If you’re looking for top stocks this month, look no further. After robust gains in 2023, the stock market is off to a sluggish start this year. The S&P 500 remains largely unchanged, jerking about due to conflicting economic signals. Once confident that the Federal Reserve would cut interest rates at its next board meeting, 96% of traders now peg the likelihood at 61% – and some believe even that is overly optimistic.

Despite Fed chairman Jay Powell’s indication of three rate cuts in 2024, some regional Fed presidents appear less sanguine, adopting a cautious “wait and see” stance due to lackluster consumer spending. While core inflation rates have dipped, food and fuel prices, though notably below their January 2023 peaks, remain elevated. Concurrently, the labor market is slowing. It’s no wonder the benchmark index is struggling to find its footing.

Investors should disregard the macroeconomic noise and focus on the businesses when mulling over stocks to purchase. Quality companies can rise above the chaos, and the following three standouts are poised for substantial growth in 2024.

Apple’s Tempting Prospects (AAPL)

Don’t anticipate Apple (NASDAQ:AAPL) losing its allure with the recent kerfuffle surrounding its Apple Watches. The tech giant introduced a workaround to continue importing the device, ensuring that it can still market the Watches. While it will deactivate the blood oxygen sensor – a feature popular with users – this should not impede the watch’s success. Wearables generated nearly $40 billion in revenue for Apple last year.

Apple has just overtaken Samsung to become the world’s leading smartphone manufacturer, shipping 235 million iPhones compared to Samsung’s 227 million. The iPhone remains Apple’s cash cow, tallying $200 billion in sales in 2023, representing 52% of total revenue. Meanwhile, services, which accounted for 22% of last year’s revenue, are rapidly gaining ground. It’s the only segment that has demonstrated growth.

BofA Securities has raised its price target on Apple to $225 per share, roughly 20% higher than AAPL’s current trading price. Robust iPhone sales and the potential integration of artificial intelligence (AI) features on its products are anticipated to further bolster sales. Brace for significant moves from Apple this year.

Rocket Lab USA: Skyward Trajectory (RKLB)

Satellite launch specialist Rocket Lab USA (NASDAQ:RKLB) is also primed to ascend in 2024. As the second-most successful space enterprise after Elon Musk’s SpaceX, Rocket Lab recently secured a Defense Department contract valued at $515 million to deploy 18 space vehicles into orbit. The company joins Lockheed Martin (NYSE:LMT) and Northrop Grumman (NYSE:NOC) as the third member of the U.S. Space Force’s Space Development Agency.

Although it encountered a setback in September with the failure of one of its rockets, Rocket Lab concluded 2023 on a high note, with its 10th successful launch, bringing its total to 42 launches. It has deployed over 170 satellites into orbit for various commercial and government clients. While Rocket Lab presently employs its Electron rocket for deploying payloads into space, it is developing a larger rocket, the Neutron, projected for completion by 2025.

Despite the attention garnered by its satellite launch business, Rocket Lab’s larger and faster-growing division is its space systems segment, which manufactures components and spacecraft for customers. This arm accounts for 66% of the company’s total revenue, registering a 10% uptick in sales year-to-date. Much of this business is linked to platforms for Globalstar (NYSE:GSAT), the satellite communications company. Deliveries of the first 17 spacecraft for Globalstar are set to start in Q1.

Even AI forecasts that Rocket Lab will be a colossal hit in the upcoming years. Although RKLB stock has declined by 12% year-to-date, it is expected to soar as the year progresses.

Rising from the Ashes: Alibaba (BABA)

Despite a slowdown in China’s economy, Chinese e-commerce behemoth Alibaba (NYSE:BABA) has been battered, though the circumstances should be viewed in context. China’s Q4 GDP expanded by 5.2%, slower than forecasts but more than twice as fast as the anticipated growth rate for the U.S. Other nations would envy a 5% GDP growth rate.

U.S. export controls on technology and computers have also hampered Alibaba. The e-commerce titan had intended to separate itself into six distinct entities. However, the export controls have stalled the segregation of its cloud services. Alibaba’s CEO Daniel Zhang, who stood down from his position last June to lead the cloud company, resigned from that role just two months later.

Alibaba has also yielded its throne as the leader in global e-commerce to Amazon in terms of total sales.

Market Dominance and Dwindling Stock Value

Alibaba, the crowned king of e-commerce stocks in China, is facing a puzzling paradox. Despite conceding the title of the most valuable e-commerce stock in China to PDD (NASDAQ:PDD), the owner of rival Temu, Alibaba proudly holds onto its market dominance. It commands an awe-inspiring near-51% share of the e-commerce market in the country, towering over its closest rival JD.com (NASDAQ:JD) at 15%, as reported by the International Trade Administration. Additionally, Alibaba’s footprint extends globally as it accounts for almost half of all the world’s e-commerce transactions.

Stock Performance and Valuation

Despite its unassailable market position, Alibaba’s stock has stumbled, down 40% over the past 12 months. It currently trades at a mere 7 times earnings estimates, a paltry figure when juxtaposed with its estimated long-term growth rate. Such undervaluation is even more confounding given China’s enduring economic growth, albeit at a moderated pace. Alibaba, deeply entrenched in the world’s second-largest economy, appeals as a robust investment prospect, indicative of the market’s myopic valuation.

About the Author

This article was penned by Rich Duprey, a distinguished figure in stock and investment analysis for two solid decades. His contributions have graced illustrious platforms such as Nasdaq.com, The Motley Fool, and Yahoo! Finance, and his insights have been cited by premier publications, both domestic and international, including MarketWatch, Financial Times, Forbes, and many others.