3 Good Stocks to Buy with Your Tax Refund in 2024 (Or with Any Extra Money)

Susan Dziubinski: I’m Susan Dziubinski with Morningstar. Even the biggest procrastinators have filed their tax returns by now; many of us are just waiting for our refunds to arrive. The average federal tax refund is about $3,000 this year. Some people spend their refunds on home improvements or splurge on a trip. Others use their refunds to pay down debt or build up their emergency fund.

But for those who’d like to use their refund to invest, here are three stock ideas to consider. All three of these stocks are among Morningstar analysts’ top picks for the second quarter. In addition, Morningstar thinks each of these companies has carved out a wide economic moat, which means we expect these businesses to remain competitive for 20 years or longer. These companies have reliable cash flows, too. And lastly, the stocks of these companies look undervalued today.

3 Good Stocks to Buy With Your Tax Refund in 2024

1. Comcast CMCSA
2. U.S. Bancorp USB
3. Zimmer Biomet ZBH

The first undervalued stock to consider buying with your tax refund is Comcast. Comcast’s core cable business enjoys significant competitive advantages; the company’s NBCUniversal business isn’t as well positioned but does hold unique assets, including core content franchises and theme parks. Overall, we expect Comcast to generate only modest revenue growth over the next several years, but we also expect the company to generate strong cash flows for the foreseeable future.

The next stock to consider buying with your tax refund is U.S. Bancorp. U.S. Bancorp is the largest regional bank in the United States. The bank recently lowered both its 2024 net interest income and expense guidance, but this doesn’t change our long-term outlook. U.S. Bancorp is one of the most profitable regional banks we cover, with a mix of fee-generating businesses including payments, corporate trust, wealth management, and mortgage banking, all while avoiding investment banking. We think the bank is in good financial health.

And the final undervalued stock to consider buying with your tax refund in 2024 is Zimmer Biomet. Zimmer Biomet is a leader in large joint reconstruction, and we expect aging baby boomers and improving technology suitable for younger patients to fuel solid demand for large-joint replacement in the future. Zimmer has cultivated close relationships with orthopedic surgeons who make the brand choice, and it plans to accelerate growth through innovative products and improved execution.

For more stock ideas, be sure to subscribe to Morningstar’s channel and visit Morningstar.com.

Morningstar directors Mike Hodel and Michael Wong and senior analyst Debbie Wang provided the research behind this segment.

Watch 2 Wide-Moat Stocks Trading at Rare Discounts for more from Susan Dziubinski.