Growing net worth for these 5 stocks in 2024

Share capital is one of the most important metrics for investors to track. Equity is the value left with investors after all liabilities have been covered and represents the intrinsic value of the company. Aside from everything else, companies with positive equity are in better shape than those that don’t, and companies that increase equity are better off than those that don’t. This article examines five high-quality investments with positive and rising shareholder value in 2024.

Cloudflare’s stock increased 22%; buy the sauce

Cloudflare NYSE: NET is a leader in cloud-based Internet security and services and is on track to reach new highs in 2024. The fourth quarter release resulted in a sharp correction in the stock price, which is not a warning sign but an opportunity for investors. The downward move realigns the market with analyst sentiment and the consensus price target, which continues to rise.

Report highlights include a 32% gain, higher gross and operating margin, record operating cash flow, a 150% increase in adjusted earnings, and a 50% increase in free cash flow. Free cash flow increased to 14% of revenue, with margin strength expected through 2024. Cash flow was put to good use, helping to reduce long-term debt and build equity capital. The balance sheet shows that current and total assets are increasing, liabilities are relatively stable, and net worth has increased by 22%.

Simpson Manufacturing raises equity by 18% in 2023

Simpsons production NYSE:SSD had a mixed fourth quarter compared to analysts’ estimates. The company beat tops but missed profit estimates, raising questions about future growth. However, as tepid as the results were, the stock is moving higher following the report due to growth, a forecast of accelerating growth and indications of margin improvement.

The company’s cash flow is also ample, allowing it to improve the balance sheet by paying dividends and repurchasing shares. The dividend is worth about 0.55% annually and the buybacks were just enough to offset share dilution, but both help shareholder value. On the balance sheet, cash is up and debt is down, driving an 18% increase in equity.

Chipotle Mexican Grill defeats the competition, shares up 16%

Mexican grill with chipotle New York Stock Exchange: CMG had an exceptional fourth quarter and 2023 with industry-leading growth. Fourth-quarter details include revenue growth of 15.5%, which beat the Marketbeat.com consensus and was compounded by wider margins. Restaurant-level operating margin improved by 140 basis points and company-level operating margin by 80 basis points, resulting in a 25% increase in adjusted earnings.

The cash flow was used to build new stores and improve the balance sheet. The balance sheet shows that liquidity is increasing, inventories are increasing, and current and total assets are increasing to offset a marginal increase in liabilities. The net result is a 16% increase in share capital aided by share buybacks. Share repurchases reduced the number of diluted shares by 1% in 2023 and are expected to continue in 2024.

Shopify achieves positive free cash flow; net worth growing by 10%

Shopify NYSE: BUY had a banner year in 2023, with growth exceeding expectations, margins widening, and cash flow becoming positive. The guidance is also favorable to shareholders, with expected revenue growth and margins remaining positive. Balance sheet highlights include a strong cash position, down from last year but offset by other current assets; current and total assets are increasing, while total liabilities are decreasing, resulting in a 10% increase in net worth. As the company has turned the corner and is producing positive free cash flow, equity should continue to improve throughout the year.

Dividend King PepsiCo increases equity by 7.8%

PepsiCo NASDAQ:PEP had a tougher time than others in the fourth quarter, with weakness in snacks offset by strength in beverages. Highlights from the report include a revenue miss offset by a better-than-expected margin that generated enough cash flow to pay dividends, repurchase shares and improve the balance sheet. Bottom line details include adjusted earnings growth of 6.5% versus revenue decline of -0.5%.

Details of the balance sheet include a growing cash position, up about 100% year over year, and an increase in assets offsetting an increase in liabilities. The cash flow also allows for substantial dividend and share repurchases, which reduced the share count by 0.3% for the year. The company’s guidance calls for mid-single-digit revenue growth, improved margins and at least $1 billion in share repurchases, driving another year of stock gains for shareholders.

Before you consider Chipotle Mexican Grill, you’ll want to hear this.

MarketBeat tracks Wall Street’s highest-rated and best-performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market takes hold… and Chipotle Mexican Grill wasn’t on the list.

While Chipotle Mexican Grill currently has a “Moderate Buy” rating among analysts, top analysts believe these five stocks are better buys.

View the five stocks here