Undoubtably, 2024 was a great year for the markets, with the S&P 500 index jumping 23%, taking its two-year gain to 53%. The bellwether technology stock index, the Nasdaq Composite, surged by 28.6% last year as enthusiasm around artificial intelligence led to a surge in mega-cap technology stocks.
These gains, however, do not mean that stocks cannot continue to do well this year. The key is to study the business behind the stock to determine if it possesses a strong track record of financial growth. It should also occupy a dominant position within its industry and have sufficient pricing power to ensure it can stay ahead of cost increases arising from inflation. Ideally, the business should also enjoy sustainable catalysts that can see it sustain multiyear growth, thus generating solid capital gains for its stockholders.
This post originally appeared at The Motley Fool.