3 Strong Buy Stocks for a Sizzling Summer Rally
2024.06.18 12:05
- Microsoft just got a bullish price target upgrade that confirms the company’s leadership in AI.
- Broadcom is the next big tech company to announce a stock split.
- Eli Lilly continues to grow along with demand for its GLP-1 drugs.
After last week’s data dump of inflation readings and the Federal Reserve’s latest decision to hold interest rates steady, investors can take a deep breath before the next earnings season kicks off in just a few weeks.
However, taking a break shouldn’t mean taking your foot off the gas when it comes to buying stocks, at least not some stocks. While small-cap stocks will remain choppy until the Fed raises rates, some gems are hiding in plain sight.
It’s a narrow market, but it’s narrow for a reason. Technology stocks, and particularly artificial intelligence stocks, are where the primary action is. The list of stocks below represents those two sectors.
Investors don’t have to worry about chasing these stocks higher; they all have room to expand. And speaking of expanding, you’ll find a biopharmaceutical company that lets traders ride the GLP-1 wave and may soon be the next $1,000 stock.
Microsoft Shows Why It Pays to Chase a Winner
Sometimes, investors need to be reminded to keep it simple. In the case of finding stocks to buy this summer, that means looking at Microsoft Corporation (NASDAQ:). The tech giant is one of the stocks analysts believe may win the race to being the first $4 trillion stock.
As you might expect in 2024, AI is at the core of this bullish sentiment. Microsoft is at the forefront of the generative AI movement. But that’s not the only lever the company has to pull. In fact, as Thomas Hughes recently reminded investors, MSFT stock has been a favorite of investors for over 12 years. It started with the company’s move to the cloud and continues as it balances growth with shareholder value.
But why should investors buy MSFT stock right now? On June 13, 2024, the company got a bullish upgrade from Tigress Financial. The firm reiterated its Buy rating and raised its price target to $550 from $475. That’s a 24.5% upside for Microsoft on top of the company’s dividend, which has been increasing for 22 consecutive years and currently pays out $3 per share annually.
Broadcom is Following the Lead of Nvidia
When investors consider chip stocks, it’s only natural that NVIDIA Corporation (NASDAQ:) comes to mind. But if you’re looking for another way to trade the sector this summer, Broadcom (NASDAQ:) is a solid choice.
The company is coming off a sizzling earnings report in which it beat on the top and bottom lines. But what really gets analysts excited is that even after 43% growth in earnings in the last 12 months, Broadcom is still forecasting earnings growth of 34% in the next 12 months. That makes it easier for investors to digest the premium they’re paying on AVGO stock.
Investors have another reason to load up on the stock this summer: Broadcom will be conducting a 10-for-1 stock split. While stock splits don’t increase a company’s valuation, they do make a stock like AVGO, which currently trades for over $1,700 a share, more accessible to retail investors, even if that accessibility is more psychological.
Eli Lilly Stock is Expanding as Waist Lines Shrink
If one theme is as hot as AI, it’s weight loss drugs. And Eli Lilly and Company (NYSE:) is one of the key names to watch. LLY stock has been up 97% in the last 12 months, and the main reason for that is the company’s partnership with GLP-1 drugs.
The GLP-1 craze began in 2023 as brand names such as Ozempic and Mounjaro became household names. Initially, this technology was only approved for treating patients with Type 2 diabetes (e.g., Mounjaro). It’s been approved as an obesity drug. In the case of Eli Lilly, that’s Zepbound.
Those two drugs accounted for a significant part of the company’s year-over-year revenue growth in 2023, and based on the company’s earnings report, that growth is not likely to slow down anytime soon.
But there are more reasons to buy LLY stock. Those reasons stem from the company’s deep pipeline, which includes the Alzheimer’s Disease drug candidate Donanemab and a deep pipeline of drugs that could be approved in the coming years.
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