In this piece, we will take a look at the ten best performing growth stocks in January 2024. If you want to skip our take on the market as the new year officially begins, then you can take a look at the top five stocks in this list by clicking 5 Best Performing Growth Stocks in January 2024.
The start of 2024 shows that even the best of forecast and the most capable of analysts can sometimes be wrong. The first month of the new year is full of news about economic data that is setting the tone for markets and the economy for the rest of 2024. 2024 is an important year, not only because it should see interest rate cuts by the Federal Reserve, but also because it's election year in the U.S. Elections in America affect not only Americans, as has been evident by the charged environment of recent years, but also the world since decisions made in Washington have global effects.
Last year had started out with investors worrying that rapid and significant interest rate increases by the Federal Reserve would sap economic activity and tip America into a recession. However, the economic data for the fourth quarter shows that the U.S. GDP grew by 3.3% - which is far, far away from a recession and mouth watering when we consider the economic troubles of powerhouses such as Germany and China. Not only did the economy grow by 3.3% in Q4, but for the full year, growth sat at a respectable 2.5%.
However, while economic growth is always welcomed by politicians, given the current market climate, for investors it paints a more complicated picture. This is because while a growing economy is beneficial for businesses and the stock markets, these days it also means that the Fed might be able to keep rates higher for longer. A key balance that Fed officials have to strike now that they've avoided a recession in 2023 is to start reducing rates before it's too late and keep them high enough for just the right time to make sure that inflation does not increase.
Overall, the economy influences investor perceptions about stocks and their future. Stocks are broadly divided into two categories, namely value stocks and growth stocks. Value stocks are those that are reasonably priced with respect to their earnings per share. These are stocks that belong to stable companies with consistent markets that are able to buffer drops in spending power during an economic downturn.
On the other end are growth stocks. These belong to companies that are operating in markets with untapped potential for revenue. The market, sensing this, prices the shares higher with respect to their earnings, and the resulting differential is captured through a price to earnings ratio. The higher this ratio (which uses either the latest twelve month, fiscal year, or forecast/estimated earnings), the more optimistic investors are about the stock's ability to grow in the future.
As it might also sound intuitive, growth stocks do well when people and businesses have money to spend. This is influenced by the economy and interest rates, both of which influence the ease with which money is available for spending. Therefore, when access to capital is cheap, there is more spending, and high growth industries such as technology end up benefiting as a result.
In fact, picking out the right growth stocks at the right time can often provide an investor with the potential to double or even triple their money. As an illustration, consider the shares of NVIDIA Corporation (NASDAQ:NVDA). NVIDIA's shares are up by a whopping 1,500%+ over the past five years. So, if you'd bought $100 of stock in January 2019 - less than a year before the pandemic struck - then your small investment would be worth roughly $1,700 now. That's a big gain, and a $10,000 investment would have meant a profit of $160,000 in just five years - or equivalent to the combined average starting salary for a Master's graduate in the U.S. for two years.
NVIDIA became the growth stock in 2023 as investors realized the massive potential offered by its products to train mathematical models commonly known as artificial intelligence. A.I. is a part of the public imagination now, and since it relies on making inferences or predictions using data, its use cases are quite ubiquitous as well. Whether it's medical science, fraud detection, drug research, logistics, shipping, or even writing, A.I. models carry with them the advantage of having a treasure trove of data to use and inform decision making.
Couple the investor interest in A.I. with the rosier economic conditions we're seeing at the start of 2024 and one might even start to think that growth stocks could do nothing else but grow this year. One way to see which growth stocks are worth their salt is to see their performance in 2024 so far in response to the shifting economic environment. Today we've done just this and the top growth stocks of January 2024 are NVIDIA Corporation (NASDAQ:NVDA), Advanced Micro Devices, Inc. (NASDAQ:AMD), and Netflix, Inc. (NASDAQ:NFLX). For more such stocks, you can also read 13 Most Promising Growth Stocks According to Analysts.
10 Best Performing Growth Stocks in January 2024
A businessperson giving a presentation on a graph demonstrating the growth of a mid-capitalization equity market.
Our Methodology
We ranked the top 30 constituents of the iShares S&P 500 Growth ETF by their year to date share price gains and selected the top ten growth stocks as the best performing growth stocks of 2024.
For these growth stocks we have also mentioned hedge fund sentiment. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.
Oracle Corporation (NYSE:ORCL) is an enterprise computing firm that provides businesses with software that allows them to conduct their daily operations. The firm kept up the pace on its A.I. announcements in January 2024 when it revealed that its products now integrate models from Meta and Cohere.
During September 2023, 88 out of the 910 hedge funds part of Insider Monkey's database had bought the firm's shares. Oracle Corporation (NYSE:ORCL)'s largest investor among these is Ken Fisher's Fisher Asset Management as it owns 18.7 million shares that are worth $1.9 billion.
Advanced Micro Devices, Inc. (NASDAQ:AMD), NVIDIA Corporation (NASDAQ:NVDA), Oracle Corporation (NYSE:ORCL), and Netflix, Inc. (NASDAQ:NFLX) are some top performing growth stocks in January 2024.
Broadcom Inc. (NASDAQ:AVGO) is a semiconductor company that sells chips that enable gadgets and computers to connect to networks. Its shares touched a record high price of $12.54 in January 2024 as investors looked to cash in on Broadcom Inc. (NASDAQ:AVGO)'s IT expansion through its VMware acquisition as well as the firm's potential to capitalize on the A.I. wave.
As of Q3 2023 end, 87 out of the 910 hedge funds part of Insider Monkey's database had bought Broadcom Inc. (NASDAQ:AVGO)'s shares. Ken Fisher's Fisher Asset Management was the firm's biggest shareholder due to its $1.7 billion stake.
ServiceNow, Inc. (NYSE:NOW) is a diversified technology company that provides IT, automation, and other associated services. The firm has beaten analyst EPS estimates in all four of its latest quarters and the shares are rated Strong Buy on average.
Insider Monkey dug through 910 hedge funds for their third quarter of 2023 shareholdings and found that 99 had invested in the firm. ServiceNow, Inc. (NYSE:NOW) 's largest investor in our database is Rajiv Jain's GQG Partners as it holds $831 million worth of shares.
Lam Research Corporation (NASDAQ:LRCX) is a backend semiconductor company that provides firms with the products that enable them to design and manufacture chips. The fact that its shares are up by nearly 12% year to date is unsurprising given the boost in optimism surrounding the industry this year.
By the end of last year's September quarter, 74 out of the 910 hedge funds covered by Insider Monkey's research were Lam Research Corporation (NASDAQ:LRCX)'s shareholders. Ken Fisher's Fisher Asset Management was the biggest investor due to its $1.8 billion investment.
Uber Technologies, Inc. (NYSE:UBER) is a software company known for its ride sharing platform. January 2024 is proving to be a busy month for the firm as it partners up with Tesla to incentivize EV sales and shut down an alcohol delivery unit.
75 out of the 910 hedge funds surveyed by Insider Monkey during Q3 2023 had held a stake in the firm. Uber Technologies, Inc. (NYSE:UBER)'s largest shareholder among these is Brad Gerstner's Altimeter Capital Management courtesy of its $613 million stake.
Uber Technologies, Inc. (NYSE:UBER), NVIDIA Corporation (NASDAQ:NVDA), Advanced Micro Devices, Inc. (NASDAQ:AMD), and Netflix, Inc. (NASDAQ:NFLX) are some of January 2024's top performing growth stocks.
