouraging result considering how strong stocks have been this year. When the market goes down, it is much easier to overcome. For example, when the S&P 500 lost 18% in 2022, 51% of US equity managers underperformed the market. But during the bullish first half of 2024, 57% of US large-cap equity managers underperformed the index, and 60% underperformed it last year when the index rose 24%.

Let’s take a closer look at how my picks are performing about a month ahead of 2024 and consider whether you should buy them for next year.

My top 10 stock picks for 2024 were: Airbnb (Nasdaq: ABNB), Amazon (Nasdaq: AMZN), Costco wholesale (NASDAQ: COST), Electronic global online (NASDAQ: GLBE), lemonade (NYSE: LMND), Lululemon Athletica (NASDAQ: LULU), Mercadolibre (Nasdaq: Millie), Now Holding (NYSE: NOW), Sophie techniques (Nasdaq: SOFI)and Visa (NYSE: V).

Here’s how it performed compared to the S&P 500 as of December 5:

Data by YCharts.

Nine of our top 10 picks have been updated year to date. The one exception, Lululemon, is facing some major challenges right now. Let’s take a quick look at each of these stocks and their outlook for 2025.

After rising 59% in 2023, Airbnb has remained flat this year. Growth has slowed, but profitability has risen. It looks more like a value stock right now, and it’s based on its popular platform. The stock trades at just 22 times trailing 12-month free cash flow, and value investors should take a look.

Amazon has unleashed powerful artificial intelligence (AI) capabilities that are driving explosive growth in its cloud computing segment, Amazon Web Services (AWS). AWS is the world’s leading cloud services provider, and AI is attracting new customers. It is also the largest e-commerce company in the United States and has a significant margin. Amazon remains the best choice for almost any investor.

Costco is one of my favorite all-weather stocks, and it continues to rise despite hitting all-time highs this year. It can be relied upon to deliver strong performance under almost any macroeconomic conditions, and the market can’t seem to get enough of it. If you have a long-term mindset, you can add a few posts yet, but you may want to adopt Average cost in dollars strategy.

Global-e is a small but growing e-commerce powerhouse that provides cross-border solutions to online retailers. It serves existing clients such as Disney, LVMHand Nordstromand adds more customers every quarter. It boasts high growth, and is close to profitability as well. This puts the company in a position to extend its momentum into 2025.

Lemonade is the standout stock on this list, and you can see how one big winner can hold a portfolio. The insurer entered 2024 down more than 90% from its all-time high as investors grew frustrated with its progress toward profitability. It has made great strides this year, and its AI algorithms are doing their job. Lemonade still has a huge opportunity.

Lululemon is a consumer favorite, but it made some mistakes this year in launching its products. This hasn’t helped the generally weak market for luxury apparel, and Lululemon isn’t the only activewear company struggling right now. However, at the current price, it trades at just 26 times trailing 12-month earnings, which is a discount to the S&P 500 average. There may be more volatility in the near future, but long-term investors should view this as an opportunity. To buy a leading consumer apparel brand on a dip.

MercadoLibre has been a top performer for a long time, but the stock fell earlier this year due to economic instability and new competition in some of its key markets. However, MercadoLibre continues to operate an outstanding, highly profitable business that continues to record high growth, and its opportunities are enormous throughout Latin America.

Nu is a fully digital bank headquartered in Brazil, and it is growing by leaps and bounds. It has a cross-selling strategy that results in high engagement and high average revenue per active customer. The company has 110 million global customers, and is entering new markets that will fuel its gains through 2025 and beyond.

SoFi is a fully digital bank in the US, and is also showing momentum as it gains market share and becomes sustainably profitable. It has reported positive net income in the past four quarters, and management expects this trend to continue. The business is successfully expanding into a full financial services application, adding to its core lending segment, and has years of growth ahead of it.

Visa is an all-weather stock that grows when the economy grows. The market has underperformed slightly this year as market gains are fueled by big technology stocks. But Visa has been a winning choice for years, and it’s an excellent value choice.

Ten stocks isn’t enough for a diversified portfolio, and this list is skewed toward growth stocks. But if your research leads you to invest in a few of these companies and you round out your portfolio with additional stocks or even an exchange-traded fund for more diversification, you can be well prepared for different market conditions.

It’s important to remember that every year will look different – some selections may fail, while others rise. But these year-to-year fluctuations become less important when you focus on buying high-quality stocks and holding them for the long term. This remains a successful strategy for building wealth in the stock market.

Before you buy shares in the S&P 500, consider the following:

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Think when Nvidia I prepared this list on April 15, 2005… If you invested $1,000 at the time of our recommendation, You will have $872,947!*

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*Stock Advisor returns as of December 2, 2024

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Jennifer Seibel He has positions at Airbnb, Global-E Online, Lemonade, MercadoLibre, Nu Holdings, SoFi Technologies, and Walt Disney. The Motley Fool has positions in and recommends Airbnb, Amazon, Costco Wholesale, Global-E Online, Lemonade, Lululemon Athletica, MercadoLibre, Visa, and Walt Disney. The Motley Fool recommends Nu Holdings. The Motley Fool has Disclosure policy.

The 10 Best Stocks I’ll Buy in 2024 Outperform the Market by 48%. Should you buy it for 2025? Originally published by The Motley Fool