Growth stock investors have had an epic run this year thanks to the rally that pushed the tech-heavy Nasdaq Composite index up 33% over the past 12 months. Nvidia and Meta Platforms more than doubled in that time, making them two of the most explosive gainers in a rising market.
Indexes may turn lower following such a huge spike, of course. But markets also have a way of booking a string of fresh records when momentum is this strong. With that prospect in mind, let’s look at a few stocks that seem primed for especially big gains in April and beyond.
1. Tune into this report
Netflix (NFLX) investors have April 18 circled in bright red on their calendars. That’s the release date of the streaming video giant’s fiscal Q1 earnings report, which covers the reporting period ending in March. Netflix’s stock isn’t far from its all-time high as we approach that update. Shares have climbed nearly 200% since their lows set back in mid-2022. The stock saw those declines about two years ago after the company reported back-to-back quarters of subscriber losses.
Yet the pandemic growth hangover is clearly in the rearview mirror. In late January, Netflix reported surprisingly strong revenue gains driven by a record 13 million new membership sign-ups. The streamer got help from its crackdown on password-sharing and a popular slate of content releases. These successes helped it stand out in a crowded entertainment field and allowed sales growth to speed up to 12% in 2023 from 6% in the prior year.
There might be bigger gains on the way. Netflix should start to see a positive impact from its push into digital advertising in 2024, for one. After all, the digital advertising market is climbing back from a deep, inflation-based downturn over the last couple of years. The company has room to greatly expand viewer engagement, given that it currently accounts for just 8% of streaming TV hours in the U.S. market. And the business is on track to generate over 20% profit margins along with ample cash flow, too. Great returns usually follow successes like these.
2. Boring pays well
Procter & Gamble (PG) stock is not known for its big price moves, but April might be an unusually volatile month for the consumer staples giant’s shareholders. Management usually announces its annual dividend increase in April, likely a few days before P&G reports its fiscal Q3 results on April 19. Both updates could contain good news for investors.
It’s true that P&G’s sales trends are slowing after several years of big gains tied to the pandemic and its immediate aftermath. Softer demand is converging with lower inflation to pressure top-line sales. Management sees only modest organic sales growth this fiscal year thanks to those two challenges.
But P&G boosted its profit margins even in that tough selling environment in 2023. The company fared better than peers like Kimberly-Clark at minimizing volume declines, too, which is a testament to its pricing power. It helps to own the leading competitor in dozens of consumer essentials categories ranging from detergents to diapers.
P&G’s stock has sat out the recent market rally, having gained just 5% in the past full year. It’s possible that investors will see another year of subpar returns ahead if consumers decide to trade down to cheaper options.
On the other hand, P&G will almost certainly announce its 68th consecutive annual dividend hike in April before reporting strong earnings growth heading toward its new fiscal year. Your market-thumping returns might take longer to accrue with this mature business, but you’ve still got a great shot at strong gains when holding P&G stock over the long term.
— Demitri Kalogeropoulos
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Source: The Motley Fool