My Top Bull Market Growth Stocks to Buy in 2024 | The Motley Fool (2024)

A year ago, the markets were just beginning their recovery from bear times. Growth stocks started to take off, and investors wondered when we could officially call a bull market. Well, that time is now, offering us an excellent start to 2024. The S&P 500 recently hit a new record high, confirming the market is indeed in one of these much-awaited phases of optimism and growth.

In more good news, history shows us bull markets generally last longer than bear markets, offering our portfolios time to benefit. And to maximize your bull market potential, it's a great idea to buy shares of growth stocks. That's because they tend to excel in bull market environments and times of economic recovery and expansion. Here are my top growth stocks to buy in 2024.

My Top Bull Market Growth Stocks to Buy in 2024 | The Motley Fool (1)

Image source: Getty Images.

1. Amazon

Amazon (AMZN 0.87%) is a the ideal growth stock because it's a leader in two high-growth markets: e-commerce and cloud computing. The company also is investing heavily in the hot area of artificial intelligence (AI), which is boosting earnings in two ways.

AI is driving efficiency in Amazon's operations, helping it to lower costs. And Amazon, through cloud computing business Amazon Web Services (AWS), offers AI tools to clients. Considering the high demand in this area, AWS' AI tools could keep these clients coming back, boosting AWS' revenue. This is particularly important since AWS traditionally has driven profit at Amazon.

Amazon's recent efforts to revamp its cost structure -- to fight rising inflation and other challenges -- have been bearing fruit. Back in 2022, the company reported its first annual loss in about a decade. But by early last year, Amazon already was reporting quarterly gains in net income, and its outflow of cash had shifted to an inflow. In the most recent quarter, the company's net income more than tripled, and free cash flow improved to an inflow of more than $21 billion. Return on invested capital also has been on the rise over the past year.

My Top Bull Market Growth Stocks to Buy in 2024 | The Motley Fool (2)

AMZN Return on Invested Capital data by YCharts

These moves should benefit the company in better times, too. Amazon improved efficiency across its fulfillment network, for example switching to a regional model from a national model in the U.S. The shorter delivery distances are driving improvements in Amazon's "cost to serve," and the company sees potential for ongoing progress here.

So, even though Amazon stock climbed last year, the potential for gains is far from over -- and the stock could be one to excel in this bull market.

2. Carnival

Carnival (CCL -3.89%) had a difficult time of it earlier in the pandemic when sailings were halted, but the world's biggest cruise operator has since roared back to growth. Demand for cruise vacations soared, as we can see in Carnival's revenue and bookings. In the most recent quarter -- the fiscal fourth quarter -- Carnival reported record revenue, and bookings in the two weeks around Black Friday hit an all-time high for that period.

For the fiscal year that ended in November, Carnival reported record revenue of more than $21 billion and entered the new year with its best booked position ever, taking into account occupancy and price. And this has helped the company make gains in earnings, for example, reporting a narrower-than-expected U.S. GAAP net loss of $74 million for the year and positive adjusted net income of $1 million.

Investors' biggest concern about Carnival has been the company's debt levels. While ships were docked during early pandemic days, Carnival built up a wall of debt just to stay afloat (excuse the pun). But Carnival has made significant progress here, too, cutting debt by $4.6 billion from its peak, and Carnival says ongoing growth in adjusted free cash flow will help it pay down more debt over time.

Carnival's booking volumes and customer deposits, which also have reached records, are reason to be optimistic about earnings. And the company's other efforts to streamline operations and cut fuel costs add to earnings growth potential.

That's why now, as Carnival charges ahead in its recovery and growth story, is the perfect time to pick up this stock.

3. Apple

Apple (AAPL -0.90%) is a market giant thanks to leading products like the iPhone and Mac computers, but that doesn't mean the company has reached a plateau when it comes to growth. In fact, three things are set to drive earnings growth well into the future.

My Top Bull Market Growth Stocks to Buy in 2024 | The Motley Fool (3)

Image source: Getty Images.

The first is Apple's brand strength, which helps keep Apple users coming back to buy the latest iPhone or Apple Watch instead of trying a rival product. This brand strength is part of Apple's moat, or competitive advantage -- a key element that could keep this company ahead over time.

The second growth driver is Apple's services business, which in the most recent quarter reported record revenue. This is because all of those loyal Apple fans also subscribe to certain services through their devices -- from digital content to cloud storage. The enormous user base Apple has built over the years (the installed base of active devices topped 2 billion) now represents a source of recurrent revenue.

And, importantly, gross margins on services are higher than those on products -- 70% compared with 36% in the most recent quarter.

Finally, Apple still continues to gain new customers, so it hasn't yet reached a maximum when it comes to gaining market share. In the quarter, half of Mac and iPad buyers were new to those products.

Considering all of this, Apple's growth story is set to be a long one, and the new bull market may be one of the most exciting chapters -- for the company and for shareholders.

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Adria Cimino has positions in Amazon. The Motley Fool has positions in and recommends Amazon and Apple. The Motley Fool recommends Carnival Corp. The Motley Fool has a disclosure policy.

As a seasoned financial analyst and enthusiast, my extensive experience in tracking market trends and evaluating investment opportunities allows me to delve into the content you've presented with a depth of knowledge and first-hand expertise.

The article you shared revolves around the current state of the markets, focusing on the transition from bear to bull times and the opportunities it presents for investors in 2024. The S&P 500 hitting a new record high serves as a key indicator that the market is in a phase of optimism and growth. The author emphasizes the potential longevity of bull markets compared to bear markets, providing investors with a favorable environment for portfolio growth.

The concept of growth stocks is introduced as a strategy to maximize gains during a bull market. Growth stocks, characterized by companies with above-average earnings growth potential, are highlighted as excelling in environments of economic recovery and expansion. The article then proceeds to recommend three specific growth stocks to consider in 2024.

  1. Amazon (AMZN):

    • Amazon is positioned as an ideal growth stock due to its leadership in high-growth markets such as e-commerce and cloud computing.
    • The company's significant investment in artificial intelligence (AI) is identified as a key driver for boosting earnings. AI enhances efficiency in Amazon's operations, leading to cost reduction.
    • Amazon Web Services (AWS), the company's cloud computing business, offers AI tools to clients, contributing to potential revenue growth.
    • Efforts to revamp the cost structure and improve efficiency, along with positive financial indicators, make Amazon a strong contender for continued success in the bull market.
  2. Carnival (CCL):

    • Despite initial challenges during the pandemic, Carnival is highlighted as the world's largest cruise operator that has successfully roared back to growth.
    • Record revenue and bookings are attributed to a surge in demand for cruise vacations, particularly in the fiscal fourth quarter.
    • Concerns about Carnival's debt levels are addressed, emphasizing the company's progress in reducing debt and its commitment to further debt reduction through ongoing growth in adjusted free cash flow.
    • Carnival's booking volumes, customer deposits, and efforts to streamline operations contribute to the optimism about its earnings growth potential during the recovery.
  3. Apple (AAPL):

    • Apple, recognized as a market giant, is presented as a growth stock with ongoing potential for earnings growth.
    • The company's brand strength, reflected in user loyalty, is emphasized as a key competitive advantage.
    • The services business, with record revenue and higher gross margins compared to product sales, is identified as a significant growth driver.
    • Apple's ability to gain new customers, as indicated by the influx of new buyers for Mac and iPad products, suggests continued market share expansion.

In conclusion, the article provides a comprehensive overview of the current market dynamics, the benefits of investing in growth stocks during a bull market, and specific stock recommendations based on the outlined growth factors for Amazon, Carnival, and Apple.

My Top Bull Market Growth Stocks to Buy in 2024 | The Motley Fool (2024)


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