Top Stock Picks for 2024

October 27, 2023

Inflation, War in Ukraine, tension in the Middle East, oil prices, government shutdown threats and labor disputes have been key factors behind a tumultuous year in the U.S. equity markets.

In spite of these obstacles, the U.S. economy has been remarkably resilient. Unemployment is near all-time lows, and the S&P 500 managed to pull out an 11% gain for the year thus far.

According to the U.S. Department of the Treasury, the U.S. economy outperformed expectations in 2023 in three key areas:

  • Growing economic output
  • Labor market resilience, and
  • Slowing inflation

In their report, they concluded that the United States has seen a particularly strong GDP recovery and is on track this year to reach the level that would have been predicted by the pre-pandemic trend.

Global labor markets continue to strengthen, and the United States has been especially resilient.

Finally, U.S. inflation has cooled sooner and more quickly than in other advanced economies.

These are all factors that shine light at the end of the tunnel after a few turbulent years.

Let’s take a look at 2023 in the rear view mirror.

After a rocky, up-and-down first quarter, the SPY ETF, which mirrors the S&P500 index took off like a rocket between April – July, rising from $393 to $459 over the 4-month period.

Taking a closer look, 2 key technical indicators triggered the move to the upside:

  1. In late March, the SPY broke through the 200 Simple Moving Average (SMA) to the upside, signaling a potential bullish run, and
  2. The Stochastic Oscillator at the bottom of the chart showed that the SPY was very oversold, and due for an imminent rebound to the upside.

By the end of July, SPY had cycled into overbought territory on the Stochastics, and started to pull back to the 200 SMA.  With the stochastics back in oversold territory, bounce back to the upside could be in the near future.

3 Top Stock Sectors in 2023


War in the Ukraine and Middle Eastern tensions, combined with OPEC production cuts have fueled the energy sector. The price of crude oil rose from  a low of $63.64 in May to a September high of $95.03. Exxon Mobil (XOM) ran up from a low of $98.02 in March to a high of $120.70 in late September for a 23% increase in share price over the 6 months. Valero (VLO), Occidental Petroleum (OXY), and oilfield services co. Schlumberger (SLB) all followed suit with strong performances in 2023.

If you wanted to own a basket of stocks in the Energy sector, then the SPDR Select Sector Fund – Energy Select Sector (XLE) would have generated some nice returns, especially between late June through September.

Chips and Semiconductors

With the supply-chain woes that dogged the chip and semiconductor industry after the pandemic, the Biden Administration signed the CHIPs Act into law, allocating over $57 billion in semiconductor funds earmarked for U.S.-based manufacturing.

In Albuquerque, New Mexico construction cranes are feverishly at work expanding the Intel (INTC) campus as CHIPs Act funds stimulate growth. Intel shares have run up from a low of $24.84 to a high of $39.65 on the year.

Other leaders in this sector include Nvidia Corp. (NVDA) +211.9%, Advanced Micro Devices (AMD) +63.8% and  Monolithic Power Systems (MPWR) 42.2%. (YTD return as of Sept.8)

For a semiconductor ETF, you could consider iShares Semiconductor ETF (SOXX), which has run up fom a low of $344.20 up to a high of $536.55 in August.

Artificial Intelligence

Artificial Intelligence (AI) has been the buzzword for 2023, and companies are racing to gain market share as this sector develops.

Semiconductor giants like Nvidia (NVDA) dominate the AI sectors, but many others, like Microsoft (MSFT), Amazon (AMZN)Alphabet (GOOG) and Meta Platforms (META) are vying for sector dominance.

An interesting player in the AI space is Palantir (PLTR). The company specializes on providing data integration and analytics solutions to government agencies and large enterprises.

The Department of Defense uses Palantir technology to manage the deployment of military and humanitarian assets being deployed into Ukraine.

In an Op-Ed to the Washington Post, David Ignatius dove deeply into AI software from Palantir, citing how the firm’s software allowed commanders to make fact-based decisions about Russian troop positions and troop movements from a wide variety of resources including satellite images, geothermal photos, tips from civilians, and other sources.

The most important aspect to this is the sheer speed at which information is delivered. Before a detected Russian unit knows what’s going on, they are targeted and neutralized. The drone and artillery strike is recorded and a damage assessment is fed back into the Palantir software system.

Palantir software also has the capability to communicate and assess the combat readiness of each battalion, including:

  • Level of combat experience in the unit. Are these fresh recruits or seasoned veterans?
  • What kinds of weapons does the unit have in their possession?
  • What is the status of ammunition? How long can they sustain combat operations?
  • What about food and fuel?

These were once logistics issues that were murky at best.  But the landscape of material and resources being supplied to Ukrainian troops is inventoried and updated so that the Palantir can provide detailed reports for military command to know the exact status of personnel and equipment. And this information is available in a matter of seconds instead of weeks.

Between aggregating data on enemy positions while rapidly positioning and fortifying the right units in the battlefield, Ukraine has a marked advantage in this conflict. As long as they have the equipment and artillery to stay in the fight, there is a distinct possibility that they can wear the Russian occupiers down.

Interested in an AI ETF? You might wish to consider

Global X Artificial Intelligence & Technology ETF (AIQ). This ETF has run up from a low of $19.61 to a high of $29.72 for a 50% jump in share price.

What are Our Top Stock Sectors for 2024?

There are many factors that will continue to pressure the markets going into 2024. Continued inflation, coupled with higher interest rates and tightening credit can squeeze corporations and ordinary Americans. The ongoing war in Ukraine, the Middle East crisis and other geopolitical tensions can also cloud the waters. Congress has been mired in infighting, which can delay funding appropriations for defense contracts and other priorities.

Finally, it’s an election year. Markets are historically cautious going into the election, and have a tendency to go into an extensive rally when the election is over, regardless of which party wins.

Aerospace and Defense Sector

As the war continues to rage on in Ukraine, the Biden Administration and our global allies are determined to supply Urkaine with the weapons and ammunition they need to push the Russian occupiers out of their country.

If Congress continues to appropriate funds to Ukraine, Israel and other regions of the world where defense technologies are needed, then these companies could be the top beneficiaries, according to Bloomberg Government:

Image source: Bloomberg Government

And it’s not just wars triggering growth in this sector. Airline manufacturers like Boeing (BA), Airbus (AIR), Embraer (ERJ) and others are receiving record orders for corporate and private jets. These companies are poised to pop if they resolve supply chain issues that have plagued them since the pandemic.

Another potential threat to this sector is Congressional inaction. If funds are not approved for aerospace and defense funding due to congressional infighting, then this could negatively affect the sector.

Interested in an ETF that tracks the Aerospace and Defense Sector? You could try iShares U.S. Aerospace & Defense ETF (ITA). It has been one of the top performing Aerospace and Defense ETFs in 2023.

Energy Sector

As long as the war rages in Ukraine and tensions boil over in the Middle East, expect to see a rise in oil prices which in turn pushes the price of select energy stocks higher. Bear in mind, if the Ukraine war suddenly ends and peace returns to the Middle East, oil prices and energy stocks could drop significantly.

The top Energy stocks on our watchlist are:

  • Occidental Petroleum (OXY)
  • Exxon Mobil (XOM)
  • Shell (SHEL)
  • Chevron (CVX)
  • Hess Corp (HES)

Our top ETF for the energy sector is SPDR Select Sector Fund – Energy Select Sector (XLE).

Tech Sector (Semiconductor and AI Technologies)

The CHIPs Act projects are breaking ground as a flood of U.S. made chips and semiconductors are supplied to U.S. automakers and technology companies. AI will continue to dominate the conversation as well.

Our Top Tech Stocks for 2024 are:

  • Nvidia (NVDA)
  • Apple (AAPL)
  • Amazon (AMZN)
  • Tesla (TSLA)
  • Advanced Micro Devices (AMD)
  • Intel (INTC)
  • Palantir (PLTR)
  • Qualcom (QCOM)
  • Adobe (ADBE)

Tech ETFs that we like

  • Invesco QQQ Exchange Traded Fund (QQQ) – Mirrors the Nasdaq
  • Global X Artificial Intelligence & Technology ETF (AIQ) – AI ETF
  • VanEck Semiconductor ETF (SMH) – Similar to SOXX


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