Stock Markets Analysis and Opinion

3 Market Leaders to Own Beyond the ‘Magnificent 7’ Stocks

2024.02.09 06:31

  • The inventory market continues to rally to new heights, with the S&P 500 hitting the 5,000-mark for the first time in historical past.
  • While most of the focus is on the ‘Magnificent 7’ mega-cap tech shares there are fairly just a few firms which have seen their shares climb to new highs.
  • As such, buyers ought to take into account including the three shares we plan to talk about on this article to their portfolio as the inventory market rally continues.
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In a market dominated by the ‘Magnificent 7’ group of mega-cap tech shares, buyers usually overlook different market leaders poised for important development.

By diversifying past Nvidia (NASDAQ:), Microsoft (NASDAQ:), Meta (NASDAQ:), Amazon (NASDAQ:), Alphabet (NASDAQ:), Apple (NASDAQ:), and Tesla (NASDAQ:), buyers can doubtlessly unlock important returns.

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While the ‘Magnificent 7’ shares might dominate headlines, buyers shouldn’t overlook this trio of market leaders with robust development prospects.

1. Eli Lilly

Eli Lilly’s (NYSE:) sturdy portfolio of blockbuster medicine, coupled with its give attention to analysis and growth, positions it for sustained development, making it a compelling funding alternative past the ‘Magnificent 7’ shares.

Investors have positioned excessive hopes on the pharmaceutical firm’s progress with its promising weight problems drug pipeline. Lilly’s hopeful candidates in Alzheimer’s illness and immunology have additionally boosted investor confidence.

The pharma big has skilled a surge in its inventory worth over the previous yr, pushed by robust gross sales development in key therapeutic areas.

Shares of the Indianapolis, Indiana-based healthcare juggernaut, which ended at an all-time excessive of $735.68 final evening, are up 116% over the previous 12 months.

Eli Lily Daily Chart

With a market cap of $661 billion, Eli Lilly is the world’s most dear healthcare agency and the eighth-biggest firm buying and selling on the U.S. inventory alternate.

Eli Lilly is nicely positioned for additional beneficial properties, with many anticipating it to develop into the first healthcare firm with a $1 trillion valuation, because it advantages from robust fundamentals, which is able to assist gas future development in earnings, gross sales, and free money circulation.

In an indication of how nicely its enterprise is performing, Eli Lilly delivered blowout fourth-quarter and income this week, fueled by surging demand for its new weight reduction drug, Zepbound, and better costs for its blockbuster diabetes remedy, Mounjaro.

As ProSuggestions factors out, Eli Lilly is in nice monetary well being situation, thanks to its sturdy earnings prospects and excessive free money flows which have allowed it to preserve its dividend for 54 consecutive years.

Eli Lily Data

Source: InvestingPro

On the draw back, ProSuggestions highlights that LLY inventory trades at excessive earnings and income multiples, underlining dangers related to overvaluation.

With that being famous, Eli Lilly’s inventory seems to be buying and selling at a hefty premium in accordance to a number of valuation fashions on InvestingPro, which means a possible draw back of -24.2% from present ranges.

2. Palo Alto Networks

Palo Alto Networks (NASDAQ:) is broadly thought-about considered one of the main names in the cybersecurity software program business.

Its core product is a platform that features superior menace detection and prevention options, cloud safety, and endpoint safety.

The cyber specialist has seen its inventory soar 121% over the previous yr as cybersecurity threats proceed to evolve and companies prioritize digital safety, driving robust income development and market share enlargement.

PANW inventory ended at a document excessive of $367.02 on Thursday, incomes the international cybersecurity chief a market valuation of round $116 billion.

Palo Alto Daily Chart

The Santa Clara, California-based cybersecurity firm is scheduled to ship its fiscal second-quarter earnings and income replace on Monday, February 26 and sell-side confidence is brimming.

In an indication of accelerating optimism, EPS estimates have seen 35 upward revisions in the final 90 days, in accordance to InvestingPro, as the firm advantages from elevated cybersecurity spending amid the rampant surge in cyberattacks.

Palo Alto Networks is forecast to earn $1.30 per share, rising 23.8% from the year-ago interval. Meanwhile, income is seen rising 15.6% year-over-year to $1.97 billion, reflecting sturdy demand for its numerous cloud-delivered safety providers.

InvestingPro’s ProSuggestions underscore Palo Alto Network’s promising outlook, emphasizing its favorable positioning in the cybersecurity sector and robust profitability outlook.

(*3*)

Source: InvestingPro

Nevertheless, considerations loom as ProSuggestions factors out the firm’s excessive income valuation multiples and a lofty price-to-book ratio, elevating questions on its present valuation.

Indeed, PANW inventory might see a possible decline of -34.2% from its present market worth, as per the quantitative fashions in InvestingPro, bringing shares nearer to their ‘Fair Value’ of $241.33.

3. Uber

Uber (NYSE:), a pioneer in the ride-hailing and food-delivery business, has skilled a resurgence in its inventory worth thanks to bettering mobility tendencies and mounting demand for its ride-sharing and food-delivery providers.

Shares of the San Francisco, California-based mobility-as-a-service firm have run about 94% larger throughout the previous 12 months, far outpacing the comparable returns of the broader market over the similar timeframe.

At present ranges, Uber has a market cap of roughly $147 billion after closing Thursday’s session at a contemporary document peak of $71.61.

Uber Daily Chart

The ride-hailing and supply specialist’s robust market presence, various income streams, and relentless give attention to attaining profitability by way of cost-cutting measures are seemingly to proceed driving its inventory to new heights in the months forward.

Indeed, Uber’s unbelievable fourth-quarter launched this week made it clear that the firm is executing nicely and delivering strong development amid the current financial local weather of elevated inflation and high-interest charges.

The firm’s income for the quarter was up 15% from the similar quarter final yr to $9.94 billion, whereas gross bookings got here in at $37.6 billion, up 22% year-over-year.

There have been 2.6 billion journeys accomplished on the firm’s platform throughout the interval, a rise of 24% from the year-ago interval.

Not surprisingly, ProSuggestions paints a largely constructive image of Uber’s inventory, citing its robust market presence and wholesome earnings and gross sales development prospects.

Uber Stock Data

Source: InvestingPro

However, warning is suggested as ProSuggestions highlights considerations about Uber’s valuation metrics, which counsel the inventory is in overbought territory.

It’s value noting that InvestingPro suggests UBER shares are slightly overvalued at current, doubtlessly dealing with a decline of -10.4%. Such a correction would convey the inventory extra consistent with its ‘Fair Value’ goal of $64.19.

***

Be positive to take a look at InvestingPro to keep in sync with the market development and what it means to your buying and selling. As with any funding, it is essential to analysis extensively earlier than making any choices.

InvestingPro empowers buyers to make knowledgeable choices by offering a complete evaluation of undervalued shares with the potential for important upside in the market.

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Disclosure: At the time of writing, I’m lengthy on the S&P 500, and the by way of the SPDR S&P 500 ETF (SPY), and the Invesco QQQ Trust ETF (QQQ). I’m additionally lengthy on the Technology Select Sector SPDR ETF (NYSE:).

I repeatedly rebalance my portfolio of particular person shares and ETFs based mostly on ongoing threat evaluation of each the macroeconomic setting and firms’ financials.

The views mentioned on this article are solely the opinion of the writer and shouldn’t be taken as funding recommendation.

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