5 Stocks To Buy On The Dip To Gain From The Wall Street Rally

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Wall Street had a dream run in 2023, reversing the nightmare of 2022. The impressive bull run appears set to continue in 2024. Year-to-date, the Dow, the S&P 500, and the Nasdaq Composite have rallied 5.5%, 10.5%, and 11.1%, respectively.

On March 20, after the FOMC meeting, the Fed kept the benchmark lending rate constant in the range of 5.25-5.5%. However, the Fed’s latest “dot-plot” (a closely watched matrix of anonymous projections from the 19 officials who comprise the FOMC) shows the benchmark lending rate to come down to 4.625% at mid-point by the end of 2024. The existing mid-point of the Fed fund rate is 5.375%. This indicates three rate cuts of 25 basis points each.

Moreover, the central bank has raised the U.S. GDP forecast for 2024 to 2.1% in March from 1.4% in December. U.S. GDP rose 2.5% in 2023 compared with 1.9% in 2022. At the beginning of 2023, the consensus estimate for full-year GDP was 2%. On March 19, the Atlanta Fed GDPNow tracker forecast a 2.1% growth rate for first-quarter 2024, indicating, no chance of a near-term recession.


Our Top Picks

At this stage, buying on the dip would be the best investment strategy to make the most of the ongoing Wall Street rally. We have narrowed our search to five large-cap (market capital > $10 billion) stocks with attractive valuations. The stocks have strong potential for 2024 and have seen positive earnings estimate revisions in the past 60 days. Most of our picks maintain strong ratings, such as a Zacks Rank #2 (Buy).

The chart below shows the price performance of our five picks in the past month.

Zacks Investment Research

Image Source: Zacks Investment Research


Twilio Inc. (TWLO - Free Report)

This company is benefiting from accelerated digital transformation amid a growing hybrid working trend. Twilio’s selective acquisitions and strategic investments in businesses and technologies are enhancing its product portfolio and fortifying its global presence.

The company is gaining traction not only from the solid expansion of its existing clientele, but also from first-time deals with new customers due to its firm focus on introducing products and its go-to-market sales strategy. Twilio’s ongoing cost-saving initiatives are driving profits and margins, which is praiseworthy.  

Twilio has an expected revenue and earnings growth rate of 5% and 9%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 3.5% over the past 30 days. The stock price of TWLO has recently been seen trading at a 21.3% discount to its 52-week high.


Zscaler Inc. (ZS - Free Report)

This next company is benefiting from the rising demand for cyber-security solutions due to the slew of data breaches. The increasing demand for privileged access security on digital transformation and cloud-migration strategies is a key growth driver. The company's portfolio strength boosts its competitive edge and adds users.

A strong presence across verticals, such as banking, insurance, healthcare, public sector, pharmaceuticals, telecommunications services, and education, safeguards Zscaler from the negative impacts of ongoing macroeconomic headwinds. Portfolio expansion through acquisitions with the likes of Avalor, Canonic Security, and ShiftRight are praiseworthy.

Zscaler has an expected revenue and earnings growth rate of 31% and 51.4%, respectively, for the current year (ending July 2024). The Zacks Consensus Estimate for current-year earnings has improved 9.7% over the past 30 days. The stock price of ZS has recently been seen trading at a 23.7% discount to its 52-week high.


NextEra Energy Inc. (NEE - Free Report)

This company continues to expand its operations through organic projects and acquisitions. NextEra has nearly 20 GW of renewable projects in its backlog. NextEra's subsidiary FPL’s customer base is expanding as Florida’s economy improves.

The company is managing its debts efficiently and has ample liquidity to meet its debt obligations. NextEra has decided to sell its natural gas assets in Florida to focus on its core business.

NextEra Energy has an expected revenue and earnings growth rate of 1.2% and 8.5%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.5% over the past 60 days. The stock price of NEE has recently been seen trading at a 23.1% discount to its 52-week high.


American Water Works Co. Inc. (AWK - Free Report)

This following company is gaining from contributions from acquired assets and military contracts. Investments in infrastructure will assist American Water Works to efficiently serve its expanding customer base. Water and wastewater rate hikes are also boosting the company's performance.

American Water Works continues to expand operations through organic and inorganic initiatives. The company also has ample liquidity to meet its obligations. Cost management is boosting margins. We expect to see an increase in revenues during 2024-2026.

American Water Works has an expected revenue and earnings growth rate of 0.6% and 6.1%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.6% over the past 60 days. The stock price of AWK has recently been seen trading at a 23% discount to its 52-week high.


Insulet Corp. (PODD - Free Report)

This final company has been progressing well with its four-pillar strategy that targets focused market expansion and innovation. Insulet has been making progress with respect to its development roadmap of the Omnipod 5 system. The international roll-out of the device continues successfully.

In 2023, Insulet commercially launched Omnipod 5 in the United Kingdom and Germany. Further, Insulet registered continued strong adoption of Omnipod DASH in its international markets. In terms of innovation, in February 2024, the company received the CE mark for the added compatibility of Omnipod 5 with the Abbott FreeStyle Libre 2 Plus sensor.

Insulet has an expected revenue and earnings growth rate of 15.7% and 12%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 21.3% over the past 30 days. The stock price of PODD has recently been seen trading at a 50.4% discount to its 52-week high.


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Disclosure: Zacks.com contains statements and statistics that have been obtained from sources believed to be reliable but are not guaranteed as to accuracy or completeness. References to any ...

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