For nearly a year now, all eyes have been glued to the ‘Magnificent 7’ stocks. These superstar companies have delivered tremendous returns, attracting copious amounts of investment dollars. Since the S&P 500 weighting is based on market capitalization, even more money has flowed into these high-flyers. While they’ve taken a small breather over the past week, these stocks remain at lofty levels compared to history.
You may be wondering if you can hop aboard the next hype train before it leaves the station. Or find the next batch of seven high-quality companies poised to generate magnificent returns. I’m right there with you – I’ll share seven stocks that I believe are following in the footsteps of the Magnificent 7. Let’s take a look!
Berkshire Hathaway (BRK-A, BRK-B)
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I’m in full agreement with Jim Cramer and Jim Worden that Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B) warrants consideration as a new member of the elite ‘Magnificent 7’ group of stocks. Unlike Tesla (NASDAQ:TSLA), which has underperformed over the past year, Berkshire continues trending upward through its prudent diversification across sectors.
Rather than making concentrated bets on AI and data like many tech darlings, Berkshire maintains holdings in a vast array of industries. This provides stability while letting Berkshire to shift capital between sectors as conditions dictate. I believe such flexibility is invaluable in turbulent times. And Berkshire boasts an ace up its sleeve in Warren Buffett, whose celebrated investing acumen stems from decades of experience.
Berkshire seems like a relative safe haven compared to other tech titans. While we cannot expect past success to guarantee future gains, Berkshire appears well-positioned to keep beating the broader markets in the years ahead. I anticipate its eventual rise to a $1 trillion value is inevitable.
MercadoLibre (MELI)
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MercadoLibre (NASDAQ:MELI) mirrors Amazon (NASDAQ:AMZN) in ways that merit its inclusion among the “Magnificent 7.” MercadoLibre is rapidly cementing itself as the e-commerce leader across Latin America. Its core marketplace and fintech operations have rebounded remarkably from the pandemic, demonstrating the resilience required for sustained success.
MercadoLibre’s strong execution shows through its impressive 32% gain over the past year and 143% surge from its June trough. Looking ahead, analysts forecast MercadoLibre’s EPS rocketing from $33 to $226 over the next decade, fueled by projected revenue growth from $17.7 billion to $72.3 billion during the same period.
Trading at 47x forward earnings and 4.4x forward sales, MercadoLibre still looks attractively priced given its standout growth outlook. I believe its shares could climb much further in the coming years. These gains could make MercadoLibre a member of the next ‘Magnificent 7’ if they mirror the Magnificent 7’s gains.
Li Auto (LI)
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Li Auto (NASDAQ:LI) exemplifies the rapid electrification happening across the Chinese auto market. The company has consistently bested expectations, delivering record EV sales month after month. Within China, Li Auto’s growth trajectory is outpacing rivals BYD (OTCMKTS:BYDDF) and Tesla.
As of February 2024, Li Auto’s total deliveries reached 684,780 vehicles, up 22% year-over-year. The slower pace versus January resulted from certain models selling out and the Chinese New Year impact. Still, Li Auto projects first quarter 2024 deliveries to jump 90-96% over last year.
Despite blistering growth, Li Auto trades at just 18x forward earnings and 1.3x forward sales. This seems remarkably inexpensive compared to cash-burning EV startups with questionable outlooks. I believe Li Auto still offers multibagger return potential given its commanding position in a fast-growing Chinese EV market.
FTAI Aviation (FTAI)
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FTAI Aviation (NASDAQ:FTAI) has been one of the most remarkable success stories in its industry over the past five years, gaining 293% in that period. While the pandemic did temporarily throw sand in its gears, momentum has only accelerated since then. FTAI stock is up a whopping 139% over the past 12 months and shows no signs of a slowdown.
This outperformance stems from FTAI’s fundamentally sound business model. Its stellar 38% net profit margin handily beats over 95% of aviation companies and business services peers. What makes FTAI special is its niche focus on owning and maintaining CFM56 commercial jet engines, specifically for private aviation. This segment has boomed as tax laws began permitting the deductibility of private aircraft used for business. With demand for engines, pilots and parts surging, FTAI finds itself in the right place at the right time.
Looking ahead, analysts forecast FTAI’s EPS tripling from 2024 to 2027. Meanwhile, revenues are projected to expand from $1.3 billion to $2.3 billion over the same period. This robust growth trajectory strengthens my conviction that FTAI could follow in the footsteps of the ‘Magnificent 7’ stocks. Now FTAI may not be comparable in sheer size, but looking at potential percentage gains, it can certainly hold its own against the giants.
Elastic (ESTC)
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Elastic N.V. (NYSE:ESTC) operates in the hot field of data analytics, providing open-source search and analytics software. Elastic’s solutions ingest and store data from diverse sources, enabling users to efficiently search, analyze and visualize that data. This helps organizations find information rapidly, optimize application performance, and protect against cyber threats.
With data, software and AI driving massive hype nowadays, Elastic appears well-positioned to capitalize even further. Its stock has already climbed 91% over the past year amid strong growth. Looking ahead, EPS is projected to leap from $1.2 in 2024 to $13.3 in 2033, representing around 35% average annual earnings growth. Revenues are also slated to quadruple over this period.
If the SaaS stock rally continues raging, I believe ESTC can keep generating substantial gains from current levels. Admittedly, its valuation looks steep at around 90 times forward earnings. However, Wall Street seems willing to accord lofty multiples to high-growth software names. So I wouldn’t rule out Elastic marching significantly higher if execution remains solid.
Aaon (AAON)
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Aaon (NASDAQ:AAON) is one of my highest-conviction picks right now. I strongly believe this stock will deliver standout performance in 2024 and beyond, given its tremendous growth trajectory. Aaon provides customizable HVAC solutions tailored to customer needs for commercial and industrial facilities.
With last summer being extremely hot across much of the U.S. and world, this year looks on track for more of the same judging by the mild winter seen in many places, especially Europe. Aaon grew Q4 revenues over 20% year-over-year, handily exceeding analyst estimates by 4%. EPS similarly beat expectations by 7.7%, while posting 26% beats in the first two quarters of 2023.
If summers continue getting hotter going forward, I expect Aaon to keep beating estimates and charging higher. The stock has already risen 36% over the past 12 months. Its 0.4% dividend yield provides a bit of extra income along the way. In my view, Aaon remains attractively valued given its secular growth outlook.
DoubleVerify (DV)
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After weakness in 2022 and early 2023, online ad spending appears to be rebounding. As marketing budgets expand, I anticipate this growth to persist thanks to the digital ad recovery. DoubleVerify (NYSE:DV) operates in this sphere, providing software for digital media measurement and analytics. Its mission is to strengthen the integrity of the digital ad ecosystem.
While not the hottest performer recently, DoubleVerify can certainly heat up from here. It has gained 34% over the past year, but I still see it as undervalued. The stock sold off after mixed Q4 results, but I view this as a buying opportunity with shares down 23% from late February highs. Despite the Q4 deceleration, revenues still grew 29% year-over-year as gross margins improved.
With ad spending rebounding, DoubleVerify seems well-positioned to capitalize given its vital role in preventing fraud and ensuring ad quality. Analysts forecast over 20% revenue growth continuing, alongside 30%+ EPS expansion in 2024. As marketing budgets swell, I expect DoubleVerify to benefit and potentially emerge as a member of the next ‘Magnificent 7.’
On the date of publication, Omor Ibne Ehsan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Omor Ibne Ehsan is a writer at InvestorPlace. He is a self-taught investor with a focus on growth and cyclical stocks that have strong fundamentals, value, and long-term potential. He also has an interest in high-risk, high-reward investments such as cryptocurrencies and penny stocks. You can follow him on LinkedIn.
