7 Stocks to Help You Build Off January’s Gains

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It's frequently said that as January goes, so goes the market.

If that's the case, it's time for investors to put money to work in the stock market. Here's the tale of the tape as of February 7, 2024:

The S&P 500 Index is up around 6.3%.
The tech-heavy Nasdaq index is up more than 30%.
The Dow Jones index is up more than 13%.

And at the time of this writing, 72% of the companies that have reported earnings have reported earnings per share (EPS) that are 2.6% higher on average than analysts' expectations. And this earnings growth is being seen in 7 out of 11 market sectors.

But as many investors understand, the rally is not as broad-based as the statistics would indicate. Just look at what's going on with some bellwether stocks like McDonald's Corporation (NYSE: MCD), which is down approximately 3% after weak guidance.

That's why we've put together this special presentation to point you to seven stocks that had a strong January but may not be done yet. These are stocks you can feel free to chase higher or buy on the dip.

#1 - Occidental Petroleum (NYSE:OXY)

Occidental Petroleum Corporation (NYSE: OXY) is one of Warren Buffett's favorite stocks. The Oracle of Omaha has made several purchases of OXY stock this year. In fact, a price range of $58.50 has come to be known as the "Buffett Buy Zone."

There are a number of fundamental reasons why OXY stock is a Buffett favorite. However, there's a reason Buffett is buying. He expects oil prices to climb much higher.

Right now, that may seem hard to believe. Energy stocks, particularly oil and gas stocks, were among the least loved equities in 2023. In January 2024, it's been more of the same.

But there are reasons to believe that will change. Consumers are voicing their objection to electric vehicles, whether on price or convenience.

And escalating geopolitical concerns in the Middle East will make oil prices volatile and may push them higher.

Occidental is forecasting earnings to grow 16.5% in the next 12 months. And even though analysts project OXY stock to climb 22% this year, the earnings growth may not be reflected in that forecast.

About Occidental Petroleum

Occidental Petroleum Corporation, together with its subsidiaries, engages in the acquisition, exploration, and development of oil and gas properties in the United States, the Middle East, and North Africa. It operates through three segments: Oil and Gas, Chemical, and Midstream and Marketing. The company's Oil and Gas segment explores for, develops, and produces oil and condensate, natural gas liquids (NGLs), and natural gas. Read More

Current Price: $63.69
Consensus Rating: Moderate Buy
Ratings Breakdown: 6 Buy Ratings, 8 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $72.00 (13.0% Upside)

#2 - Newmont Gold (NYSE:NEM)

We move from liquid gold to actual gold. Or at least buying shares of a gold mining company. That's what you get from Newmont Corporation (NYSE: NEM), the world's largest gold miner by revenue.

Gold mining stocks have performed poorly, and NEM stock is down 31% in the last 12 months as of this writing. However, the price of gold is expected to increase in the next few years. And it's not because of all the customers buying gold at Costco.

Central banks throughout the world have been adding to their reserves. In 2023, central banks added 1,037 tons of gold to their total reserves. That was just shy of the record amount they purchased in 2022.

Since the spot price of gold is governed by supply and demand, that points to a rising gold price. Newmont is forecasting earnings to grow by 41% in the next 12 months, and analysts have an upside price target of $55.48, which is 66% higher than the price as of February 8, 2024.

About Newmont

Newmont Corporation engages in the production and exploration of gold. It also explores for copper, silver, zinc, and lead. The company has operations and/or assets in the United States, Canada, Mexico, Dominican Republic, Peru, Suriname, Argentina, Chile, Australia, Papua New Guinea, Ecuador, Fiji, and Ghana. Read More

Current Price: $41.53
Consensus Rating: Moderate Buy
Ratings Breakdown: 7 Buy Ratings, 6 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $48.35 (16.4% Upside)

#3 - Advanced Micro Devices (NASDAQ:AMD)

Chip stocks will continue to be in a super cycle due to demand for artificial intelligence (AI) chips. And if you want to stick with Nvidia Corporation (NASDAQ: NVDA), it's hard to make a case against it. But if you're looking to zig where others may be zagging, you should consider Advanced Micro Devices Inc. (NASDAQ: AMD).

The company's latest earnings report reported that sales of its MI300 AI chips exceeded expectations. The company also raised its guidance for MI300 chip sales for the full year. And according to analysts, that may be too conservative.

That's because customers are looking for options for AI chips that are not made by Nvidia. AMD is in the best position to capitalize on that demand right now.

After an initial dip following the earnings report, AMD stock is moving higher, and analysts are bidding the stock to a level well above the consensus price target of the Advanced Micro Devices analyst ratings on MarketBeat of around $177.

About Advanced Micro Devices

Advanced Micro Devices, Inc operates as a semiconductor company worldwide. It operates through Data Center, Client, Gaming, and Embedded segments. The company offers x86 microprocessors and graphics processing units (GPUs) as an accelerated processing unit, chipsets, data center, and professional GPUs; and embedded processors, and semi-custom system-on-chip (SoC) products, microprocessor and SoC development services and technology, data processing unites, field programmable gate arrays (FPGA), and adaptive SoC products. Read More

Current Price: $153.62
Consensus Rating: Moderate Buy
Ratings Breakdown: 27 Buy Ratings, 2 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $183.94 (19.7% Upside)

#4 - Palantir Technologies (NYSE:PLTR)

Palantir Technologies Inc. (NYSE: PLTR) is unquestionably the riskiest stock on this list. But for investors who were willing to take that risk, they've been rewarded with a 196% gain in the last 12 months.

The company is a software-as-a-service (SaaS) company that focuses on artificial intelligence and big data analytics. They have government clients and commercial clients. The significant driver for the stock has been its AIP platform. Wedbush analyst Dan Ives has referred to Palantir as the "Lionel Messi of AI," and he could be right.

Palantir released earnings in February 2024, and the stock popped over 20% in the days after the report. The company is projecting 20% growth in the next 12 months, which has some analysts skeptical about the company's valuation. But Palantir has been doing a good job of silencing skeptics and appears to be a solid long-term choice for growth-oriented investors.

About Palantir Technologies

Palantir Technologies Inc builds and deploys software platforms for the intelligence community to assist in counterterrorism investigations and operations in the United States, the United Kingdom, and internationally. The company provides Palantir Gotham, a software platform which enables users to identify patterns hidden deep within datasets, ranging from signals intelligence sources to reports from confidential informants, as well as facilitates the handoff between analysts and operational users, helping operators plan and execute real-world responses to threats that have been identified within the platform. Read More

Current Price: $21.56
Consensus Rating: Reduce
Ratings Breakdown: 3 Buy Ratings, 6 Hold Ratings, 5 Sell Ratings.
Consensus Price Target: $20.65 (4.2% Downside)

#5 - Pfizer (NYSE:PFE)

Pfizer Inc. (NYSE: PFE) was one of the weakest stocks in 2023. The simple reason is that sales of its COVID-19 vaccines and therapeutics have more than normalized. And, to date, the company doesn't have a contender in place to make up that revenue.

That's likely to change in 2024. The company acquired Seagen Inc. (NASDAQ: SGEN) in 2023. That gives Pfizer access to the latter's portfolio of oncology drugs. Pfizer is also on the leading edge of the customizable (i.e., precision) medicine trend.

Trading for just 12x forward earnings and with a dividend yield of over 6.8%, PFE stock appears to be unjustifiably undervalued early in 2024. Analysts are forecasting Pfizer will increase earnings by 24% in the next 12 months, which smashes the sector average of 14.6%.

Investors may have to wait a little longer on Pfizer, but that patience will likely be rewarded.

About Pfizer

Pfizer Inc discovers, develops, manufactures, markets, distributes, and sells biopharmaceutical products in the United States, Europe, and internationally. The company offers medicines and vaccines in various therapeutic areas, including cardiovascular metabolic, migraine, and women's health under the Eliquis, Nurtec ODT/Vydura, Zavzpret, and the Premarin family brands; infectious diseases with unmet medical needs under the Prevnar family, Abrysvo, Nimenrix, FSME/IMMUN-TicoVac, and Trumenba brands; and COVID-19 prevention and treatment, and potential future mRNA and antiviral products under the Comirnaty and Paxlovid brands. Read More

Current Price: $28.28
Consensus Rating: Hold
Ratings Breakdown: 6 Buy Ratings, 10 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $36.00 (27.3% Upside)

#6 - Costco (NASDAQ:COST)

Retail stocks were a tough buy in 2023, but Costco Wholesale Corporation (NASDAQ; COST) stood out. Despite tough comparisons, Costco continues to post higher revenue and earnings year-over-year.

It's hard to make the case that COST stock isn't overvalued. The stock is trading for around 49x earnings, up from 34x last year. However, as long as investors are willing to pay that higher valuation, there is likely to be room to run.

Investors continue to pay it because the company's subscription model keeps consumers shopping at the warehouse club even in the face of sticky inflation, particularly on food. And if the consumer gets any help in the form of lower interest rates and/or tamer inflation, Costco will be an obvious beneficiary.

Costco still expects to see earnings climb by 9%. You should also consider that the stock's dividend, while offering a tiny 0.58% yield, has increased for 20 consecutive years. And it currently pays out 4.08 per share.

About Costco Wholesale

Costco Wholesale Corporation, together with its subsidiaries, engages in the operation of membership warehouses in the United States, Puerto Rico, Canada, Mexico, Japan, the United Kingdom, Korea, Australia, Taiwan, China, Spain, France, Iceland, New Zealand, and Sweden. The company offers branded and private-label products in a range of merchandise categories. Read More

Current Price: $763.41
Consensus Rating: Moderate Buy
Ratings Breakdown: 18 Buy Ratings, 6 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $694.48 (9.0% Downside)

#7 - Discover Financial (NYSE:DFS)

Discover Financial Services (NYSE: DFS) is a digital bank as well as a global payment network. With a 26.96 billion market cap, the company is tiny compared to Visa Inc. (NYSE: V) and Mastercard Inc. (NYSE: MA).

The bullish case is that the economy appears to be healthier than conventional wisdom suggests. Consumers continue to charge more on their credit cards. Delinquencies among low-income cardholders are back to 2019 levels. But, for middle-income and upper-income consumers, this looks more like a spending problem than a credit problem, at least for now.

Then, as you look closer at DFS stock, you'll see it's extremely undervalued by comparison. The stock trades for just 9.4x forward earnings and projects 23% earnings growth in the next 12 months. And you'll also get a dividend currently paying a 2.60% yield. Plus, with a 24% payout ratio, the dividend is very safe and is likely to increase for the 14th consecutive year in 2024.

About Discover Financial Services

Discover Financial Services, through its subsidiaries, provides digital banking products and services, and payment services in the United States. It operates in two segments, Digital Banking and Payment Services. The Digital Banking segment offers Discover-branded credit cards to individuals; private student loans, personal loans, home loans, and other consumer lending; and direct-to-consumer deposit products comprising savings accounts, certificates of deposit, money market accounts, IRA certificates of deposit, IRA savings accounts and checking accounts, and sweep accounts. Read More

Current Price: $123.60
Consensus Rating: Hold
Ratings Breakdown: 7 Buy Ratings, 11 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $126.29 (2.2% Upside)

No investor can predict the future. The stocks included in this report were picked based on some assumptions. Those assumptions include that inflation will continue to move closer to the Fed's target rate of 2%. It also presumes the Fed will cut rates at least once – and maybe more – at some point this year.

And you shouldn't forget that it's an election year. An LPL Financial study reports that the S&P 500 index tends to rise an average of 7% in an election year. That's only a tick more than the index is trading at as of early February.

But as you know, many stocks will outperform the index. That's the idea behind the stocks in this presentation. These are companies that are likely (although not guaranteed) to beat the index in their total return. That is capital gains plus a dividend in some cases.