Progress Report: Top 2024 Pick Ready to Run

Many of our top 2024 stock picks had a rough Q2, but are still mostly higher year-to-date

Managing Editor
Jul 10, 2024 at 12:40 PM
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Subscribers to Chart of the Week received this commentary on Sunday, July 7.

What’s the point of New Year’s resolutions if you aren’t checking in on them? Goals are ineffective if they’re just a ‘set it and forget it’ task to do at the end of December. The same can be said for stock picks, like the 12 we unveiled in December. At the end of the first quarter, we checked in on their performance and tried to piece together a road map for the technical performance for rest of 2024. With the onset of the third quarter, combined with the low volume environment of the holiday week, and intriguing bullish signals, now makes the perfect time for another progress report.

The theme of April’s progress report was Fed fatigue; stubbornly high inflation despite a hawkish central bank fiscal policy, dulled gains after a robust Q1 across the board. The Dow Jones Industrial Average (DJI), S&P 500 Index (SPX), and Nasdaq Composite Index (IXIC) all finished April with their first monthly loss of 2024. All three major indexes have since snapped back with monthly wins in May and June, and at the time of this writing, optimism over interest rate cuts in September has soared. This comes amid the latest job data that hints at a Goldilocks market for the rest of the summer.

Per the table below, eight of our Top 2024 picks finished the second quarter in the red. However, from a year-to-date perspective, seven of our 12 picks are in the black. After brutal first-quarter drops, Dropbox Inc (NASDAQ:DROP), UiPath Inc (NYSE:PATH), Unity Software Inc (NYSE:U), and Walgreens Boots Alliance Inc (NASDAQ:WBA) all dug themselves deeper in the red during the second quarter, and now face sizable year-to-date deficits at the halfway mark of 2024.

2024 Stock Picks Progress Report

Other notable trends include Cloudflare Inc (NYSE:NET) battling its 2024 breakeven level, Samsara’s Inc (NYSE:IOT) rollercoaster year thus far, and Intuit’s (INTU) steady trek higher. But the big winners continue to be Taiwan Semiconductor Mfg Co Ltd (NYSE:TSM), Cintas Corp (NASDAQ:CTAS), and DoorDash Inc (NASDAQ:DASH) -- all boasting double-digit year-to-date gains, though the latter did suffer a 21.1% drawdown in Q2. Cintas (CTAS) is intriguing because the Cincinnati-based business support stock is flashing two seasonal signals right now. Per Schaeffer’s Quantitative Analyst Rocky White, CTAS is historically one of the best SPX stocks to own in July in the last 10 years. Per White’s data, the stock averages a 6.8% gain this month in the last decade and has finished positive nine out of 10 times.

COTW Best 2H

CTAS also showed up on White’s list of the best-performing SPX stocks for the third quarter, in the last 10 years. The stock’s average return for Q3 comes out to 8.7%, with a quarterly win rate of 80%. Taking it one step further, White compiled the best-performing stocks in the last 10 years for the second-half of the calendar year. CTAS shows up again, with an average second-half return of 16.8% and a 90% win rate in the last 10 years.

Cintas may be slated for attention in the future, but right now the spotlight belongs to Chewy Inc (NYSE:CHWY). The pet retailer went from being the second-worst of Schaeffer’s 2024 picks in the first quarter, to rattling off a 71% return in Q2 and finished above its year-to-date breakeven level. The explosion was two-fold — the stock gapped higher by 27.1% on May 29 in the wake of the company’s earnings triple play, and then late last month scored two double-digit pops after meme stock maven Roaring Kitty’s Keith Gill disclosed a 6.6% passive stake in Chewy. CHWY has since corrected itself and is down 8.5% in July already, but if the shares are the next meme stock bait, buckle up and get ready for the volatility.

From a macro perspective, there are a few takeaways. The red ink splayed all over PATH, U, and DBX shows that not every tech stock is an automatic gainer. As alluded to earlier, meme stocks continue to have an impact on quick yet unsustainable moves. Perhaps most importantly is that just because a stock spends a quarter in the red does not mean it is dead in the water. Studying quarter-over-quarter performance with progress reports like these can help an investor pinpoint pressure points and identify when enough is enough.

 

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