Baird likes these stocks for 2024, including Nvidia
The stock market is on an absolute tear recently, but there are some individual names that could emerge as winners heading into the new year. The three major indexes just wrapped up eight straight weeks of gains, the longest winning streak since 2017 for the S & P 500 . During that run, the 500-stock benchmark has risen to within 1% of an all-time closing high set in January 2022. Stocks are also in the midst of the so-called Santa Claus rally, which takes place over the last five trading days of December and the first two of January. On average, the S & P 500 rises more than 1% during that stretch, according to the Stock Trader's Almanac. That said, analysts at Baird think some names could do better than others in 2024. The firm recently broke down its top stock recommendations for the new year. Here are a few of them: One stock that made the list was semiconductor darling Nvidia , which has soared more than 237% this year. Analyst Tristan Gerra's price target of $750 means that the stock could rally another 54% from Friday's close NVDA YTD mountain NVDA YTD chart "Nvidia is at the center of the secular demand for AI ahead," the analyst wrote, adding that the artificial intelligence wave "overall remains at its infancy." "AI server demand gap is expected to persist at least through mid C2024, with demand exceeding supply by nearly 20% in the current quarter." Gerra also noted that Nvidia's Grace Hopper superchip has now begun to be ramped into a new multibillion-dollar product line, which would further boost the company's revenue. UBS similarly named Nvidia one of the firm's top picks for 2024. Restaurant conglomerate Yum Brands was also included on Baird's list. The corporation operates fast-food brands such as KFC, Pizza Hut and Taco Bell. The restaurant stock is only up 1.7% this year, but analyst David Tarantino's $152 price target implies 17% upside. That's in part due to the stock's attractive relative valuation, a stronger long-term growth outlook and relatively high earnings visibility justifying a higher premium, he wrote. "Expecting 8%+ EBIT growth on 7% system sales growth annually with modest capex requirements, leading to strong [free cash flow] increases over time," Tarantino said. Swiss footwear manufacturer On Holding also made the cut. While the brand has increasingly shot to public attention in recent years, analyst Jonathan Komp believes there's still more room to go. The company is "growing into premium global Sportswear brand spanning running, outdoor, training, tennis, and performance all-day addressing a $70B+ annual market (3X running) with still low brand awareness today (U.S./U.K. 9%/6%) and full pipeline," he wrote. On Holding has also guided for solid performance, projecting to end 2023 with a revenue increase of 46%. Komp said the company has a "very strong pipeline" ahead that could support higher margins and growth beyond 25% in 2024. Shares of On Holding have rallied 65% this year. Komp's price target of $35 signals the stock could still go up 25% from here. Baird analysts also selected L3Harris Technologies as a top pick for the new year. Shares of the aerospace and defense company have rallied 29% since their October low. Analyst Peter Arment said the stock could still go up another 31% to his $274 price target, citing a favorable long-term growth outlook, high visibility and margin upside as catalysts. Additionally, L3Harris' acquisition of Aerojet provides the company with multiyear tail winds that could result in significant upside, he wrote. Earlier this month, Deutsche Bank upgraded the stock to a buy from hold rating. Morgan Stanley also cited the name as a top pick. "While LHX's new targets are somewhat muted, we think they could represent a new floor. Risk-reward skews positive on upside potential," Morgan Stanley wrote. Baird also included gym franchise Planet Fitness in its list of top names. The stock is down 7% this year, providing a good entry opportunity for investors at its current valuation, especially as Baird's Komp sees the company reaccelerating back toward high single-digit unit growth in upcoming years. "PLNT's highly franchised model provides an attractive combination of growth yet defensive characteristics for an uncertain consumer backdrop, with a strong value proposition, and demand tailwinds (especially for Gen Z consumers)," he added. Komp's $80 price target corresponds to a potential 9% upside for the stock, which closed at $73.09 on Friday.