13 Stocks That’ll Make You Chuckle All the Way to the Bank in 2024 – Inflation-Proof Edition!

Top 13 Inflation-Proof Stock Picks for Investing in 2024

As we approach the new year of 2024, it seems that even the most esteemed forecasters are scratching their heads. The predictions for the economy and stock market are all over the place, with no clear consensus in sight. Last year, everyone was convinced that the Federal Reserve’s interest rate hikes would plunge the US into a recession. But surprise, surprise, that didn’t happen. So, what’s in store for us in 2024? Your guess is as good as mine.

We’ve got a real hodgepodge of factors at play here. The lingering uncertainty of long-term interest rates, the AI revolution, and geopolitical tensions have thrown a wrench into the works, leaving experts with wildly divergent outlooks. Some are predicting a major recession, while others believe in an economic reacceleration fueled by a strong job market. It’s like watching a game of dodgeball, with economists dodging and weaving to avoid getting hit by the unpredictable curveballs of the market.

In times like these, it’s best to play both offense and defense when it comes to stock investment. On one hand, you want to hold onto companies with a solid financial foundation—ones with strong balance sheets, steady cash flows, and low debt levels. These stalwarts are like sturdy shields that can withstand the blows of inflation and high interest rates. But don’t ignore the potential for outsized growth either. There are companies out there aligned with long-term trends, like the adoption of AI, that could soar to new heights. It’s like having a double-edged sword, ready to parry and thrust in the market’s ever-changing landscape.

To help guide you through this uncertain terrain, we’ve sought out the wisdom of seven of Wall Street’s most respected investors and analysts. They’ve shared their top stock picks for 2024, which run the gamut from reliable consumer-staples plays to bets on the next technological revolution. These picks offer a mix of safety and opportunity, ensuring you’re prepared for whatever twists and turns the economy may take.

Leaning into AI

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AI, that buzzword that’s been compared to the internet, automobiles, and electrification, is undoubtedly one of the most important technological advances of our time. While there’s no doubt it will revolutionize the economy and boost corporate earnings, the timing and extent of those changes are still up for debate. The pessimists argue that the AI hype has gone too far, inflating the valuations of some stocks. But as the saying goes, “The bears try to look smart while the bulls make money.” And one thing’s for sure, you don’t want to miss out on the money-making potential of the AI revolution.

Two stocks that keep popping up among our experts are Microsoft and Nvidia. Microsoft has taken the lead in the AI arms race, thanks to its partnership with OpenAI, the brains behind ChatGPT. And when it comes to the hardware side of AI, Nvidia is the go-to choice with its pivotal graphics processing units (GPUs). Both of these stocks have already experienced significant gains, but the bulls believe there’s even more room to run.

You know who else is bullish on Nvidia? Mark Baribeau, head of global equity at Jennison Associates. He calls Nvidia his top stock pick for 2024, touting its impressive margins, strong revenue growth, and dominant position in the AI hardware market. According to Baribeau, we’re entering the fourth era of computing, and Nvidia is leading the charge. And even though the stock has already soared, Baribeau believes it’s still undervalued. It’s like finding a hidden treasure that the rest of the market hasn’t fully recognized yet.

And let’s not forget Microsoft. With its Azure cloud platform and AI workloads, Microsoft is well-positioned to benefit from the AI revolution. As Dan Ives, senior equity analyst at Wedbush Securities, puts it, “Redmond is gaining more and more cloud market share.” The potential for growth is huge, and investors shouldn’t underestimate the power of Microsoft’s AI-driven future.

But wait, there’s more! Richard Saperstein, founding principal and chief investment officer of Treasury Partners, is not only a fan of Microsoft but also Google’s parent company, Alphabet. He believes that despite the recent selloff, Alphabet is trading at an attractive valuation. With its hefty investments in research and development, including AI, Saperstein is confident that Alphabet will reap the rewards in the long run.

Looking beyond the big tech players, there are other opportunities to tap into the AI boom. Tom Lee, head of research at Fundstrat Global Advisors, points to Cadence Design Systems as his top pick. This electronic design automation firm plays a critical role in the development of the semiconductors that power AI. And speaking of pure-play AI, data analytics firm Palantir Technologies is another favorite among our experts. Its AI software is in high demand, particularly from intelligence agencies, making Palantir a company to watch in this geopolitical storm.

Recession-Resistant Names

While the economic landscape may be uncertain, there are certain sectors that tend to weather the storm better than others. Eli Salzmann, portfolio manager at Neuberger Berman, believes we’re on the brink of a recession. But fear not, there are defensive stocks that can help safeguard your portfolio. Two names that Salzmann suggests are Procter & Gamble and Johnson & Johnson.

Procter & Gamble, the consumer staples giant, has all the qualities you want in a defensive stock. It has strong pricing power, robust cash flow, and a low debt-to-earnings ratio. And let’s face it, even in tough times, people will still brush their teeth and do their laundry. So, Procter & Gamble’s products will continue to fly off the shelves, no matter what the economy throws at us.

When it comes to pharmaceutical companies, Johnson & Johnson stands out. This diversified healthcare products leader has a pipeline of drugs under development that offer significant sales potential. Salzmann is particularly excited about the company’s treatments for multiple myeloma, psoriasis, and inflammatory bowel disease. In economic uncertainty, people still need their medications, making Johnson & Johnson a steady bet.

And hey, let’s not overlook the insurance companies. Haruki Toyama, head of the large-cap and midcap equity team at Madison Investments, highlights Arch Capital Group as his top pick. This global property and casualty insurer has a well-diversified portfolio and a knack for quickly pivoting to profitable coverage. It’s the kind of stability investors crave during uncertain times.

The Case for Oil and Gas

Geopolitical tensions, from Russia’s invasion of Ukraine to the Israel-Hamas conflict, have cast a shadow over the energy sector. But that cloud could have a silver lining for investors. With oil prices already elevated, further conflict could push them even higher. And let’s not forget the lack of investment in oil and natural gas production, thanks to the green energy transition and investor demands for higher returns. The combination of geopolitical turmoil and limited supply could create opportunities in energy sector stocks.

According to Tom Lee, Exxon Mobil is well-positioned to benefit from the upward pressure on oil prices. Even in a worst-case scenario where the economy struggles, Exxon will continue to provide income for investors through its dividends. It’s like having a reliable oil well that keeps pumping out cash.

And if we’re talking about the importance of US domestic energy production, we can’t ignore Kinder Morgan. This energy infrastructure company is the backbone of natural gas transportation and is set to benefit from the ongoing boom in LNG exports. As the US share of global LNG exports grows, Kinder Morgan’s pipelines and terminals will be in high demand. It’s like being the gatekeeper of a treasure trove of energy that the world desperately needs.

Finding Growth Outside the U.S.

While the US economy has outpaced other developed countries, there are still opportunities for growth abroad. Mark Baribeau points to MercadoLibre, the Argentinean e-commerce giant, as a prime example. With the ongoing digital transformation in Latin America, MercadoLibre’s e-commerce business is booming. It’s like having the Amazon of Latin America in your investment portfolio.

Another international pick that Baribeau likes is Hermès, the French luxury goods manufacturer. With its direct-to-consumer business model and loyal customer base, Hermès has a unique level of pricing power. The demand for its high-end products remains strong, even in times of economic uncertainty. It’s like investing in a brand that’s immune to the fluctuations of the average consumer.

A Contrarian Bet on Office Space

Sometimes, the best time to invest is when everyone else is running away in fear. For Jay Hatfield, the beaten-down commercial real estate (CRE) sector presents an opportunity for savvy investors. Despite the pessimism surrounding rising interest rates and remote work trends, Hatfield believes quality CRE names have been oversold.

One such name is Boston Properties, a real estate investment trust (REIT) with a portfolio of luxury properties across major cities. The selloff has pushed its valuation to attractive levels, making it a potential bargain. And with the anticipated boom in demand for office space from AI developers and a potential attenuation of the work-from-home trend, Boston Properties could see a rebound. It’s like getting a prime piece of real estate at a steep discount.

So, there you have it—our experts’ top stock picks for 2024. From AI powerhouses to recession-resistant names, there’s something for every investor. Remember, the future is uncertain, and the market is a wild ride. But by arming yourself with a balanced portfolio that combines defense and offense, you’ll be prepared for whatever the economy throws at you.

What are your thoughts on these stock picks for 2024? Do you have any other top picks to share? Let us know in the comments below!