Main Street’s Revenge: 3 Stocks Primed to Benefit from the Retail Investor Revival

Heightened volatility in U.S. equities over the past couple years have left many retail investors out of the loop. Inflation continues to take a major toll on the ordinary consumer’s finances.

Moreover, interest rates, having reached a peak not seen in over two decades, have prevented people from buying new homes and vehicles. Despite the macroeconomic outlook appearing cloudy, there may be a silver lining. Signs of a slowing economy may incentivize the U.S. Federal Reserve to cut rates quicker than some had previously expected.

Analysts at Goldman Sachs see a revival for equities this summer as retail investors increase their engagement with the market. Popular trades like Nvidia (NASDAQ:NVDA) have continued to advance in terms of equity performance. However, a multitude of well-known stocks have received less love in 2024. This is either due to unsavory macroeconomics or company-specific growth issues.

Let’s delve into three stocks poised for a strong rebound as retail investors begin pouring back into the market.

Palantir (PLTR)

Palantir (NYSE:PLTR) had been a favorite of r/wallstreetbets.

Founded by Peter Thiel, the data analytics firm made quite a name for itself amongst defense industry contractors and their government counterparts. While Palantir started out by acquiring clients embedded within the U.S. intelligence apparatus, the software company has made moves to attract enterprises across various sectors, including healthcare. In January, the National Health Services (NHS) in England awarded Palantir a controversial £330 million ($415 million) contract to overhaul the health service’s patient data system and build out the “Federated Data Platform.”

Furthermore, the data analytics platform is quite interested in artificial intelligence (AI). Having already embedded machine learning algorithms into its products, that should not surprise the average investor reading about the company. Palantir’s AI platform made waves upon its initial announcement late last year and continues to increase the number of trials. Unfortunately, lower-than-expected guidance has brought volatility to PLTR stock price. The stock was on its way to rising more than 50% at the beginning of March but has seen its rally subside since then.

Because Palantir remains a well-known stock, retailor investors reallocating capital to equities could help to boost its share price as we get into the summer.

Tesla (TSLA)

The electric vehicle (EV) market, at least in the U.S. and Europe, have faced a number of headwinds. Elevated interest rates and inflation have played a key role in pricing ordinary consumers out of the new car market. Tesla (NASDAQ:TSLA) has felt the brunt of the EV market slowdown. In the first quarter, the American EV maker reported its first year-over-year (YOY) decline in deliveries in nearly four years. Tesla has attempted to incentivize new car buyers with discounts on its Tesla Model 3. But even that has failed to spur consumer demand.

Additionally, the EV maker faces competition from Rivian (NASDAQ:RIVN), which reported strong delivery growth in Q1, as well as intense competition in its second largest market, China. Unlike Tesla, Chinese EV makers, including BYD (OTCMKTS:BYDDY), Li Auto (NASDAQ:LI), and, most recently, Xiaomi reported robust growth in the first quarter.

TSLA share price has plummeted more than 30% YTD, but retail investors entering the market will likely see this as an opportunity to place bets on the ailing EV maker.

Alphabet (GOOG, GOOGL)

Parent company of software giant Google, Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) has seen its share rise in 2024. Its relatively low valuation could see retail investors pour into the stock this summer. Google has many positive developments going for it.

Being a pioneer of investing and conducting extensive research into “deep learning,” the software firm is finally seeing those R&D dollars bear fruit. Google Cloud turned a significant $900 million operating profit in Q1, and that portion of the business will likely be a key growth lever moving forward, particularly as enterprises leverage the cloud platform to train and deploy advanced generative AI models.

In April, Google’s Cloud Next conference in Las Vegas had very little to do with the platform’s core cloud product. It focused more on the way in which AI deployments via Google Cloud would help create efficiencies in across an enterprise.

The software giant trades at just below 23.0x forward earnings, which is cheaper than Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT) and Amazon (NASDAQ:AMZN). This could give ample reason to retail investors to put their money in GOOG shares as the retail investor resurgence takes place.

On the date of publication, Tyrik Torres did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.