The S&P 500 and the Nasdaq jumped to all-time highs to start the final month of 2024. The bulls are in control for a variety of reasons in December and heading into 2025.
Wall Street is buying up stocks based on the outlook for strong earnings growth in 2025 and beyond and the likelihood of lower interest rates. On top of that, the possibility of lower corporate taxes and less red tape under a second Trump term could be further wind on the economic sails.
Beyond that, big tech companies are spendings billions of dollars on the artificial intelligence expansion, and the U.S. is in the midst of an infrastructure spending boom from energy to data centers.
Of course, the market cannot go straight up and there will without a doubt be a pullback at some point. The best long-term investors will simply utilize the next significant drawdown in their favorite stocks or the market as buying opportunities.
The three stocks we explore today have soared to all-time highs and boast impressive upward earnings revisions.
Buy and Hold This Historic U.S. Engine Maker Stock?
Cummins Inc. CMIstock has quadrupled the S&P 500 over the last 20 years and doubled it in the past 12 months.
Cummins manufactures engines and powertrains for trucks and busses to off-highway construction equipment and beyond. Cummins’ lineup of engine technologies includes diesel, natural gas, and alternative fuel. The historic U.S. engine maker also builds generators and integrated power systems to support data centers, microgrids, and more.
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Alongside its engine and power systems segments are its components and distribution units. Plus, CMI’s new power division, Accelera, includes batteries, fuel cells, hydrogen-production technologies, and more.
Cummins averaged 20% sales growth between 2021 and 2023 and posted a similarly impressive stretch of earnings expansion. CMI is projected to post roughly flat sales in 2024 against its recent backdrop of massive top-line growth and then pop 2.5% next year to reach $34.59 billion.
Cummins is expected to boost its adjusted earnings by 5% in FY24 and over 7% in 2025. CMI’s upward earnings revisions help it earn a Zacks Rank #2 (Buy).
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CMI soared 1,700% over the last 20 years for a total return of 2,700% (including dividend reinvestments), leaving the S&P 500’s 425% and 720%, respective climbs in the dust. Cummins has jumped 57% YTD to trade at all-time highs.
Cummins trades at an 18% discount to its Zacks sector despite blowing it away in the last 10 years and 17% below CMI’s 10-year highs at 17X forward earnings.
Cummins appears overheated in the short-run based on RSI levels and its distance above its 21-week moving average. The next pullback could mark a solid entry point for long-term investors.
Buy This Under-the-Radar Tech Equipment Stock?
Garmin Ltd. GRMNshares have skyrocketed over 2,000% in the last 25 years to blow away the Zacks Tech sector’s 300%. GRMN has also ripped over 70% higher in the last year, highlighted by its massive post-earnings release surge at the end of October.
Garmin was at the vanguard of modern consumer-facing GPS. GRMN became a household for its in-car navigation systems, as well as its fitness wearables and smartwatches. Garmin’s wearables, smartwatches, and other handheld electronics have grown in popularity despite challenges from Apple and others.
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GRMN is also an innovator across sonar, radars, autopilot systems, and other crucial and cutting-edge tech through its marine unit. On top of that, Garmin’s aviation business spans general, business, government & defense, helicopters, and experimental aircraft, with offerings such as flight decks & displays, autopilot, and navigation & radios.
Garmin posted a blowout beat-and-raise Q3 on October 30, citing momentum heading into the holiday shopping period. Garmin’s earnings estimates jumped by 16% for 2024 and 2025 to earn GRMN a Zacks Rank #1 (Strong Buy). Garmin is projected to post 17% revenue growth in 2024 and 6% higher sales next year to help boost its bottom line by 25% and 9%, respectively.
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Garmin’s recent surge, part of a 130% climb in the last two years, sent it to fresh all-time highs. The stock trades in line with the Tech sector and 8% below its highs in terms of forward earnings. Garmin pays a dividend that yields 1.4% and is actively buying back stock to reward shareholders.
Garmin funds these efforts and future expansion via its stellar balance sheet, highlighted by $2.4 billion in cash and equivalents, $9.3 billion in total assets vs. $1.8 billion in total liabilities and zero debt.
Stride Stock Is Up 230% in the Past Two Years: Time to Buy LRN?
Stride LRNstock has climbed 820% during the past decade, leaving its industry’s 36% climb in the dust and roughly quadrupling the benchmark.
Stride is a digital education firm extending its scope and adapting to the changing economy and education system. LRN’s growing portfolio serves K–12 students and parents, adult learners, school districts, businesses, the military, and beyond.
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Stride’s career learning segment is growing, especially from its Middle-High School cohort. Stride is also capitalizing on the digitalization of the U.S. economy, offering courses across healthcare, IT, coding, and beyond.
Stride grew its revenue from $400 million in 2010 to $2.04 billion in its FY24. Stride grew its revenue by an average of 10% in the trailing three years following 48% Covid-boosted expansion in FY21.
LRN posted blowout Q1 FY25 results in late October, boosted by 18% enrollment growth, with Career Learning enrollments up 30%.
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Stride is projected to grow its FY25 sales by over 12% and add 8% to the top-line next year. LRN is expected to expand its adjusted EPS by 42% and 13%, respectively following 58% growth last year. Stride’s earnings outlook has surged by roughly 32% for FY25 and FY26 since its Q1 release to earn it a Zacks Rank #1 (Strong Buy).
LRN stock has climbed 84% in the trailing 12 months and it might be a tad overcooked after its massive post-earnings run.
Even though LRN sits at all-time highs, Stride trades at a 75% discount to its highs and 35% below its median at 15.7X forward 12-month earnings.
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