The rally that sent stocks soaring 24% in 2023 isn’t over just yet. Year to date, the benchmark S&P 500 has gained another 9.9% as Mar. 21. Wall Street has been enthusiastic about the prospect that interest rates could start declining soon, while the U.S. economy remains in growth mode.
Many stocks have benefited disproportionately from that bullish attitude among investors, but a few stand out for already tripling the market’s year-to-date return. Let’s look at three of the biggest winners so far this year: Meta Platforms (NASDAQ: META), Deckers (NYSE: DECK), and Netflix (NASDAQ: NFLX).
1. Deckers
Deckers has been riding a wave of strong demand for many of its popular footwear brands like Hoka and Ugg. These wins help it stand out compared to peers such as Nike, which has been struggling with weak sales and pricing trends recently.
Deckers is seeing no such challenges. In fact, sales were up 16% in its fiscal 2024 third quarter (ended Dec. 31). Compare that to Nike’s modest sales decline in its last reported quarter, and you can understand why investors have pushed Deckers stock higher this year. The company is also selling many of its products at full price, highlighting another way this business has separated itself from competitors. Gross profit margin jumped to 53% of sales last quarter compared to 48% of sales in the prior-year period.
Management hiked its fiscal 2024 outlook for a second time last month. Inventory levels are low as well, suggesting lots of room for earnings growth and higher stock returns ahead.
2. Meta Platforms
A year ago, investors were worried about Meta Platforms’ slowing growth and its ballooning expenses, yet those concerns have completely fallen away over the last few quarters. The social media giant is not only boosting its user base but improving the economics around its ads.
Large advertisers are sticking with the Facebook and Instagram platforms even as they pull back on spending elsewhere. Ad impressions rose 21% in the fourth quarter, contributing to a 25% increase in revenue. Combine that success with dramatic cost-cutting moves (its employee headcount was down 22% last quarter), and you’ve got the ingredients you need for soaring earnings.
Net income jumped 69% in 2023 to $39.1 billion. As if that wasn’t enough to keep Wall Street happy, Meta also initiated a dividend with the first payout hitting shareholders’ accounts in late March.
3. Netflix
Don’t look now, but Netflix stock is finally climbing back toward the all-time high it set in late 2021. The streaming video giant has taken investors on a roller-coaster ride the past few years. Shares collapsed from approximately $690 to $170 as the pandemic growth hangover set in, and the company endured its first-ever back-to-back quarters of subscriber losses (in Q1 and Q2 2022).
It turns out that decline was just a temporary speed bump — year-over-year subscriber gains have accelerated for four consecutive quarters with 12.8% growth in Q4. Netflix now counts 260.3 million paying subscribers, up from 230.8 million at the start of 2023.
Wall Street is excited about the prospects for even faster growth ahead as Netflix’s advertising business matures and its account-sharing crackdown continues to reap benefits. As long as Netflix can keep boosting its subscriber base, cash flow, and operating margins, investors can expect to keep watching this stock deliver excellent returns.
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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Demitri Kalogeropoulos has positions in Meta Platforms, Netflix, and Nike. The Motley Fool has positions in and recommends Meta Platforms, Netflix, and Nike. The Motley Fool recommends the following options: long January 2025 $47.50 calls on Nike. The Motley Fool has a disclosure policy.
3 Stocks That Have Tripled the Market’s Return So Far This Year was originally published by The Motley Fool