As we head towards the end of another tumultuous year, investors are closely monitoring the performance of the Dow Jones Industrial Average (DJIA). In 2023, the index has enjoyed a commendable rise of nearly 15%, yet it has also experienced a recent downturn, losing over 3% in December alone. This notable decline signals potential volatility ahead, prompting analysts to identify certain stocks that could sustain or bolster their performance despite a broader market slump.
Among the companies standing out in this uncertain environment is Merck. Even as its stock price has dipped about 8% year to date, analysts still express optimism for its prospects in 2024, projecting a remarkable upside of up to 32%. This positive outlook comes amidst challenges, including a revised sales forecast and decreased profit guidance attributed to disappointing revenue from its HPV vaccine.
Nevertheless, Merck continues to excite market watchers with its robust pipeline of late-stage drug developments and an undeniable success story in its cancer medication, Keytruda. The substance’s strong sales demonstrate that Merck possesses formidable assets capable of absorbing market shocks. Bank of America analyst Tim Anderson emphasizes Merck’s status in the growth-at-a-reasonable-price (GARP) framework, underscoring its enduring potential as a foundational holding for investors in the pharmaceutical sector.
Beyond Merck, Johnson & Johnson and Amgen are also under the analyst microscope. Although some analysts have taken a more conservative stance on these companies, projecting neutral and underperform ratings, the potential for recovery in their stock prices cannot be dismissed. Analysts indicate that both companies could achieve gains exceeding 21.5% in 2024, despite the current year seeing J&J and Amgen both down around 7% and 8% respectively.
In particular, Amgen’s stock appears to be shedding its “obesity premium,” a fad that had buoyed its valuation in previous months. Industry watchers note, however, that the company may still have room for upward movement, albeit at a slower pace than in earlier periods. J&J and Amgen are also expected to be key players for dividend yields in the coming year, further entrenching their appeal for income-seeking investors.
Another name that cannot be overlooked in the upcoming year is Nvidia. The semiconductor giant, renowned for its pivotal role in the artificial intelligence sector, has experienced staggering growth of over 180% in 2023. Nevertheless, recent stock fluctuations, including a brief period of correction, have raised questions about its valuation. Despite these warning signs, the investment community remains largely favorable towards Nvidia, with the majority of analysts affirming strong buy ratings.
The projected upside for Nvidia stands at nearly 28% as it rounds out 2023 and transitions into 2024. As the tech industry continues to wrestle with economic pressures, Nvidia’s prospects could be seen as both a risk and a reward, making it a stock worth watching for investors with a higher risk tolerance.
An interesting feature of the current market scenario is the emphasis on dividends, especially as investors seek stability amid volatility. As Merck, J&J, and Amgen are expected to rank among the top 10 dividend yielders in the DJIA for 2024, there emerges an enticing opportunity for income-focused investors. All three companies currently boast dividend yields exceeding 3%, attracting attention even as market conditions shift.
The juxtaposition of potential growth in pharmaceutical stocks and the stalwart performance of tech giants like Nvidia reveals the multifaceted nature of contemporary investing. As the market braces for the challenges ahead in 2024, maintaining a diverse portfolio that includes both reliable dividend payers and high-growth potentials may prove to be a prudent strategy for navigating the complexities of the financial landscape.
As we stand on the precipice of a new year, investors should remain vigilant and informed as they assess which stocks could emerge resilient from the market’s inevitable ups and downs. With careful consideration, the right choices may not only cushion investors against potential downturns but also position them for significant gains in the coming year.