2 Stocks That Can Double Again in 2024

There are just 17 U.S. exchange-listed companies with market caps greater than $1 billion that have more than doubled in 2024. Most of them won’t double again. Market sentiment will rotate elsewhere, and some of them will fall out of favor.

Let’s focus on the winners with legs. I think two of them — SoundHound AI (NASDAQ: SOUN) and Sweetgreen (NYSE: SG) — have the ingredients to potentially double again before the end of this year. Let’s take a closer look.

1. SoundHound AI: Up 174%

This is the second year in a row that SoundHound AI has gotten off to a hot start after the ball drops in Times Square. A leader in conversational intelligence, SoundHound doubled in 2023 by Feb. 6. It gave back most of those gains by the end of the year. This time around, it got there by Feb. 26. Can it sustain the early gain in 2024?

Yes, the AI at the end of its name stands for artificial intelligence. The voice recognition specialist operates a platform that gives its customers AI-enhanced tools for speech recognition, transcription, and computer-generated speech, delivering a better conversational experience. Revenue growth is potent, with back-to-back years of 47% jumps. It’s starting to pick up the pace.

Image source: Getty Images.

Revenue soared 80% in SoundHound’s latest quarter. Its guidance calls for $63 million to $77 million in revenue this year, a 53% improvement at the midpoint. It recently initiated its outlook for 2025, looking to top $100 million next year. In short, it sees revenue climbing at least 43% in 2025.

SoundHound has been too ambitious in the past. It was initially targeting a 50% top-line surge for 2023, and it fell just shy of its forecast. The bottom line is another story worth watching. Analysts see at least another two years of losses, but SoundHound’s operating and net loss narrowed in 2023 following restructuring and other cost-cutting measures. Wall Street pros see the deficit continuing to narrow this year and again in 2025.

It wasn’t SoundHound’s fourth quarter that sent the stock soaring last month. Just two weeks before its financial update, AI kingmaker Nvidia (NASDAQ: NVDA) disclosed a small position in SoundCloud. Is Nvidia planning to buy it whole, or is it just impressed enough with SoundHound’s voice AI technology to keep it close? The situation is a good one for SoundHound investors either way, but investors also need to be realistic: This was just a small $3.7 million investment by the gargantuan Nvidia. SoundHound shares have responded enough to increase the company’s market cap by more than $1.1 billion this young year. The stock may seem susceptible at this point, but don’t be surprised if it surges when AI stocks heat up again.

2. Sweetgreen: Up 116%

Let’s talk greens, and not just the green that Sweetgreen investors are seeing this year. The fast-growing chain selling premium salads and warm bowls is thriving. Telecommuters have returned to the office, and with that comes the need for prepared meals and the ability to pay up for a quality lunch.

Sweetgreen saw its revenue climb 29% in its latest quarter. Opening new eateries is the key top-line driver, but that’s not cannibalizing existing locations. Same-store sales still rose 6% in the quarter.

Its latest financial update may not seem like enough of a catalyst for this year’s big move higher. The bottom line is still problematic, and Sweetgreen has posted larger-than-expected losses in its last three quarters. Its guidance for 2024 is encouraging, and Sweetgreen expects to finally post positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) this year. However, the key to understanding the stock’s recent ascent begins by focusing on the starting line.

Sweetgreen went public at $28 in 2021, peaking north of $50 in its first few minutes of trading. Sweetgreen kept growing, but the stock kept shrinking. The stock began this year at $11.30. It has more than doubled so far this year, but it’s still a broken IPO. The shares have now quadrupled from the all-time low from 12 months ago, but it’s still below its $28 price tag as a debutante.

It can keep building on this momentum. Sweetgreen is a better company now than it was when it went public in late 2021. It shouldn’t be less valuable. If it can keep expanding briskly, posting positive comps, and improving restaurant-level operating margin, it can double again from here. If so, then the salad days may finally be here for Sweetgreen.

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Rick Munarriz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool recommends Sweetgreen. The Motley Fool has a disclosure policy.

2 Stocks That Can Double Again in 2024 was originally published by The Motley Fool