Analysis: Can the Top 10 Stock Picks of 2023 Shine Again in 2024?

The start of 2023 was tough for the stock market, with the S&P 500 recording its steepest decline since 2008. However, amidst these challenging conditions, I identified 10 stocks in January that I believed were poised for success. With the year nearly over, it’s clear these selections outperformed the market significantly, boasting a collective lead of 160%.

The recommended stocks, now central to the debate, include household names such as Airbnb, Amazon, American Express, Chipotle Mexican Grill, Dutch Bros, Global-e Online, Lululemon Athletica, Marqeta, MercadoLibre, and Nu Holdings. Their individual performances against the S&P 500 this year emphasize the success. For example, a $10,000 investment in the S&P 500 at the start of the year would now value $11,990, while the same amount distributed equally across these 10 stocks would have grown to $15,237.

The best portfolio is a diversified portfolio

Although not every stock in the group managed to outshine the market, investing in all of them turned out to be an effective strategy. Diversification remains the key takeaway here. While I trusted the potential of each company at the year's onset, the unpredictable nature of the stock market underlines the need for a diversified portfolio.

An ideal investment spread contains both growth stocks and value stocks, ensuring a balance that can withstand varying economic conditions. The 10-stock portfolio advised earlier was more inclined towards growth stocks, which implies higher risk, yet I believe it was still a manageable gamble. Diversification within this portfolio played a pivotal role in its ability to outperform the broader market.

However, 10 stocks alone don’t complete a diversified investment. For most, aiming for around 25 stocks across various sectors might be a better approach, but the recommended 10 could certainly be a significant part of it.

After careful consideration, I have categorized these stocks into two lists: those to carry forward into 2024’s ‘top stocks’ list, and those that I’m opting to replace with other promising candidates.

Still top stocks for 2024

In the updated list for 2024, Airbnb, Amazon, Global-e, Lululemon, MercadoLibre, and Nu Holdings retain their positions. Not only did these companies excel in 2023, but the characteristics that initially drew my attention to them still hold value for potential investment next year.

Stocks that didn't make the cut

That said, I am choosing different opportunities for 2024 in place of American Express, Chipotle Mexican Grill, Dutch Bros, and Marqeta. While I still assert confidence in these four and recognize their long-term benefits, the new picks for next year present what I believe to be better growth prospects.

As we prepare for 2024, keeping an eye on strategic diversification and opting for promising growth opportunities could well position investors for another year of market-beating performance.

portfolio, diversification, stocks