Many top companies like Merck and Stanley Black & Decker expected to deliver triple digit earnings growth
As 2023 wraps up, investors already have their sights set on 2024 – and for good reason. Several S&P 500 giants across healthcare, industrials and even real estate look poised to deliver explosive triple-digit profit growth next year.
“Now that the (third quarter) 2023 earnings reporting period has essentially come to a close, 2024 EPS growth projections as of Nov. 24 show the S&P 500 posting an 11.1% increase,” says Sam Stovall, strategist at CFRA. “Due to seasonality, momentum, and EPS growth projections, we still think there is upside potential for the market and growth stocks.”
Overall, the S&P 500 companies are expected to grow their adjusted earnings per share by 11.1% in 2024. While solid, this number could prove conservative if the most high-flying growth stocks live up to their full potential. In fact, Stovall believes growth companies across communications, healthcare and tech could realistically deliver profit jumps of 14.5%.
As the market prepares for broader profit growth, some individual stocks already stand out. Merck, Stanley Black & Decker, Estee Lauder and more look primed to double, triple or even quintuple earnings over the next year.
Hefty Profit Rebound Expected After Lackluster 2023
This past year, lackluster S&P 500 profit growth failed to impress. The index rallied nearly 20% as the market looked ahead – while companies grew their overall earnings just 0.6%.
“Companies in the S&P 500, all told, only saw their profit rise 0.6% in 2023, FactSet says based on current estimates. That’s a fraction of the more than 10% profit growth expected in 2024,” the article states.
2024 offers a nice rebound. As inflation cools, rates stabilize and demand normalizes, markets see blue skies ahead. Strong consumer spending should lift industries across the board – from big pharma to tools to even real estate.
Now investors want to pinpoint the biggest growth stories. While rising tides should lift all ships, some companies have charted an especially prosperous course for 2024.
Merck Leads Pack With 520% Profit Explosion Anticipated
At the front of the growth pack stands pharma titan Merck, poised for a revenue explosion next year. Analysts predict the healthcare giant will earn $8.44 per share in 2024, a massive 520% leap over 2023.
This would represent the single largest profit increase across the entire S&P 500. It also offers a nice change of pace from 2023, when Merck earnings plunged over 80%.
What explains such a drastic swing? Simply put, receding Covid headwinds. As the pandemic recedes into the background, demand normalizes for healthcare staples beyond vaccines. Merck also boasts a strong drug pipeline that should deliver newly approved blockbuster drugs in 2023.
Stanley Black & Decker Rides Upswing with 250% Growth
Right behind Merck, toolmaker Stanley Black & Decker looks to deliver the second highest profit growth at 250%. Like Merck, the industrial company endured tough sledding in 2023 with a 70% earnings contraction.
But analysts bet on a strong rebound as stores replenish inventory, consumers feel flush again and construction activity picks back up. Stanley Black & Decker’s diverse portfolio of power tools and storage products should all benefit in today’s improving economy.
While less severe than Merck’s, Stanley’s whipsaw from plunging profits to exponential growth still demonstrates the new normal. Investors can expect extreme highs and lows as industries react to inflation, rates and other macroeconomic factors.
Estee Lauder, Tyson Foods Tap Into Bullish Consumer Spending
Beyond industrials and healthcare, upbeat analyst projections reach even consumer staples. Estee Lauder and Tyson Foods land #3 and #4 for projected profit growth in 2024, thanks to strong consumer spending forecasts.
Estee Lauder’s prestige cosmetics should fly off shelves as shoppers regain confidence. Analysts see 192% profit growth potential in 2024. Meanwhile, Tyson Foods anticipates meat demand will take off afteryears of scarcity fears, predicting 178% earnings growth in 2024.
Other consumer giants like Pepsi and Starbucks expect solid if not outstanding bouncebacks next year. But emerging from the pandemic economy, the potential for consumer discretionary stocks to overdeliver looms large.
Highfliers Across Communications, Real Estate and Tech
Triple digit earnings growth projected for 2024 fails to confine itself to a few sectors. Opportunities to multiply profits two, three or fivefold dot the S&P 500 landscape.
A few more names to watch:
- Entertainment company Paramount anticipates 129% profit growth in 2024. Last year’s hits like Top Gun: Maverick demonstrate the media giant’s potential. A pending merger with Univision boosts projections further.
- Data infrastructure REIT Digital Realty Trust eyes 104% earnings expansion next year. As enterprise migration to the cloud accelerates, data center providers stand ready to enable and benefit from the transition.
- Pfizer, while past its pandemic peak, expects to grow profits 102% with new drugs hitting the market. This comes after the pharma titan contracted 76% in 2023. Once again growth after decline creates opportunity.
Sifting Diamonds From The Rough
Between cooling inflation and strong consumer demand, markets see the perfect backdrop for runaway growth in 2024. While the rising tide should lift most ships, some companies shine brighter on the horizon.
For investors seeking profit explosions, it pays to scan for potential. Reports of outsized growth projections – whether 200%, 500% or more – signal firms bursting with upside in the post-pandemic economy.
By locating these diamonds in the rough, investors can capitalize on the markets’ incoming tide as we sail out of 2023 and onto bigger, brighter horizons.