Zinger Key Points
- Dan Niles says the S&P 500 could either rally 20% or fall 30% this year.
- The Satori Fund's top picks for 2024 are a mixture of offensive and defensive names, led by two mega caps.
Satori Fund founder and portfolio manager Dan Niles is out with his top stock picks for 2024 and two Magnificent 7 names are at the top of the list.
What To Know: The Satori Fund's top picks for this year are a mixture of offensive and defensive names, as the firm believes the S&P 500 could either rally significantly in 2024 or suffer a sizable drawdown, depending on the Federal Reserve.
"We believe the S&P could gain another 20% (10% from earnings growth and another 10% from multiple expansion) if the Fed does in fact engineer the first soft landing since 1995," Niles said Wednesday in a social media post.
TOP 5 PICKS 2024
— Dan Niles (@DanielTNiles) January 3, 2024
As a reminder, Our initial Top 5 picks coming into 2023 had a skew of defense and offense. Those were:
1) $META – Our favorite megacap w/ low valuation & growth
2) $MUFG – Japan abandoning Yield Curve Control eventually
3) $URA – resurgence in nuclear energy… https://t.co/Um7AEIZTbN
"Having said that, if we do get a shallow recession in 2024 given the long and variable lags in monetary policy, we could see the S&P down 30% (10% earnings decline and 20% multiple compression)."
Check This Out: Soft Landing? Don't Bet On It Just Yet: Fed's Barkin Indicates Further Rate Hikes Possible
The Top 5: The top stock on Niles' list for 2024 is Amazon.com Inc AMZN.
Amazon tends to gain market share during recession and has a lot of profit margin expansion potential, Niles said this week in a CNBC interview.
The second name on the list is Meta Platforms Inc META, which is the only stock that was also on Niles' top stocks list for 2023.
Niles told CNBC that Meta is growing revenue 15% year-over-year and is trading around 25 times earnings, which is much more reasonable than other names in the Magnificent 7, he said.
Apple Inc AAPL, for example, had negative 1% revenue growth in 2023 and is trading around 30 times earnings, Niles said.
The third name on Niles' top stocks for 2024 list is Texas Instruments Inc TXN.
"Despite two of the Magnificent 7 being top picks on one of the barbell, we are increasingly looking for beaten up names with compelling valuations outside of the Magnificent 7 to drive returns," Niles said in the X post.
Texas Instruments was only up 3% in 2023 so the hedge fund investor expects the stock to outpace some of its peers in the semiconductor space in 2024, he said.
The last two names on the list are ETFs: SPDR Series Trust SPDR S&P Biotech ETF XBI and KraneShares Trust KraneShares CSI China Internet ETF KWEB.
Both of these ETFs have been underperforming for years and Niles is betting that they are at a valuation tipping point, which could deliver upside to patient investors in 2024, he said.
Photo: courtesy of Amazon.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
