Higher interest rates have been considered as a new economic theme over previous 2 years as the US Federal Reserve focuses on fighting inflation, that touched 40-year high in June 2022. As a result of increased inflation, stock market started tumbling in the previous year because investors reconsidered their growth expectations. Since there was some rebalancing, these investors favoured money market funds. For investors, these funds provided attractive returns as they had little to no risk. As the result, there are certain growth stocks which investors should buy before 2024 so that they can beat the market returns.
However, the US Federal Reserve has been successful so far, as inflation fell significantly in 2023, and the apex bank has decided to slow the pace of interest rate increases. Stock market has bounced back, despite of the fact that several individual stocks are still below their all-time highs. Many economists and experts believe that US Federal Reserve might be finished with cycle of interest rate increases now, and they might start to cut these interest rates in 2024. While nobody can be certain regarding the decisions about the US Federal Reserve, traders and investors believe that its high-time for US Fed to realise the need to reduce key interest rates.
With 2024 around the corner, there are several beaten-down stocks which are down by more than 25% from their all-time highs, thus, creating opportunity for long-term investors. Still, they should not wait for 2024 to arrive, and take a look at the list of growth stocks which investors should buy before 2024. If estimates prove correct, these growth stocks are set for substantial gains.
With this in mind, let us now have a look at growth stocks which investors should buy before 2024.
1. Cohu, Inc.
The company is a supplier of semiconductor test and inspection handlers, micro-electro-mechanical system (MEMS) test modules, test contactors and thermal sub-systems which are utilised by renowned semiconductor manufacturers and test subcontractors.
The company has acquired Equiptest Engineering Pte. Ltd. (EQT), which is a provider of semiconductor test contactors and other consumables with TTM revenue of ~$20 million. EQT becomes part of the company’s Interface Solutions Group, joining products and technologies to pace up the customer penetration.
The company posted 2Q23 net sales of $168.9 million and GAAP income of $10.6 million or $0.22 per share. Net sales for first 6 months came in at $348.3 million, with GAAP income was $26.3 million or $0.55 per share. Total cash and investments at the end of 2Q23 came in at $372.3 million and the company’s Term Loan B principal amount was $31.1 million. Its 2Q gross margin and profitability were strong due to resilient recurring business model that saw revenue growth being compounded at ~7% over 3 years.
There are certain hedge funds which have bought shares of the company. Barrow Hanley Mewhinney & Strauss LLC increased its position in shares of the company by ~2.2% during first quarter. Now, Barrow Hanley Mewhinney & Strauss LLC owns ~1,357,102 shares of the semiconductor company’s stock worth $52,099,000 post purchasing an additional ~29,833 shares in last quarter. Riverwater Partners LLC bought a new stake in shares of the company during the 2nd quarter worth ~$216,000.
Needham & Company LLC reissued a “Buy” rating on the shares of the company and gave $52.00 price objective on shares on 4th August. B. Riley raised shares of the company from a “Neutral” rating to a “Buy” rating and they increased price target for the stock from $38.00 to $50.00 on 17th July.
The company expects 3Q23 sales to be ~$150 million.
Cohu, Inc. is one of the two growth stocks which investors should buy before 2024.
2. Upstart Holdings, Inc.
The company provides credit services. It provides proprietary, cloud-based, artificial intelligence lending platform.
Heritage Financial Credit Union announced its partnership with Upstart to provide personal loans to more people. Partnership with Upstart enables it to extend its reach and provide the modern, digital-first experience to support more inclusive lending throughout the New York counties it serves.
The company has released financial results for 2Q23 ended June 30, 2023, with total revenue of the company coming at $136 million, exhibiting a decline of 40% from 2Q22. Total fee revenue of the company was $144 million, a decrease of 44% year-over-year.
Lending partners originated ~109,447 loans, which totalled ~$1.2 billion throughout its platform in 2Q23, down 64% in comparison to the same quarter of the previous year. Conversion on rate requests came in at ~9% in 2Q23, down from ~13% in similar quarter of the prior year. Contribution profit came in at $95.9 million in 2Q23, exhibiting fall of ~21% year-over-year, with contribution margin of 67% in comparison to 47% contribution margin in similar quarter of the prior year.
For 3Q23, the company expects revenue of approximately $140 million, with revenue from fees of ~$150 million and net interest income (loss) of ~ ($10) million. Contribution margin of the company should be ~65% and adjusted net income (loss) should be ~ ($2) million. It expects its adjusted EBITDA of ~$5 million.
There are several institutional investors which have purchased stakes in the company’s shares. Bank Julius Baer & Co. Ltd Zurich increased its stake in the company during the second quarter. Bank Julius Baer & Co. Ltd Zurich owns 50,939,090 shares of the company’s stock for an amount of ~$1,824,129,000 post buying an additional 50,890,245 shares.
Norges Bank bought new stake in shares of the company in 4th quarter valued at ~$11,225,000.
Upstart Holdings, Inc. is the 2nd growth stock which investors should buy before 2024.
Conclusion
There are investors which have benefitted in the stock market in a massive way just by showing their proactive nature and by entering in the market at the right time. While Cohu, Inc. is down by ~29% from its all-time high, Upstart Holdings, Inc. is down by ~92% from its all-time high. Therefore, these are the 2 growth stocks which investors should buy before 2024 so that they can see significant profits.
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