MoneyShow's Best Investment Ideas For 2024: Part 1 (2024)

MoneyShow’s top contributing analysts, strategists, and newsletter editors share their investment recommendations for the year ahead.

Academy Sports and Outdoors

By Berna Barshay, Editor of Consumer/Culture/Commerce by HedgeFundGirl

Academy Sports and Outdoors (ASO) is a sporting goods retailer that sells a wide variety of athletic apparel and footwear for both individuals and team sports, sports equipment, as well as a broad array of products that support the outdoor lifestyle.

Products include everything from equipment for fishing and hunting to outdoor grills, coolers, and camping equipment. If you live in Texas or surrounding states, you probably know Academy - it’s an institution in the region.

The pandemic led to a surge in interest in outdoor sports and activities, and Academy was a large beneficiary during that time period, seeing its earnings per share (“EPS”) double from calendar 2020 to calendar 2022 (like many retailers, Academy’s fiscal year ends in January).

But unlike many companies that went through a pandemic boom, Academy has enjoyed a soft landing post-pandemic. Earnings this year are expected to be down just 10% off the 2022 peak, and next year, earnings should again reach the peak 2022 level of $7.70.

Moreover, in an era when most proven retail concepts have been fully exploited already, Academy’s management plans to open 120-140 stores over the next five years.

That represents a roughly 50% growth opportunity over the current 275 store base. Academy’s wide breadth of product as well as its on-point merchandising that emphasizes everyday value while also offering curated opportunities to upgrade into premium products is the right positioning for success and to compete with its larger primary competitor, Dick’s Sporting Goods (DKS).

DKS has greatly narrowed its focus in recent years and pulled back from many of the outdoor leisure categories where Academy excels. Academy currently outperforms Dick’s on key metrics like sales per square foot and EBITDA (earnings before interest, taxes, depreciation, and amortization) per store.

Academy’s management team has also shown incredible financial discipline since the company went public in 2021. In just over two years, management has bought back approximately 14 million shares of stock, reducing the float by around 15%.

Management capitalized on the pandemic opportunity by streamlining operations and increasing margins in a way that generated a ton of cash which they used to aggressively buy back shares.

By returning excess cash to shareholders through buybacks while at the same time prudently allocating capital to self fund mindful store growth, Academy has managed to maximize short-term EPS growth without sacrificing long-term growth from expanding the business.

Academy is a stock with great growth ahead, yet it trades at a value price. At the recent trading price of $61, ASO shares changed hands at less than nine times the expected earnings of $7 for the fiscal year ending January 2024. Taking into account the company’s expected future growth, the stock looks even cheaper.

AeroVironment Inc.

By Jim Woods, Editor of The Deep Woods

Geopolitical conflict is always present in this dangerous world. But the ongoing conflict in Ukraine and the late-2023 resumption of heavy fighting in Israel has brought to everyone’s attention the need for robust war-fighting tools and technologies of the sort made by defense contractors. One company poised to perform well due to the need for enhanced global security is AeroVironment (AVAV).

Missile systems, guidance systems, drones, etc., are going to be in even more demand due to these situations, and due to an ever-present threat of mankind’s embrace of war. Yet, the reality here is that while “war is hell” for the participants, civilians, and for the world, it’s also a boon for defense companies.

AeroVironment supplies unmanned aircraft systems, tactical missile systems, high-altitude pseudo-satellites, and other related services to government agencies within the United States Department of Defense as well as the United States allied international governments.

The company says that its systems can help with security, surveillance, or sensing, and provide “eyes in the sky” without needing an actual person, or driver, in the sky.

So, the “NewsQ” (my term for news that can materially affect a stock) of a company making a product that will be needed to fight future wars is bullish for AVAV. So, too, are the fundamentals.

For example, as of late 2023, AVAV was in the top 16% of all public companies in terms of earnings per share (EPS) growth over the past several years. And in terms of share price performance, the stock’s near-51% gain over the past 12 months (through mid-December) put it in the elite top 8% of all stocks on a relative price strength basis.

Interestingly, on December 5, 2023, the company reported strong earnings and raised its full-year guidance, although that guidance was slightly below consensus views. That news prompted some selling in AVAV shares that was just enough to make it look wildly attractive.

Investors with a taste for battle should consider AVAV, as mankind’s penchant for conflict isn’t going away anytime soon. So, while we should pray for peace, we also should prepare our portfolios for war with AeroVironment.

Agnico Eagle Mines

By Clif Droke, Contributor to Cabot Top Ten Trader

One of the best-quality players in the gold arena is Agnico Eagle Mines (AEM). It is our top pick for 2024 and our favorite mining stock for leveraging what we view as a gold demand boom in the coming years. The company is a senior Canadian producer with a pipeline of high-quality exploration and development projects in the US, Canada, Mexico, and Columbia.

Key to Agnico’s long-term growth plans is the firm’s 100%-owned Canadian Malartic mine, which is being transformed from Canada’s second-largest operating gold mine to its largest underground mine, with 15 million ounces of resources being added since 2019.

Another major contributor to Agnico’s expansion efforts is the open-pit Meadowbank complex in Canada. It has seen a 15% year-on-year increase in gold production in the first nine months of this year, along with record haulage of underground ore in Q3 - plus efforts to extend the mine’s life by several years.

Agnico has described overall production across its mine portfolio as “robust” in recent quarters, with gold production coming in above the mid-point of annual guidance and cost performance remaining “solid.”

Payable gold production in the latest quarter was over 850,000 ounces at production costs per ounce of $893. All-in sustaining costs (a key metric) were $1,210 per ounce - well under the recent gold price of ~$2,100, and leaving Agnico in a strong position to benefit from additional gold price increases.

The firm is entering the new year in a flexible financial position with $355 million in cash and over $1 billion in available liquidity. That should help Agnico’s expansion plans going forward along with dividend payments (a 2.9% yield in late 2023).

Wall Street sees earnings growth 11% this year, which is likely to prove too conservative given the likelihood of higher gold prices.

Alamos Gold

By Omar Ayales, Editor of Gold Charts R Us

US dollar weakness is likely to spill into 2024, becoming a bullish catalyst for foreign currencies and a bullish catalyst for commodities broadly. For my speculative recommendation, I’m recommending Alamos Gold (AGI).

Some of the assets that are poised to outperform most others are precious metals, particularly gold and silver. Both gold and silver are not only commodities with industrial applications (particularly silver), but they’re currencies too (particularly gold).

Consider that central banks globally bought gold during 2023 at a record pace. That will likely flow into 2024 as global fragmenting intensifies.

AGI is a Canadian mid-tier gold producer with solid mining operations in Ontario, Canada and Mexico. AGI has developed an efficient business model, allowing it to produce gold at some of the lowest costs in the industry. Look for AGI to thrive as gold’s rise picks up steam.

Alexandria Real Estate Equities

By Adam Johnson, Editor of Bullseye Brief

Alexandria Real Estate Equities (ARE) is the largest and longest-tenured owner/developer of specialized AAA commercial space focused exclusively on meeting the unique needs of the life sciences sector. For investors, this translates into a compelling combination of high cash flow, stable dividend income, and consistent earnings growth.

From fully-wired, high-tech workspaces to customized laboratories housing billions of cutting-edge equipment across corporate campuses, Alexandria owns 74M square feet (SF) in North America and has 6M additional SF under development. Future commitments already in planning total another 17M SF and provide significant runway for growth.

The company’s uniquely focused business model ensures a high-quality tenant base, resulting in higher occupancy, longer leases, stronger cash flow, and industry-leading capital appreciation. Notably, as of late 2023, occupancy was 96% and lease renewals were being signed at 6% increases, both of which provided ample support for the 4.5% dividend yield.

Ironically, shares recently traded at a 25% discount to long-term valuation on the assumption all commercial real estate is doomed by higher rates and work-from-home demographics. I disagree, and I think the current valuation anomaly will correct as stability returns to the market.

Buying Alexandria now provides a rare opportunity to acquire an investment-grade company at a near-distressed valuation.

Alphabet

By Berna Barshay, Editor of Consumer/Culture/Commerce by HedgeFundGirl

Sometimes it’s better to just keep it simple. As the great Warren Buffett famously said, “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.” Alphabet (GOOG, GOOGL), parent of Google, YouTube, Android, and a growing cloud computing business, is very much a wonderful company at a fair price.

Much has been made about the outperformance of the Magnificent Seven in 2023 - consisting of Alphabet, along with big tech peers Amazon (AMZN), Apple (AAPL), Meta Platforms (META), Microsoft (MSFT), Nvidia (NVDA), and Tesla (TSLA). The group was collectively up 75% in 2023 as of mid-December, driven by the nearly 250% move in Nvidia and 186% move in Meta.

Alphabet was up a relatively tame 54% in comparison, the “laggard” of the group (although that performance is obviously nothing to sneeze about). With this dramatic price appreciation in 2023, these seven stocks now comprise 30% of the market cap of the S&P 500.

Such outperformance and the resultant index domination has spawned a plethora of think pieces suggesting that the move in these stocks is done and that investors will look to rotate elsewhere in 2024. This may prove true for some members of the Magnificent Seven, but I think treating them like a monolith is a mistake.

Consider that the individual members of the Magnificent Seven sport vastly different valuations. While Tesla - arguably the constituent with the smallest competitive moat and most competition in the group - recently sported a P/E ratio over 80 and ecommerce and cloud giant Amazon sported a P/E just under 60, Alphabet traded at just under 24 times 2023 expected earnings.

Sure, that was a premium to the overall S&P 500 index, which traded at 21.5 P/E on this year’s earnings. But it was an extremely modest premium when you consider Alphabet’s superior growth outlook, margins, and financial strength versus the average for the S&P 500.

Alphabet is expected to grow its earnings 50% faster than the S&P 500 next year, and its extremely high operating margin is roughly double that of the S&P 500. Alphabet also has $120 billion of cash and equivalents sitting on its balance sheet - which give it outstanding financial stability and the flexibility to keep buying back stock, which helps propel EPS growth.

In fact, if you adjusted its stock price to back out its cash holdings, Alphabet trades in line with the S&P 500 despite having a much higher profit margin and an incredibly deep competitive moat, particularly in the core search business where Alphabet still sources the majority of its earnings.

Paraphrasing Buffett, with Google, you are getting an exceptional company at a decidedly average price. Don’t let the noise about the Magnificent Seven distract you from what should be a really easy investment decision.

Alpine Income Property Trust

By Marty Fridson, Editor of Forbes/Fridson Income Securities

Alpine Income Property Trust (PINE) is a retail Real Estate Investment Trust (REIT) that invests in owning and operating a portfolio of single-tenant, net leased commercial income properties. Lessees are largely high-quality public tenants.

The REIT’s tenants include the likes of Walmart (WMT), Lowe's (LOW), Home Depot (HD), Dick’s Sporting Goods, CVS Health (CVS), Walgreens (WBA), Dollar General (DG), Best Buy (BBY), Tractor Supply (TSCO), Darden Restaurants (DRI), 7-Eleven (OTCPK:SVNDY), and Advance Auto Parts (AAP). PINE’s portfolio is well-diversified geographically, spread over 138 properties in 103 markets in 35 states as of 9/30/23.

The company continues to improve the credit quality of its tenant exposure; as of 9/30/23, 64% of tenants were investment grade, up from 49% a year earlier. On that date, occupancy stood at 99.1%, with strong prospects for remaining at a high level.

Specifically, occupancy costs for PINE’s portfolio tenants are materially below market rents, reflecting the inflationary pressure on building and land costs. This implies a high likelihood that tenants will exercise their renewal options at expiration.

On the financial side, PINE has a well-staggered debt maturity schedule, with $100 million due in 2026, $100 million in 2027, and $49 million in 2028. On 9/30/23, outstanding debt was down 7% from a year earlier.

The company has also grown its quarterly dividend by 37.5% since the beginning of 2020. PINE recently traded at $17.20 and an indicated yield of 6.4%. Distributions are taxed as ordinary income. We consider this common stock suitable for medium-risk tax-deferred portfolios.

Altimmune

By Todd Shaver, Editor of Bull Market Report

Altimmune (ALT) stands as a beacon of hope in the ever-evolving landscape of obesity treatment. This biotech company, with its impressive financial strength, innovative approach, and promising pipeline, is poised to disrupt the multi-billion dollar market for weight-loss solutions.

Altimmune’s financial position sets it apart. Unlike many competitors, the company boasts a healthy cash balance and zero debt. This financial stability provides the freedom to pursue innovative research and development without the constraints of debt obligations. This unburdened financial state fuels the company’s bold vision for revolutionizing obesity treatment.

Altimmune’s flagship product, pemvidutide, represents a groundbreaking development in the fight against obesity. This novel GLP-1/glucagon dual receptor agonist offers a unique approach to weight management. Unlike traditional obesity drugs, pemvidutide targets both GLP-1 and glucagon receptors, mimicking the complementary effects of diet and exercise on weight loss. This dual action has the potential to significantly enhance the efficacy of current treatments.

Clinical trials of pemvidutide have yielded promising results. In a recent Phase 2b study, patients receiving the drug experienced an average weight loss of 16%, with some individuals losing as much as 32 pounds. These results are comparable to those achieved with leading GLP-1 drugs like Novo Nordisk’s Wegovy, highlighting the potential of pemvidutide as a competitive and effective weight-loss solution.

Altimmune’s ambition extends beyond pemvidutide. The company is actively developing a pipeline of innovative therapies targeting not only obesity but also other metabolic diseases like non-alcoholic steatohepatitis (NASH). This diversification of its portfolio ensures that Altimmune remains at the forefront of the metabolic disease treatment landscape.

The company recently had a market cap of $370 million, with $140 million in cash, no debt, and a burn rate of about $20 million a quarter. Roughly 80% of the stock is held by institutions. We fully expect a buyout offer from a large pharmaceutical company sometime in 2024.

Apollo Global

By Stephen Biggar, Analyst at Argus Research

Our buy rating on Apollo Global Management (APO) reflects the company’s strong position among alternative asset managers and ability to generate cash in a wide variety of market environments.

While the outlook for monetization activity of investments has been challenging, we see strong growth in fee - and spread-related assets as a long-term driver for APO stock, and believe that the outlook for monetizations will improve in 2024 given recently improved market valuations.

The company’s early 2022 acquisition of Athene also provides several avenues for growth, particularly as a higher interest rate environment sparks greater activity in fixed-income investments, which are the majority of Apollo’s assets.

Arcos Dorados Holdings Inc.

By Nancy Zambell, Editor of Cabot Money Club

Arcos Dorados Holdings (ARCO) is the largest independent McDonald’s franchisee in the world and the largest quick-service restaurant chain in Latin America and the Caribbean. The company has the exclusive right to own, operate, and grant franchises of McDonald’s restaurants in 20 countries and territories in Latin America and the Caribbean.

Those countries include Argentina, Aruba, Brazil, Chile, Colombia, Costa Rica, Curacao, Ecuador, French Guiana, Guadeloupe, Martinique, Mexico, Panama, Peru, Puerto Rico, Trinidad and Tobago, Uruguay, the US Virgin Islands of St. Croix and St. Thomas, and Venezuela.

Latin America has a growing middle class, which is leading to higher incomes and better access to credit. In this expanding environment, ARCO and its sub-franchisees own and operate 2,300 Latin American McDonald’s restaurants, employing more than 95,000 people.

ARCO handily beat analysts’ earnings estimates in its third quarter, reporting EPS of 30 cents, considerably more than the consensus estimate of 20 cents, as well as 2022’s third quarter earnings of 23 cents per share. ARCO’s revenues rose 21.7%, year-over-year, to $1,115 million, also walloping Wall Street’s forecasts of $1,076 million.

Analysts expect ARCO to see EPS growth around 18.8% this year, higher than the industry average of 17.9%. And I won’t be surprised if that number expands, as consensus estimates have been rising for the past few months, more than 9% in a recent 30-day period.

Trading-wise, Arcos Dorados boasted a PEG ratio of 1.17 in late 2023, compared with 2.23 for the industry. Its P/E ratio was just 14.19.

The shares are ranked “Strong Buy” by the analysts covering the company. Just 41.8% of its shares were owned by institutional investors, which means any big purchases could further boost the company’s share price.

ARCO recently had a market cap of $2.57 billion, and only 130.66 shares outstanding. I consider the shares a bargain at this price.

Originally posted on MoneyShow.com

Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.

MoneyShow — an industry pioneer in investor education since 1981 — is a global, financial media company, operating the world's leading investment and trading conferences. Each show brings together thousands of investors to attend workshops, presentations and seminars given by the nation's top financial experts. The company also offers exclusive seminars-at-sea, with the investment industry's leading partners. In addition, MoneyShow operates the award-winning, multimedia online community, Moneyshow.com and publishes free Investing and Trading newsletters, which provide individual investors with exclusive ongoing access to the latest investment and trading ideas from the nation's most respected and trusted financial newsletter advisors.