The year 2023 has been a volatile one for the stock market, with many ups and downs, challenges and opportunities, and winners and losers. As we approach the end of the year, investors may be wondering which stocks are worth buying or holding for the next year. In this article, we will present our picks for the 5 best stocks to look out for in 2024, based on their performance, growth potential, competitive advantage, and future prospects. These are not necessarily the highest-returning or the most popular stocks, but rather the ones that we believe have a strong chance of delivering consistent and sustainable value to shareholders in the long term.
1. Airbnb (NASDAQ: ABNB)
Airbnb is the leading online platform for short-term lodging, connecting millions of hosts and guests around the world. The company has disrupted the traditional hotel industry and created a new way of traveling and experiencing different cultures. Airbnb has shown impressive growth and resilience, especially during the COVID-19 pandemic, when many people opted for alternative accommodations over crowded hotels. In the third quarter of 2023, Airbnb reported an 18% year-over-year increase in revenue, a 57% increase in gross bookings, and a positive free cash flow of $1.3 billion. The company also raised its full-year guidance, indicating strong demand and confidence in its business model.
Airbnb has several competitive advantages that make it a compelling stock to watch in 2024. First, it has a large and loyal user base, with over 4 million hosts and 900 million guest arrivals since its inception. Second, it has a diversified and global portfolio, with listings in over 220 countries and regions, and exposure to various segments such as urban, rural, leisure, and business travel. Third, it has a strong brand recognition and reputation, as well as a high level of customer satisfaction and retention. Fourth, it has a scalable and asset-light business model, which allows it to generate high margins and cash flows with low capital expenditures. Fifth, it has a clear vision and strategy for the future, focusing on expanding its offerings, enhancing its technology, and improving its social and environmental impact.
We believe that Airbnb has a lot of room for growth and innovation, as it continues to tap into the huge and growing market of travel and tourism, which is expected to reach $11.4 trillion by 2027. Airbnb also has the opportunity to leverage its data and insights to create personalized and differentiated experiences for its users, as well as to explore new verticals such as experiences, adventures, luxury, and long-term stays. We think that Airbnb is well-positioned to benefit from the recovery and transformation of the travel industry, and to deliver long-term value to its shareholders.
2. Amazon (NASDAQ: AMZN)
Amazon is the undisputed leader in e-commerce, cloud computing, and digital entertainment, with a diversified and dominant portfolio of products and services. The company has been one of the biggest beneficiaries of the pandemic, as more people shifted to online shopping, streaming, and working from home. In the third quarter of 2023, Amazon reported a 13% year-over-year increase in revenue, a 21% increase in operating income, and a 23% increase in earnings per share. The company also surpassed $100 billion in quarterly revenue for the fourth consecutive time, and generated $12.5 billion in free cash flow.
Amazon has several competitive advantages that make it a formidable stock to watch in 2024. First, it has a massive and loyal customer base, with over 300 million active customers and over 200 million Prime members worldwide. Second, it has a wide and deep product selection, offering millions of items across various categories, from books and electronics to groceries and fashion. Third, it has a fast and convenient delivery network, with over 175 fulfillment centers and over 100,000 delivery vehicles. Fourth, it has a powerful and profitable cloud computing segment, Amazon Web Services (AWS), which provides infrastructure, platform, and software solutions to millions of customers, from startups and enterprises to governments and nonprofits. Fifth, it has a popular and innovative digital entertainment segment, which includes Prime Video, Prime Music, Audible, Twitch, and IMDb TV.
We believe that Amazon has a lot of potential for growth and diversification, as it continues to invest in new and existing markets, such as healthcare, education, gaming, and advertising. Amazon also has the ability to leverage its data and technology to create personalized and integrated experiences for its customers, as well as to enhance its efficiency and productivity. We think that Amazon is well-equipped to maintain its leadership and relevance in the rapidly changing and evolving digital economy, and to generate long-term value for its shareholders.
3. American Tower (NYSE: AMT)
American Tower is the largest owner and operator of wireless and broadcast communication infrastructure in the world, with over 214,000 sites in 23 countries. The company provides leasing space on its towers and rooftops to wireless carriers, broadcasters, internet service providers, and government agencies, enabling them to deliver wireless voice and data services to their customers. American Tower operates as a real estate investment trust (REIT), which means that it distributes at least 90% of its taxable income to its shareholders as dividends. In the third quarter of 2023, American Tower reported a 9% year-over-year increase in revenue, a 10% increase in adjusted funds from operations (AFFO), and a 12% increase in dividends per share. The company also raised its full-year outlook, reflecting strong demand and performance across its markets.
American Tower has several competitive advantages that make it an attractive stock to watch in 2024. First, it has a large and diversified portfolio of assets, with a balanced mix of mature and emerging markets, and a high exposure to the fast-growing regions of Asia, Africa, and Latin America. Second, it has a stable and recurring revenue stream, with long-term contracts and high occupancy rates, as well as built-in escalators and renewal options. Third, it has a low and predictable operating cost structure, with minimal maintenance and capital expenditures, and high operating margins⁴. Fourth, it has a strong and flexible balance sheet, with ample liquidity and access to capital markets, and a conservative leverage ratio. Fifth, it has a proven and disciplined growth strategy, focusing on organic growth, acquisitions, and innovation.
We believe that American Tower has a lot of opportunity for growth and value creation, as it continues to benefit from the increasing demand for wireless connectivity and data consumption, driven by the proliferation of mobile devices, the adoption of 5G technology, and the expansion of broadband access. American Tower also has the potential to leverage its expertise and infrastructure to offer new and value-added services, such as edge computing, internet of things, and smart cities. We think that American Tower is well-positioned to capitalize on the secular trends and opportunities in the wireless communication industry, and to deliver consistent and sustainable returns to its shareholders.
4. Walt Disney (NYSE: DIS)
Walt Disney is the world’s leading entertainment company, with a diverse and iconic portfolio of media and entertainment assets, including Disney, Pixar, Marvel, Star Wars, National Geographic, ESPN, ABC, and Hulu. The company operates in four segments: media and entertainment distribution, parks, experiences and products, direct-to-consumer, and studio entertainment. In the fourth quarter of 2023, Walt Disney reported a 12% year-over-year increase in revenue, a 15% increase in operating income, and a 17% increase in earnings per share. The company also surpassed 200 million paid subscribers across its streaming services, including Disney+, ESPN+, and Hulu.
Walt Disney has several competitive advantages that make it a compelling stock to watch in 2024. First, it has a loyal and passionate fan base, with millions of customers and followers around the world, who are willing to pay a premium for its products and services. Second, it has a rich and diverse content library, with thousands of titles and characters across various genres, formats, and platforms, creating a strong and lasting intellectual property moat. Third, it has a global and synergistic distribution network, with multiple channels and outlets to reach and engage its customers, such as cinemas, television, streaming, theme parks, merchandise, and live events. Fourth, it has a talented and creative workforce, with some of the best storytellers, artists, and innovators in the industry, who are constantly developing and delivering new and exciting content and experiences. Fifth, it has a visionary and strategic leadership, with a clear and ambitious plan for the future, focusing on enhancing its core strengths, expanding its reach, and diversifying its revenue streams.
We believe that Walt Disney has a lot of potential for growth and recovery, as it continues to overcome the challenges and disruptions caused by the pandemic, especially in its parks and studio segments. Walt Disney also has the opportunity to leverage its content and brand power to drive its direct-to-consumer segment, which is the key growth engine and priority for the company. We think that Walt Disney is well-prepared to adapt and thrive in the changing and competitive media and entertainment landscape, and to generate long-term value for its shareholders.
5. Mastercard (NYSE: MA)
Mastercard is one of the world’s leading payment technology companies, facilitating the processing and settlement of electronic transactions between consumers, merchants, banks, and governments. The company operates a global network that connects over 2.8 billion cards, 70 million merchants, and 25,000 financial