2024 threatens market turmoil! I aim to secure passive income with these two growth stocks

One Fool UK contributor has two British growth stocks on his radar, both harnessing technology in very different fields.

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Economic uncertainty, combined with political unrest and the looming threat of war, has left many analysts dead-set on predicting a recession in 2024. It’s been 15 years since the last one and that alone suggests we’re well overdue. Yes, gold is the age-old go-to asset as a recession-hedge, but for those willing to invest in smaller-cap stocks, the returns could be far more beneficial. So with a rocky year ahead, I’m looking at two promising growth stocks to help me secure some passive income in 2024.

Two things that I believe will be key drivers of growth in 2024 are defence and medical tech. Artificial intelligence (AI) is quickly moving away from sloppy artwork and rapidly finding itself a home in medical and defence technology, alongside nano-robotics and augmented reality (AR).

With that in mind, this is where I’m planting my magic beans for a bountiful harvest next year.

Smith & Nephew

The pandemic may seem a long-forgotten memory as the Middle Eastern conflict begins to dominate headlines but that doesn’t mean health stocks are out of the picture. If anything, the pandemic drove interest in the development of newer technologies to help combat future outbreaks. In particular, nano-robotics, artificial intelligence (AI), and RNA-based drugs are rapidly becoming the new face of medical advancement.

With an £8bn market cap, Smith & Nephew may seem overly established for a growth stock, but it’s still a small fish next to leading medical tech names like Johnson & Johnson. With a focus on emerging technology for orthopaedics, sports medicine, and advanced wound management, I think it has a lot of room to grow.

But Mark, the stock’s fallen 19% in the past 3 months and dividends are not covered by earnings and cashflows!” Sure, but with a confident price-to-earnings (P/E) ratio of around 45 and a stock that most analysts agree is heavily undervalued, I believe Smith & Nephew has strong potential as a growth stock in 2024.

QinetiQ Group

With global conflicts likely to continue escalating in the coming months, defence is an obvious pick for growth stocks in 2024. It’s widely reported that the rising demand for military armaments recently boosted international defence stocks like Lockheed Martin and Raytheon but where does the UK fall in?

That would be lesser-known British weapons manufacturer QinetiQ Group (LSE:QQ.), a modest £1.9bn company that’s been making consistent gains over the past decade. With a revenue growth of 19.71% in Q4 of 2023 and recent contract renewals amounting to £950m, QinetiQ looks to me like a potential passive income growth stock for 2024.

Sure, BAE Systems and Rolls-Royce like to hog the headlines when it comes to UK defence, but their massive market caps lack the growth potential of QinetiQ Group stock. Admittedly, defence stocks have a tendency to taper off their gains soon after the initial outbreak of war so ongoing conflict is no guarantee of growth.

But what makes the difference here is QinetiQ’s keen focus on robotics and drones, key technologies that will define the future of defence. The company is paying heed to a tightening economic policy with an aim to develop cheaper, disposable defence products and weaponry. I think it’s just the kind of strategy that will equate to growth in 2024. 

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Mark David Hartley has no position in any of the shares mentioned. The Motley Fool UK has recommended BAE Systems, Lockheed Martin, QinetiQ Group Plc, and Smith & Nephew Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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