William Blair says buy these stocks for 2024

With 2023 coming to an end, the William Blair Equity Research Group’s individual sector groups — consumer; energy and sustainability; financial services and technology; global industrial infrastructure; global services; healthcare; and technology, media, and communications — provided an outlook for the year ahead, naming their top picks for each. The list includes names like Chipotle (CMG), Wolfspeed (WOLF), Charles Schwab (SCHW), Zoetis (ZTS), and Uber (UBER).

CONSUMER: Looking at what 2024 will bring for the (FIVE), Chewy (CHWY), Scotts Miracle-Gro (SMG).

ENERGY AND SUSTAINABILITY: When it comes to energy and sustainability, the battle continues between bulls and bears for next year, William Blair says, as they question if the FED will orchestrate a soft landing or will the dichotomy of hawkish monetary and loose fiscal policy will create casualties in 2024. The firm notes that the role of compounds in electrification, fiscal stimulus, energy pricing, interest rates and PPA pricing could all impact the sector next year. William Blair’s 2024 best one-year ideas in the energy and sustainability space are Tetra Teck (TTEK) and Wolfspeed.

FINANCIAL SERVICES AND TECHNOLOGY: In general, the economy in 2023 was better than feared, but investors’ ability to assess macro trends has been complicated by the pandemic, the impact from a host of government stimulus programs, and the lagging impact associated with higher interest rates. Despite the uncertain macro environment, William Blair believes core secular tailwinds that have driven fintech earnings and support strong multiples remain solidly intact; these tailwinds include the transition to digital payments, e-commerce, software-led payments, and modernized digital banking. William Blair’s 2024 best one-year ideas in the sector are Charles Schwab, Allstate (ALL), Global Payments (GPN), and Remitly Global (RELY).

GLOBAL INDUSTRIAL INFRASTRUCTURE: Looking ahead to 2024, the firm sees favorable, long-term cyclical and secular industrial tailwinds for industrial machinery, diversified, and automation names. On the aerospace, defense and smart cities, however, the combination of tough comps and the potential for a government shutdown put pressure on backlog potential for 2024. Discussing the building products and specialty distribution names, the firm says it keeps a tilt to housing/consumer versus industrial. Its 2023 best one-year ideas in the global industrial infrastructure sector are Ferguson (FERG), Curtiss-Wright (CW), SPX Technologies (SPX), and Xometry (XMTR).

GLOBAL SERVICES: The sector includes the commercial and consumer services market, business and information services, and staffing and human capital services. The firm expects companies in the information services sector will continue to benefit from the proliferation of data and increased spending on data and analytics across the corporate landscape. William Blair’s 2024 best one-year ideas in the sector are WillScot Mobile Mini (WSC), ASGN (ASGN), and CBIZ (CBZ).

HEALTHCARE: The firm believes that Healthcare cost inflation could reach the highest level in more than a decade, while Medicare Advantage and Medicaid markets could remain under pressure. Heading into 2024, macro uncertainty also clouds the outlook for the dental and animal health space, says Blair. The firm’s 2024 best one-year ideas in the sector are Zoetis, Dexcom (DXCM), ICON (ICLR), Hologic (HOLX), Ionis Pharmaceuticals (IONS), Stevanato (STVN), Krystal Biotech (KRYS), NewAmsterdam Pharma (NAMS), Cabaletta Bio (CABA), Accolade (ACCD), and Fusion Pharmaceuticals (FUSN).

TECHNOLOGY, MEDIA AND COMMUNICATIONS: The firm believes internet stocks will continue to outperform in 2024, profitability is here to stay, digital advertising will continue to recover, and that there is growth in AI. Further, given continued macro uncertainty, Blair expects the software spending environment to remain challenged to begin the year as sales cycles remain elongated with budgets under scrutiny. For IT services, the firm sees stabilizing demand after several quarters of a volatile macro environment that has impacted demand. Cybersecurity spending trends also appear to be consistent with 2023 with limited growth, as threat environment likely to continue intensifying. Wiliam Blair’s 2024 best one-year ideas in the space are Uber, Workday (WDAY), Dynatrace (DT), Unity (U), Globant (GLOB), GitLab (GTLB), CyberArk Software (CYBR), DoubleVerify (DV), and Udemy (UDMY).