The 20 most-tipped ASX stocks for 2024

In 1906, at a country fair in the town of Plymouth, England, a competition was held to guess the weight of a slaughtered ox. Some 800 people in the crowd participated. When analysing the guesses, statistician Francis Galton noticed something intriguing – the median guess of 1207 pounds was remarkably close - within 1% - to the actual weight of 1198 pounds.

“What does that have to do with the top 20 stocks?”, I hear you ask.

The tale above encapsulates the concept of the wisdom of the crowd. In scientific terms, a crowd's individual judgments can be modelled as a probability distribution of responses with the median centred near the true value of the quantity to be estimated.

In other words, if you have enough observations, the most popular answers in the middle of the dataset will likely be the right ones.

The Outlook Series survey

This year, the Outlook Series survey ‘crowd’ grew considerably as we not only surveyed Livewire readers but also Market Index readers. Almost 5,000 of you participated across both platforms – a tremendous result. Thank you.

So, rather than a top 10, we’re presenting the 20 top-tipped ASX stocks – and then doing a deep dive into some of the key metrics.

Please note: We are sharing information from the Livewire and Market Index readerships by publishing this list. We hope it inspires ideas for your investment research. This information is not, nor is it intended to be, a set of recommendations. Please do your own research and seek advice from a professional.

The 20 most-tipped ASX stocks for 2024

Image: The 20 most-tipped stocks for 2024 (Source: Livewire)

Key observations and metrics

While the wisdom of the crowd phenomenon is legitimate, bias within any dataset is possible. In the case of the Outlook Series survey, where respondents answered the question, “Which will be the best performing ASX stock in 2024?” for as long as we have been running the survey, the #1 pick has been CSL Limited (ASX: CSL).

As great a company as CSL is, it’s hard to fathom that investors truly believed that CSL would be the best-performing stock each year for the past eight years, and then again this year. We must remain open to the possibility that some people have substituted “favourite” for “best-performing”. But, with that grain of salt taken, we move forward.

Whilst we have expanded the list to 20 ASX names this year and ditched the large-cap and small-cap categories, there are some notable exclusions.

Last year, Xero (ASX: XRO) was the best-performing large-cap tipped, up 46.7%. This year, it didn’t rate a mention. Allkem (ASX: AKE) is another name that fell by the wayside as the lithium hot air seeped out of the bubble. The rest of last year’s top-tipped large caps (FMG, BHP, CBA, MQG, WDS, CSL, MIN) all made the cut again this year. 

Key metrics:

• The average market cap of the top 20 is $59.2 billion - heavily weighted towards large caps

• The average PE is 39.25x - this signals a growth focus as it is well above the market long-term average around 16x, and even the three-year average around 23x

• The average yield was 2.8% (the average 1-year forward yield is 3.0%) - this makes sense in light of the above; growth stocks have smaller dividends or don't pay them at all. 

• The average ROE is 21.45%

• In terms of sectors, healthcare and materials have the highest representation, each a 30% weighting in the picks, followed by energy (20%), financials (10%), technology and consumer discretionary (5%) 

The sector weightings make for very interesting reading. Last year's best-performing sector - technology, up 30% - has only one representative in the top 20 (WTC), whilst last year's worst-performing sector - energy, down 3.2% - has four (WDS, STO, BOE, PDN). 

In tipping the best-performing stocks for 2024, people seem to be ditching last year's winners and rummaging around in the bargain basement. This idea is supported by the representation in healthcare, with six spots in the top 20, despite being the eighth best-performing sector last year, up just 1.4%.  

Top 5 Dividend Stocks

As noted above, the top 20 list definitely has a growth focus. 

With that in mind, take these top 5 dividend stocks - based on the 1-year forward expected yield - with a grain of salt - i.e. the top four are all cyclical commodity stocks, not exactly consistent dividend payers, historically speaking. 

If you’re interested in dividends, you can learn about the most consistent dividend-paying stocks here.

Top 5 Growth Stocks

When looking for growth companies, I was taught that a revenue growth figure above 15% (both current and forward) was the minimum hurdle rate. That may sound high, but there are lots of companies out there doing it - and they will need to keep doing it to justify their share prices. 

Below are the top 5 growth stocks from the list, based on percentage revenue growth for the most recently completed period. Once again, the list is dominated by cyclical commodity stocks, apart from Telix which is a pharmaceutical company. 

5 high Return on Equity stocks

Why single out return on equity (ROE)? 

It is a useful measure for understanding the nature of a company's profitability - i.e. how efficiently it can generate profits, using the investments made by its shareholders. Some factors that would lead to a higher ROE would be improved operational efficiency, share buybacks, improved asset utilisation, strategic acquisitions, and cost management.