Few non-Magnificent Seven stocks could surprise the market in 2024. Here are the names:
Live Nation Entertainment (LYV), the parent company of Ticketmaster, Kinsale Capital Group (KNSL), a Richmond-based specialty insurer, and Clean Harbors (CLH), a hazardous waste disposal company are out-of-favor stocks but all three companies generate decent free cash-flows and the management is deploying them in intelligently so that they generate returns for the shareholders.
Other companies include Enovis (ENOV), Avantor (AVTR), and Align Technologies (ALGN).
- Enovis (ENOV)s a medical device and surgical implants company. The management of the company has a great strategy and can increase its profit margin through a high-growth strategy. After COVID, the surgical implants business has some catch-up potential resulting in overall better growth, higher margins, and a higher multiple over the next 18 to 24 months.
- Avantor (AVTR), is a life sciences and diagnostics tools company, sector that benefits from secular long-term growth. However, as a result of COVID, the healthcare sector saw huge demand resulting in a capacity build-up. Today, the sector is suffering from an oversupply of diagnostics tools and consequently stock prices are down across the industry, particularly the one of small-cap biotech and bioprocessing companies. The business model of AVTR appears to be sound, i.e. they are focusing in high-tech innovation and there is sufficient capacity to stay tuned in the difficult market conditions to build up some more market share.
- Align Technologies (ALGN) is a maker of teeth aligners like Invisalign. As discretionary and in particular feel and look-good spending has increased over the past years, clear aligners have been taking market share away from classic metal braces for years. Align has a dominant market position and its brand is one of the leaders in the segment. Teeth aligners is a high-margin business and ALGN has a superior manufacturing capacity hence it should not suffer in the event growth is about to flatten out somehow. For now, volume is picking up to come close to pre-covid levels and therefore earnings margins and eps should ramp up quite powerfully.