Top Five Stocks To Ring In The New Year

Q3 EPS Surprises Clash with Q4 Uncertainty

New Year’s resolutions may not always stick, but long-term growth investments can.

With more than 90% of companies having already reported third-quarter earnings, the blended year-over-year earnings growth rate for the S&P 500 is projected to fall around 5.4% – the 5th consecutive quarter of YoY earnings growth for the index, according to FactSet.

Thanks to plenty of positive earnings per share (EPS) surprises in recent months, the 4.2% YoY earnings growth rate projected for the S&P 500 by analysts in September looks like it could nearly double, Bloomberg data suggests.

But the election-fueled stock market rally could encounter obstacles as uncertainty looms surrounding whether the Federal Reserve will be able to continue lowering interest rates and how a more aggressive fiscal policy in Washington under President Trump could impact corporate performance.

Looking ahead to Q4, 54 S&P 500 companies have issued negative EPS guidance while 26 S&P 500 companies have issued positive EPS guidance, the FactSet data shows, suggesting that the bull sentiment on Wall Street could be waning.

Top Growth Stocks

With these market fluctuations expected to continue into 2025, growth investors must choose wisely in a landscape where gains can be highly sector-specific. Seeking Alpha’s Quant can help identify top-performing stocks that are expected to grow earnings at an above-average rate compared to the market, and which sectors hold the highest potential for growth despite economic uncertainty. Five standout growth stocks with ‘Strong Buy’ Quant ratings have been selected – the result of our proprietary computer processing technology and what I call ‘quantamental’ analysis – slated for powerful growth well into the new year.

These companies offer attractive yields and solid valuation metrics, as well as strong dividend safety and growth characteristics, which could lead to continued dividend growth and capital appreciation.

So you can feel ready, no matter what the new year holds, let’s check out the first stock that has taken flight.

1. United Airlines Holdings, Inc. (UAL)

• Market Capitalization: $31B
• Quant Rating: Strong Buy
• Quant Sector Ranking (as of 11/21/24): 3 out of 615
• Quant Industry Ranking (as of 11/21/24): 1 out of 26

United Airlines (NSQ: UAL) shares are taking flight. The airline’s stock has risen more than 135.83% over the past 12 months and set a new 52-week high during Tuesday’s trading session when it reached $95.19. While some of its airline industry peers grow constrained by delayed aircraft deliveries from Boeing (BA), among other challenges, UAL is flying high on strong revenue gleaned from its credit card program and other non-airline revenue streams.

Ranked the #1 Quant pick in the Passenger Airlines industry, UAL’s ‘A+’ momentum grade reflects surging price performance of 127.97% YTD and more than 137% over the last year, exhibiting significant growth versus the sector.

Looking ahead, the numbers suggest that growth is set to continue. Of the 19 analysts offering EPS estimates, the consensus is that UAL could achieve EPS of 12.16 by December 2025 – representing 18.52% in YoY growth.

There is also significant value to be gleaned from UAL, which receives an ‘A-’ by our own Quant ratings and falls among JPMorgan analysts’ latest value picks.

United Growth Prospects

A key metric to understanding UAL’s continued growth potential is its forward EPS diluted growth, which measures a company’s profitability per share. At an ‘A+’-rated 68.98% – a 707.65% difference to the sector median of 8.54% –the metric underscores UAL’s attractiveness for long-term investors and the company’s potential for strong dividend growth down the line.

UAL’s YoY and forward EPS GAAP Growth of 253.81% and 74.01%, respectively – a 2,636.20% and 707.70% difference to the sector – also suggest the stock has a strong flight path ahead. Despite UAL’s share price surging this year, SA contributor Selendis Research predicts further upside potential of more than 50% for investors as a result of strong tailwinds from the broader momentum of the airline industry so long as it can successfully expand its fleet and pre-tax net income margins among other growth initiatives.

2. Vista Energy (VIST)

• Market Capitalization: $4.85B
• Quant Rating: Strong Buy
• Quant Sector Ranking (as of 11/21/24): 4 out of 236
• Quant Industry Ranking (as of 11/21/24):1 out of 71

Vista Energy (NYSE: VIST) is currently the #1 Quant pick in the Oil and Gas Exploration and Production. The Argentine producer of hydrocarbons, oil, and natural gas is on a production tear in the shale-rich Vaca Muerta formation north of Patagonia. Under libertarian President Javier Milei, tax breaks and other foreign investment incentives have fueled a fracking boom. With an attractive valuation and superior growth profile, VIST has scored A’s and B’s across the board by our Quant system.

Of particular note is the company’s ‘A+’-rated forward price-to-earnings-growth (PEG) of 0.43 compared to the sector median of 1.75, a -75.20% difference. A PEG ratio below one often suggests that a company’s shares are undervalued, indicating that VIST shares are highly discounted relative to its peers. Its forward price-to-earnings ratio (P/E) of 8.82 also indicates a strong value proposition.

The natural gas driller saw a 53% YoY increase in revenue to $462.4M in Q3 due to the rise in production, a trend SA analyst and LatAm investor Ricardo Fernandez expects to continue following plans to spend around $1.1B on scaling up its Vaca Muerta shale operations.

Vista Energy Growth Prospects

With a diluted EPS compound annual growth rate (CAGR) of 44.47% YoY and 620.37% over the next three years, analysts appear to agree that there is a strong growth pipeline ahead. That theory can be supported by VIST’s ‘A+’ return on common equity (TTM) ratio of 39.34% compared to the sector’s 12.35% – a 218.67% difference, suggesting both impressive returns to shareholders and the possibility of future dividends.

VIST also boasts an ‘A+’ return on total capital (TTM) and return on total assets (TTM), which, at 185.85% and 188.98% differences to the sector, respectively, are both far stronger than the rest of the sector.

Maintaining its stellar growth grade will hinge on VIST successfully executing its ambitious growth plan and the continued commitment of Argentina’s government to deregulating its oil and gas sector.

The company’s capital expenditure – which increased to $368.5M in Q3 – along with an additional $282.6M of investment in its Vaca Muerta operations suggest that it is putting significant cash behind its aggressive growth plan. Milei’s government also appears to be holding up its end of the bargain.

With these powerful growth metrics paired with a solid valuation, VIST shares remain on my list of Top 10 Energy Stocks.

3. SkyWest, Inc. (SKYW)

• Market Capitalization: $4.39B
• Quant Rating: Strong Buy
• Quant Sector Ranking (as of 11/21/24): 4 out of 615
• Quant Industry Ranking (as of 11/21/24): 2 out of 26

While it may be lesser known than some airline industry competitors, SkyWest (NSQ: SKYW) has a Quant profile to take on the biggest and the best. After setting a 52-week high of $116.47 earlier this month, shares in the Utah-headquartered regional airline have remained airborne on the back of strong Q3 earnings.

SKYW maintains a unique business model, with 94% of its fleet under capacity purchase agreements. The company has partnerships with UAL, Delta Air Lines (DAL), American Airlines (AAL), and Alaska Air Group (ALK), allowing for more flexible margins and stable revenue even in the strongest of headwinds. Additionally, SkyWest is an Alpha Pick, one of the two most attractive Quant Strong Buys each month. SKYW was selected to the Alpha Picks portfolio on June 3, 2024, and has returned an incredible +36%.

SkyWest Growth Prospects

SKYW’s ‘A+’ growth grade comes down to several key metrics. YoY EBITDA growth of 60.14% compared to the sector median of 6.39% comes at an 840.55% difference to the sector, and it also boasts solid YoY EBIT growth, 310.19% to the sector’s 5.95% – 5,113.00% difference to its competitors. The airline’s shares also track a long-term EPS growth rate of 126.49% – a 1,002.40% difference to the sector’s 11.47%.

Valuation metrics are also attractive. SKYW’s forward PEG of 0.12 is 93.8% less than the sector median of 1.95x, suggesting that the company’s shares are relatively cheap compared to its earnings performance.

4. Catalyst Pharmaceuticals (CPRX)

• Market Capitalization: $2.52B
• Quant Rating: Strong Buy
• Quant Sector Ranking (as of 11/21/24): 29 out of 1021
• Quant Industry Ranking (as of 11/21/24): 14 out of 497

Catalyst Pharmaceuticals (NSQ: CPRX), the Coral Gables, Florida-based group dedicated to developing therapies for rare neurological and epileptic diseases, earns SA’s ‘Strong Buy’ stamp of approval evidenced by its profitability metrics and consistent growth.

CPRX shares have risen over 54.3% in the last 12 months, driven by continued positive analyst revisions – five upward EPS revisions and seven upward revenue revisions over the last 90 days – and excellent profitability. The more professional analysts’ earnings per share EPS revisions associated with a stock, the more it is deemed to have a higher than expected earnings growth compared to their sector in the long term.

The company has a net income margin of 31.01% vs. the sector median of -4.36%. It also holds above-industry average (TTM) EBIT and EBITDA margins of 37.78% and 45.92%, respectively, showing that it has consistently outperformed its industry counterparts in terms of profitability.

Similarly compelling is its levered free cash flow margin (TTM) – a ratio that measures a company’s profitability in terms of how much cash it has left after meeting its obligations – which earns an ‘A+’ score of 32.72% compared to the 2.13% sector median, a 1,438.02% difference.

Catalyst Growth Prospects

The biopharmaceutical company’s ambition to tackle hard-to-treat health conditions also extends to its growth plans. Since receiving FDA approval for Duchenne’s muscular dystrophy drug AGAMREE last year, CPRX reported a 25.3% YoY increase in total revenues for Q3 to $128.7M.

During an earnings call earlier this month, it also announced that it would be upping its 2024 net revenue projections for AGAMREE from the $35M to $40M range to the $40M to $45M range.

Impressive YoY EBITDA growth of 110.85% compared to the industry’s 7.09%, a 1,464.41% difference, and an above-industry average YoY EPS diluted growth of 114.68%, a 972.77% difference to the sector median of 10.69%, suggests that CPRX shares still have room to grow when paired with its strong profitability and positive revisions track record.

5. The Progressive Corporation (PGR)

• Market Capitalization: $150.57B
• Quant Rating: Strong Buy
• Quant Sector Ranking (as of 11/21/24): 15 out of 685
• Quant Industry Ranking (as of 11/21/24): 4 out of 50

Also included among my Top 5 Black Friday Deals for value investors and my top 10 financial sector Quant Picks, Progressive Corporation (NYSE: PGR) also ranks high on my list in terms of smart growth plays to make this holiday season. The company’s shares have exhibited strong performance recently – up 3.7% over the past month – on the heels of its most recent third-quarter earnings, which reported net income of around $2.3B, more than double the previous year.

Shares in the insurer have rallied more than 62% year to date, charting YoY revenue growth of 22.67% compared to the sector’s 4.52% and forward revenue growth of 19.95% compared to the sector’s 5.45%. With 17 EPS upward analyst revisions in the last 90 days, PGR has also rallied the market behind its earnings growth potential.

Progressive Growth Prospects

In addition to solid revenue growth, Progressive’s ‘A+’ growth grade contains valuable insight into its path forward.

One big standout is its forward EPS GAAP Growth of 125.73% vs. the 3.36% sector median – a stunning 3,646.44% difference. ‘A+’ YoY and forward return on equity growth rates of 113.68% to the sector’s -11.70% and 26.78% to the sector’s -2.65% also indicate that PGR is ahead of the growth curve compared to other insurers.

PGR also scores an ‘A+’ dividend per share (DPS) growth rate of 100.32% vs. the sector’s 4.03% (a 2,639.89%) and 1-year dividend growth rate (TTM) of 187.5% vs. the sector’s 3.99% (an even more staggering 4,599.19%), both powerful indicators of future dividend growth to come. Companies with dividend safety grades higher than the sector are a huge green flag. They’re not using their savings to pay their dividends and are well-prepared for any incoming potential volatility.

PGR’s ‘A+’ dividend safety grade – which pools together 13 underlying financial metrics, including estimates of future cash flow and earnings – also suggests it is at a lower risk of slashing its dividend and could likely increase future payouts.

Check out our explainer on dividend grades for a full lowdown.

Conclusion

If 2025 looks anything like the end of 2024, we know the market will be anything but straightforward.

One way to achieve peace of mind is to choose growth stocks with good fundamentals, significant margins, valuations that aren’t stretched, and strong earnings track records.

SA’s Quant system has beaten the S&P 500 12 out of the past 13 years, and we’re on track to do it a 14th time. A look at Seeking Alpha’s Quant Strong Buys’ performance since inception (December 2009 onwards), our stock picks have delivered blockbuster returns.

If growth investing is part of your New Year’s goals, we have the tools to help. (Pro tip: You can find all of the top growth stocks by using the Quant rating here.)

Not your style? SA’s Quant system evaluates stocks across the entire investment spectrum in real-time, or if you prefer a list of monthly best of the best ‘strong buy’ Quant stocks, consider Alpha Picks.

• I am Steven Cress, Head of Quantitative Strategies at Seeking Alpha. I manage the quant ratings and factor grades on stocks and ETFs in Seeking Alpha Premium. I also lead Alpha Picks, which selects the two most attractive stocks to buy each month, and also determines when to sell them.

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