As we move into 2024, it is clear that the market and the world in general is changing quickly. The ability to adapt and to change with the times is a necessity. How does that happen in the investing world? Doing very careful research into stocks, exchange-traded funds and other investment vehicles for growing income in 2024 and beyond.
Rob Isbitts, a senior contributor for Forbes and founder of ETFyourself.com, joins ‘Forbes Talks’ to discuss the three best growth stocks for 2024.
Rob Isbitts, a senior contributor for Forbes and founder of ETFyourself.com, joins ‘Forbes Talks’ to discuss the three best growth stocks for 2024.
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00:00 Hi, everyone. I'm Rosemary Miller here with Rob Itspitz, the founder of ETFyourself.com,
00:10 here to tell us about the three best growth stocks for 2024. Thank you so much for joining
00:15 me today, Rob. Sure, sure. Great to be here. And it is funny, people heard that introduction.
00:22 They say, OK, ETFyourself.com must be one of those ETF geeks and guilty. But remember,
00:31 every ETF that somebody analyzes has a group of individual stocks in it if it's an equity
00:38 ETF. And obviously, a big part of my background as a mutual fund manager was in the equity
00:44 space. So, yeah, we went for three different ETFs here. And look, we're talking about growth.
00:53 And so, I mean, I've been a macro strategist as long as I can remember, probably going
01:00 back 30 years. And so, you know, with the caveat that my macro view for this year, next
01:09 year is, let's say, a little more sanguine, not through the roof bullish. But that doesn't
01:18 matter to somebody who's trying to find growth stocks for long term purposes. And so, you
01:26 know, none of this is personal advice, of course. But I picked out three that I thought,
01:31 OK, these are not just stocks. These are businesses. These are franchises. They're going to have
01:39 their ups and downs because as a famous investor, value investor, Benjamin Graham famously said,
01:49 the stock market in the short term is a voting machine. In the long term, it's a weighing
01:55 machine. And I think these all may weigh out longer term. So we'll start with BlackRock.
02:01 And for those who are familiar with the ETF business, you can probably fill in the words
02:09 for me. BlackRock are the kings of the ETF business. They had a tremendous business before
02:20 that. But they really, their iShares brand is almost like we say, Band-Aids instead of
02:29 what it really is, which is an adhesive bandage. Well, for ETFs, I'm sure there are a lot of
02:34 investors, maybe millions of them that say, oh, well, I just use iShares. And what they
02:39 really mean is they invest in ETFs. So when you get to that point and you've got a market
02:46 cap of $110Bn, so certainly they're not going anywhere. They've been very hesitant to cut
02:53 their stock price to split it, similar to Warren Buffett and Berkshire Hathaway. So
03:01 they're putting their stock in the 700s per share. It is not cheap and not outrageously
03:08 expensive at 21 times trailing earnings at the time we wrote the article. And this is
03:15 only a 35-year-old business. And I just feel like they have such a, again, kind of a Buffett
03:28 quote, wide moat. They have such a wide moat in the ETF business. There are a small number,
03:35 about five or six firms in the ETF world that dominate the assets. And among the dominators,
03:42 BlackRock is the dominator of the dominators. And they've got over $9T in AUM. And so I
03:52 think that that's the story there. We've got a couple more.
03:56 Yes, we do have a couple more, two more.
03:59 Great. Okay, great. So let's turn to Salesforce, which really one of those businesses that
04:08 in the last dot-com bubble, Salesforce was just getting started. The company started
04:19 to open up their doors in 1999. They are a software as a service business. A lot of it
04:29 is really based on their flagship CRM, Customer Relationship Management software. So a confirmed
04:38 leader. They're not technically part of the Magnificent Seven, as we call them, but maybe
04:44 just outside. And they are one of the 30 stocks in my favorite market indicator, the Dow Jones
04:52 Industrial Average. 30 stocks in the Dow. And Salesforce is the only one that's never
04:58 paid a dividend. And the fact that even the Dow committee would allow them in there tells
05:04 you something about the quality of this business, because the Dow historically has been dividend
05:10 paying stocks. So there's no dividend. If you look at trailing P.E., it's going to be
05:16 somewhere in the 90s. So that's not really the way to look at this one. These are growth
05:21 companies. And while the stock did move up quite a bit last year with the tech sector,
05:32 if you were thinking on a longer term time horizon, I would say at least five years.
05:39 Salesforce, again, is one of those not going to go anywhere kind of companies, should continue
05:43 to grow, has the ability to grow by acquisition and in a high interest rate environment. The
05:50 longer we stick around with that, and I think it could be a little bit. Companies that can
05:55 self-fund because they have that kind of cash flow. I mean, that's kind of common to all
06:00 three of these. They don't have to worry that they are maturing old debt and now they have
06:07 to issue more debt just to stay alive at a much higher rate, which is going to destroy
06:13 a lot of smaller companies. Not these three. And speaking of three, the third one is Nike.
06:20 I still remember when I was a much younger person being in a store. I think I was shopping
06:27 for Adidas or Puma. And I remember the salesperson said to me, oh, have you seen these Nikes?
06:33 They're going to knock the other guys off the block. Well, never were truer words said.
06:39 Right. So, look, I mean, it's another Dow component. Again, another skinny yielder, because
06:48 that's kind of not what we're looking for in growth stocks. And, you know, I mean, they've
06:56 been Nike since 1971. There's a great movie about Phil Knight and the influence they had
07:02 with Michael Jordan and the Air Jordans. I'm trying to remember the name of the movie,
07:08 but it kind of tells the story. And, you know, today, Nike, I think it suffers from very
07:14 high expectations. The stock has really been crushed on earnings a couple of times the
07:20 last year. But, you know, again, the ability to do what big growth companies can do to
07:27 grow, whether it's acquisition, quashing competition. And let's face it, like all these
07:35 companies, pure innovators, pure innovators. And in the case of Nike, very much a trendsetter
07:43 in the retail world. And so it makes the top three.
07:48 So what key factors should investors keep in mind when researching and considering growth
07:52 stocks for their portfolios? Well, that is a direct result of what your
08:01 investment time horizon is. I'm not a investment advisor, registered investment advisor anymore.
08:07 I was for 27 years, though. Sold my practice a few years ago to focus on research. And
08:12 so I've sat in that chair. And the one thing that, as they say, you know, you can take
08:18 the boy out of fiduciary, you can't take the fiduciary out of the boy. And so I would say
08:25 to anybody who's looking for growth stocks, say first, ask yourself why. Is it for immediate
08:30 gain? Are you looking for the pop? Well, in that case, use trading strategies. If you're
08:35 looking for growth companies, focus on the growth. Yes, the valuation is important, but
08:41 sometimes you just don't have a place to go because they're all overvalued. And in large
08:46 cap growth companies, that's kind of where we are. So and then, look, I mean, find good
08:54 resources. Don't just listen to what I or anyone else has to say. Go and start to learn
09:02 about some some of the key factors and focus on sustainable growth, not grew very quickly
09:10 last year, period. And also in your selection process for those
09:15 stocks, how important was diversification in your selection process?
09:20 Well, we're talking about a portfolio of three. So really, as far as I went was to not find
09:29 any two companies that were really in the same space. So you've got one in tech, you've
09:35 got one in the financial space, but not in the banking business. BlackRock is not really
09:42 a bank, they're an investment manager. And in the case of Nike, you know, it's in the
09:48 consumer space. So I think that's sort of an introduction to an introduction of diversification
09:58 with those three. And I guess the last thing I would say is, look, whether it's growth
10:04 investing or not, I'm still a fan of the Dow. Not all the companies have the fastest growth
10:12 rates, but it's 30 stocks that are, you know, very established companies. And the more you
10:19 learn about those types of companies, the more you start to learn about what is important
10:24 in that word I used before, which is your earnings and profit and ultimately what investors
10:32 reward, which is the sustainability, the ability to just keep doing it year in, year out, regardless
10:39 of whether the stock price is flipping up and down at this moment.
10:43 Well, thank you so much for joining me today, Rob. This has been incredibly insightful.
10:50 Thank you very much. Thanks for having me.
10:52 Yeah.
10:53 Thanks, Rob.
10:54 Thanks, Rob.
10:55 Thanks, Rob.
10:55 Thanks, Rob.
10:56 Thanks, Rob.
10:56 Thanks, Rob.
10:57 Thanks, Rob.
10:57 Thanks, Rob.
10:58 Thanks, Rob.
10:58 Thanks, Rob.