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Wall Street has been witnessing an impressive rally since the beginning of 2023, barring a few minor fluctuations. The rally has primarily been driven by the technology sector, buoyed by the massive adoption of generative artificial intelligence (AI). Consequently, the tech-heavy Nasdaq Composite Index has surged 21% year-to-date after climbing 43.4% in 2023.

However, the tech-laden index has suffered a blow this month. The release of weaker-than-expected inflation data, several soft key economic data, and the Fed Chairman’s recent dovish comments on interest rate cuts have skyrocketed market participants’ expectation of a 25-basis point rate cut in September. Investors are also anticipating at least two rate cuts by the end of 2024.

Following these developments, investors preference has shifted in July from overvalued technology stocks to beaten-down rate-sensitive cyclical sectors like industrials, financials, materials, energy, and small-cap stocks. Over the past 18 months, shares of several AI-centric stocks have soared three to four times. Sector rotations in July have made the ongoing rally more broad-based.

Consequently, the Nasdaq Composite witnessed a bloodbath in the last few trading sessions. The index recorded an all-time high of 18,671.07 on July 11. Thereafter, the tech-heavy index tumbled 4.3% in five trading sessions. On July 17, the index fell 2.8% — its worst daily performance since December 2022. 

Aside from technology stocks, several stocks from various sectors have also flourished year-to-date. Despite being a tech-laden index, the Nasdaq Composite also carries a diversified structure. Several stocks from non-technology sectors are included on the index. 

A few Nasdaq Composite-listed stocks, with a favorable Zacks Rank, from these non-technology sectors are set to thrive in second-half 2024, too. Investment in these stocks should be fruitful in the near- to mid-term.

Our Top Picks

We have narrowed our search to five Nasdaq Composite-listed non-tech stocks that have strong growth potential for the rest of 2024. These stocks have seen positive earnings estimate revisions in the last 60 days. Many of these stocks maintain favorable ratings, such as a Zacks Rank #2 (Buy).

The chart below shows the price performance of our five picks year-to-date.

Image Source: Zacks Investment Research

Costco Wholesale Corp.’s (COST - Free Report)

Costco's key strengths are strategic investments, a customer-centric approach, merchandise initiatives, and an emphasis on membership growth. These factors have been helping Costco to register decent sales and earnings numbers. We expect the stock to register an 8.6% adjusted earnings per share improvement in fiscal 2024 on 4.8% revenue growth. 

This outlook reflects the company's ability to navigate the challenging operating environment, generate solid sales, and register high membership renewal rates. A favorable product mix, steady store traffic, pricing power, and strong liquidity position should help Costco to keep on outperforming.

Costco Wholesale has an expected revenue and earnings growth rate of 7.2% and 8.9%, respectively, for next year (ending August 2025). The Zacks Consensus Estimate for next-year earnings has improved 0.3% over the last seven days.

Texas Roadhouse Inc. (TXRH - Free Report)

This next one is a full-service, casual dining restaurant chain offering assorted seasoned and aged steaks hand-cut daily on the premises and cooked to order over open gas-fired grills. Texas Roadhouse operates restaurants under the Texas Roadhouse and Aspen Creek names. 

The company offers its guests a selection of ribs, fish, seafood, chicken, pork chops, pulled pork and vegetable plates, an assortment of hamburgers, salads and sandwiches. Texas Roadhouse also provides supervisory and administrative services for other licensed and franchise restaurants.

Texas Roadhouse has an expected revenue and earnings growth rate of 15.3% and 33.3%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.3% over the last seven days.

Intuitive Surgical Inc. (ISRG - Free Report)

Intuitive Surgical has benefited on the back of continued growth in the company’s da Vinci procedure volume, coupled with strong Ion procedure growth. The company's initiative to increase the pricing of procedures should also continue to aid in sales growth in 2024. 

Improving procedure volume along with better system placements and services across all markets will drive top-line growth of Intuitive Surgical this year. The launch of da Vinci SP in Europe and da Vinci 5 in the U.S. market should drive the company's system placements higher.

Intuitive Surgical has an expected revenue and earnings growth rate of 12.5% and 9.6%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.8% over the last 60 days.

Interactive Brokers Group Inc. (IBKR - Free Report)

This next company is a global automated electronic broker. Interactive Broker Group's efforts to develop proprietary software, low compensation expenses relative to net revenues, an increase in emerging market customers, along with higher interest rates are all expected to boost revenues in the upcoming quarters. 

Interactive Broker Group executes, processes and trades in cryptocurrencies, too. The commodities futures trading desk of the company also offers customers a chance to trade cryptocurrency futures. We project total net revenues to witness a CAGR of 5.2% over the next three years. Interactive Broker's enhanced capital distribution plans seem sustainable given a solid liquidity position.

Interactive Brokers Group has an expected revenue and earnings growth rate of 14.7% and 18.8%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.9% over the last seven days.

First Solar Inc. (FSLR - Free Report)

Finally, First Solar remains the largest PV solar module manufacturer in the United States. First Solar is investing heftily in enhancing its manufacturing capacity to boost its revenue stream. Such manufacturing capacity expansion plans will enable the company to duly meet its production target of 15.6-16 gigawatts of solar modules by 2024 end. First Solar has also been innovating advanced solar modules to boost its portfolio. 

First Solar has an expected revenue and earnings growth rate of 36.5% and 76.2%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.1% over the last seven days.

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