Although the market is still hitting record highs, many stocks are still good buys. The key is not to look at where the market is now; it’s about seeing where some stocks could go if they can continue their growth trajectory.
If these four can maintain their overall trajectory, they will continue to rise faster than the market, making them excellent buys now.
1. Semiconductor manufacturing in Taiwan
Wherever you look in the technology sector, you will notice that every device contains highly advanced chips. It doesn’t matter whether a GPU is used for training artificial intelligence (AI) models or the latest smartphone, they all have the latest chips. There is a good chance that these chips will be manufactured Taiwanese semiconductor manufacturing (NYSE: TSM)commonly known as TSMC, because it partners with almost all the biggest technology players to produce their chips.
This positions TSMC nicely in today’s technology-heavy environment. In fact, management believes sales will grow at a compound annual growth rate (CAGR) between 15% and 20% over the next “several years.” That’s market-beating growth, making it a company every investor should consider owning.
Taiwan Semi is by far the most expensive stock in this group, trading at 28 times forward earnings.
However, with its long-term execution, market-beating growth and industry leading position, the company has earned that premium. I think Taiwan Semi is a great buy here and will be a successful investment for years to come.
2. Alphabet
Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) is probably better known as Google’s parent company. The company’s dominance of the search market has resulted in a huge revenue stream, although it is a mature company and not growing nearly as fast as some of its peers.
However, Alphabet is also investing heavily in the generative AI technology race and has enough financial resources to make one of the best offers in this field. Yet, despite all these benefits from two industries set to boom over the next decade, Alphabet’s stock trades for just 21.2 times forward earnings. The most common index that Alphabet is compared to is the S&P500which trades for 23.5 times forward earnings.
That’s a healthy discount to the market, even though Alphabet has consistently pushed its profits above 30% year after year. Alphabet stock has strong value in a market full of expensive stocks, making it a great place to deploy cash.
3. Metaplatforms
Metaplatforms (NASDAQ: META) is similar to Alphabet in that most of its revenue comes from its social media platforms, such as Facebook, Instagram, and Threads. This delivers incredible cash flows as the ‘Family of Apps’ segment delivered a 50% operating margin in the second quarter.
It is using much of that money for AI research and the development of mixed-reality products, such as the new Orion glasses, which are still in the works. While many investors wish they wouldn’t waste money on this endeavor, Meta is still a great company, even if its Reality Labs division puts pressure on margins. Moreover, if Meta develops an indispensable technology in this area, it will generate a new revenue stream.
Meta trades at 27.6 times earnings, but has seen incredible growth (revenue rose 22% year over year and earnings per share rose 73% in the second quarter), helping it earn that premium price tag.
4. PayPal
PayPal (NASDAQ:PYPL) has been in a turnaround scenario for several years now. However, CEO Alex Chriss, who came on board in August 2023, has done a phenomenal job. Although revenue is no longer growing at a breakneck pace (up 8% in the second quarter), Chriss has used much of PayPal’s cash flow to buy back stock and launch new products.
It took a while for investors to notice, but the stock appears to be turning a corner as it is up about 40% since July. The stock still trades for just 18.5 times forward earnings, so at these prices it’s still a good buy.
However, if management continues to innovate and buy back shares, future earnings expectations could rise, making the shares look even cheaper. This is just the beginning of PayPal’s turnaround, and it’s a great stock to get into now.
Don’t miss this second chance at a potentially lucrative opportunity
Have you ever felt like you missed the boat on buying the most successful stocks? Then you would like to hear this.
On rare occasions, our expert team of analysts provides a “Double Down” Stocks recommendation for companies they think are about to pop. If you’re worried that you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:
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Amazon: If you had invested $1,000 when we doubled in 2010, you would have $21,266!*
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Apple: If you had invested $1,000 when we doubled in 2008, you would have $43,047!*
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Netflix: If you had invested $1,000 when we doubled in 2004, you would have $389,794!*
We’re currently issuing ‘Double Down’ warnings for three incredible companies, and another opportunity like this may not happen anytime soon.
See 3 “Double Down” Stocks »
*Stock Advisor returns October 7, 2024
Randi Zuckerberg, former director of market development and spokeswoman for Facebook and sister of Mark Zuckerberg, CEO of Meta Platforms, is a member of The Motley Fool’s board of directors. Suzanne Frey, a director at Alphabet, is a member of The Motley Fool’s board of directors. Keithen Drury has positions in Alphabet, Meta Platforms, PayPal and Taiwan Semiconductor Manufacturing. The Motley Fool holds positions in and recommends Alphabet, Meta Platforms, PayPal, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends the following options: $70 short calls in December 2024 on PayPal. The Motley Fool has a disclosure policy.
My 4 Best Stocks to Buy Now was originally published by The Motley Fool
