No one knows for sure how any stock will perform over the next 12 months. There are simply too many variables that can come into play.
However, that doesn't mean that analysts and investors can't have pretty good hunches about what certain stocks will do over the near term. And they can certainly have a reasonable idea about how some stocks will perform over the long term. With these two premises in mind, I'll make a prediction: These three phenomenal stocks are set to soar.
1. D.R. Horton
D.R. Horton (NYSE: DHI) stock is already a big winner in 2024. I think the homebuilder's shares will jump even more for three key reasons.
Most importantly, the U.S. still faces a major housing shortage. Zillow recently estimated that the country has a deficit of 4.5 million homes. As the largest homebuilder by volume in the U.S. for more than two decades, D.R. Horton is uniquely positioned to benefit as this shortage is addressed.
While the housing shortage should provide a long-term tailwind for D.R. Horton, the stock could move higher over the short term if the Federal Reserve lowers interest rates. Many observers expect the Fed to cut rates by at least 0.25% later this month and potentially follow up with further cuts. Lower interest rates usually lead to lower mortgage rates, which should boost home sales.
My third reason for being bullish about D.R. Horton is its valuation. Shares currently trade below 12 times forward earnings with a five-year price-to-earnings-to-growth (PEG) ratio of only 0.62. Simply put, D.R. Horton is dirt cheap considering its strong growth prospects.
2. Nvidia
If you see a glass of water as half-full, you'll probably focus on the fact that Nvidia's (NASDAQ: NVDA) share price has skyrocketed this year. If you see a glass of water as half-empty, you might correctly point out that the stock has pulled back quite a bit from its peak. My view, though, is that more water will soon be poured into Nvidia's glass.
I'm referring to the upcoming commercial launch of Nvidia's graphics processing units (GPUs) based on its Blackwell architecture. This GPU platform supports up to 25 times lower costs and energy consumption than the company's market-leading chips that use its Hopper architecture.
Sure, Nvidia has delayed shipping its Blackwell chips. However, CEO Jensen Huang expects the new GPUs will rake in "billions of dollars" in 2024. He also thinks that Blackwell could be the "most successful" product in Nvidia's history and possibly in the entire computer industry.
Maybe Huang is overly optimistic; maybe he's not. Either way, I suspect the launch of Blackwell will enable Nvidia to set new all-time highs in the not-too-distant future. And with the company now on a one-year cycle of new product roll-outs, Blackwell should be only the beginning.
3. Vertex Pharmaceuticals
Vertex Pharmaceuticals (NASDAQ: VRTX) has racked up the smallest gains of these three phenomenal stocks so far this year, but it's still up by a double-digit percentage. I believe the biotech stock will soon shift into a higher gear.
The commercial launch of Casgevy, the first CRISPR gene-editing therapy to win regulatory approval, is only in the early stages of ramping up. William Blair analyst Myles Minter projects Casgevy will achieve peak-annual sales of at least $3 billion.
There's even better news for Vertex, though. The company expects regulatory approvals of suzetrigine in treating acute pain and its vanzacaftor triple-drug combo in treating cystic fibrosis by early 2025. Suzetrigine should have tremendous market potential as a non-opioid that's safe and effective at alleviating pain. I predict that the vanzacaftor triple will become Vertex's best-selling CF therapy yet.
Vertex's pipeline features two other promising drugs in late-stage development. Inaxaplin targets APOL1-mediated kidney disease, which affects more patients worldwide than CF. Povetacicept is in phase 3 testing for treating IgA nephropathy, an inflammatory kidney disease. I think both could become blockbuster drugs for Vertex if approved.
Should you invest $1,000 in Vertex Pharmaceuticals right now?
Before you buy stock in Vertex Pharmaceuticals, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Vertex Pharmaceuticals wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $730,103!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.
*Stock Advisor returns as of September 9, 2024
Keith Speights has positions in Vertex Pharmaceuticals. The Motley Fool has positions in and recommends Nvidia, Vertex Pharmaceuticals, and Zillow Group. The Motley Fool has a disclosure policy.
Prediction: These 3 Phenomenal Stocks Are Set to Soar was originally published by The Motley Fool