In this piece, we will take a look at the 12 best breakout stocks to buy right now. If you want to skip our coverage of the latest stock market news, then you can skip ahead to 5 Best Breakout Stocks To Buy Right Now.
The stock market in 2024 is more optimistic and forward looking than it was at the start of last year. Back then, investors were fretting about the state of the U.S. economy and the impact that high interest rates from the Federal Reserve would have on it. Yet, as 2023 demonstrated, and much to everyone's surprise, neither did the U.S. economy tip into recession and nor did the stock markets fall and wipe out wealth.
Instead, AI prevailed everywhere as NVIDIA Corporation (NASDAQ:NVDA), Microsoft Corporation (NASDAQ:MSFT) and other big ticket technology names soared after OpenAI's ChatGPT convinced the world that A.I. now roams among us.
In fact, February 2024 is the first time in its history that the flagship S&P 500 index has crossed 5,000 points. As if this weren't enough, the month has also seen the NASDAQ Composite, dominated by the technology industry, near its all time high levels before paring back the breakout. At the heart of this stunning performance is, you guessed it, A.I. The start of the year has seen industry bigwigs the likes of Meta Platforms, Inc. (NASDAQ:META) chief Mr. Mark Zuckerberg, NVIDIA boss Jensen Huang, and of course, OpenAI's eccentric Sam Altman all take the stage and reaffirm their optimism for the artificial intelligence industry.
It was Zuckerberg who got the ball rolling, as he shared his firm's plans for buying hundreds of thousands of GPUs from NVIDIA this year in order to beef up Meta's computational capacity. Since we'll be talking about breakout stocks in this piece, Meta is particularly important as far as 2024 is concerned. This is because its shares have shown the classic trait of a sudden breakout in the wake of a catalyst. While the Meta chief's GPU comments were nevertheless welcome, the true surge in the firm's shares came after its earnings report for the fourth quarter of 2023. This report saw the firm report a surprise dividend of 50 cents. Since the earnings report, Meta's shares are up by 18%, making it a classical example of a breakout stock.
Yet, when we talk about breakout stocks in the A.I. era, the crown is still firmly placed on NVIDIA and Mr. Huang's head. NVIDIA's shares are already up by 49.9% year to date in a blistering set of results that saw NVIDIA briefly become more valuable than big ticket technology stocks Amazon.com, Inc. (NASDAQ:AMZN) and Alphabet Inc. (NASDAQ:GOOG).
Similarly, another breakout stock that has soared recently is also related to artificial intelligence and also has a close relationship with NVIDIA. This stock is none other than the British semiconductor design house Arm Holdings plc (NASDAQ:ARM). Arm is one of the youngest entrants on the stock market, and before its shares were publicly listed, NVIDIA was on its way to buy the firm before regulators marred the plans. Well, the decision to go public seems to have served Arm well, since it's a breakout stock that is now up by 145% since its IPO.
So why is Arm soaring? Well, all the company had to do was to convince investors that there were A.I. related orders down in the pipeline, and off the shares went. Arm's latest earnings call saw plenty of AI mentions, with the management commenting:
From the most complex devices on the planet for training and inference, the NVIDIA Grace Hopper 200 to edge devices such as the Gemini Nano Pixel 6 from Google or the Samsung Galaxy S24, more and more AI is running on more end devices, and that's all running on Arm. And what that has done is driven a very strong set of tailwinds for our licensing growth. When we look at demand for new products from a licensing standpoint, what we are finding from the end market is that we've reached nowhere near good enough relative to the capability of the technology, and end customers for new designs are needing more and more Arm technology to keep up, particularly with the AI demands.
Looking at these trends, it appears that the gods of the stock market are plenty favorable when it comes to breakout stocks. Therefore, we made a list of some such stocks today and the top picks are Salesforce, Inc. (NYSE:CRM), NVIDIA Corporation (NASDAQ:NVDA), and Adobe Inc. (NASDAQ:ADBE).
To make our list of the best breakout stocks, we ranked the holdings of the IBD Breakout Opportunities ETF by the number of hedge funds that had bought the shares during Q4 2023. Out of these, the top breakout stocks were selected.
For these best breakout stocks, we used hedge fund sentiment. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.
Shopify Inc. (NYSE:SHOP) is a Canadian e-Commerce retailer headquartered in Ontario. Despite broader inflationary concerns denting the market for e-Commerce firms, it has been doing well on the financial front as of late and has beaten analyst EPS estimates in all four latest quarters.
As of December 2023 end, 68 out of the 933 hedge funds surveyed by Insider Monkey were Shopify Inc. (NYSE:SHOP)'s shareholders. Out of these, the biggest shareholder was Peter Rathjens, Bruce Clarke, and John Campbell's Arrowstreet Capital as it held $1.6 billion worth of shares.
KKR & Co. Inc. (NYSE:KKR) is a financial services company headquartered in New York City. Amidst an investing environment clouded by high interest rates, the firm released a fresh report in February 2024 that revealed that family office investment vehicles were starting to reduce their stock investments.
After digging through 933 hedge fund Q4 2023 investment portfolios, Insider Monkey found that 68 had included KKR & Co. Inc. (NYSE:KKR) as an investment. The firm's biggest shareholder in our database is Natixis Global Asset Management's Harris Associates as it owns $1.7 billion worth of shares.
NVIDIA Corporation (NASDAQ:NVDA), Salesforce, Inc. (NYSE:CRM), and Adobe Inc. (NASDAQ:ADBE), KKR & Co. Inc. (NYSE:KKR) are some top breakout stocks that hedge funds are also piling into.
Fiserv, Inc. (NYSE:FI) is a financial technology company that enables businesses to manage their payments. Its shares are rated Strong Buy on average, and the average analyst share price target is $156.94.
For their fourth quarter of 2023 shareholdings, 73 out of the 910 hedge funds polled by Insider Monkey had held a stake in the firm. Fiserv, Inc. (NYSE:FI)'s largest investor in our database is Natixis Global Asset Management's Harris Associates due to its $1.9 billion stake.
MercadoLibre, Inc. (NASDAQ:MELI) is a Uruguay based eCommerce company. It's one of the most expensive stocks on our list, as the shares are currently trading for a cool $1,692 per share. Like others, it also jumped on the A.I. train in February 2024 after partnering up with ERP giant SAP to integrate generative artificial intelligence into its operations.
Insider Monkey scoured through 933 hedge fund portfolios to find 81 MercadoLibre, Inc. (NASDAQ:MELI) investors as of Q4 2023 end. David Blood and Al Gore's Generation Investment Management was the largest stakeholder through its $673 million investment.
Workday, Inc. (NASDAQ:WDAY) is a technology company that provides a diverse set of cloud computing services for business use. Its shares are rated Buy on average, and the firm has done well on the financial front as of late by having beaten analyst EPS estimates in all four of its latest quarters.
During last year's December quarter, 81 out of the 933 hedge funds profiled by Insider Monkey were the firm's shareholders. Workday, Inc. (NASDAQ:WDAY)'s biggest investor is Andreas Halvorsen's Viking Global as it owns 4.1 million shares that are worth $1.1 billion.
Intuitive Surgical, Inc. (NASDAQ:ISRG) is a backend healthcare company whose surgical robot platforms are among the best in the world. The company last month said it would announce a new robotic surgery platform later this year.
By the end of last year's fourth quarter, 82 out of the 933 hedge funds tracked by Insider Monkey had held a stake in Intuitive Surgical, Inc. (NASDAQ:ISRG). Ken Fisher's Fisher Asset Management owned the largest stake which was worth $1.5 billion.
Booking Holdings Inc. (NASDAQ:BKNG) is a travel services provider which enables travelers to digitally manage their trips by booking accommodation. The firm has been performing well on the financial front as it has beaten analyst EPS estimates in all four of its latest quarters.
83 out of the 933 hedge funds part of Insider Monkey's Q4 2023 database were the firm's shareholders. Booking Holdings Inc. (NASDAQ:BKNG)'s biggest investor among these is Peter Rathjens, Bruce Clarke, and John Campbell's Arrowstreet Capital through its $1.7 billion investment.
Salesforce, Inc. (NYSE:CRM), Booking Holdings Inc. (NASDAQ:BKNG), NVIDIA Corporation (NASDAQ:NVDA), and Adobe Inc. (NASDAQ:ADBE) are some top hedge fund breakout stock picks.
