With multiple Wall Street indexes near all-time highs, the odds of finding deals are becoming increasingly difficult. In some ways it’s a nice problem to have, but it’s also a challenge for those wondering where to deploy new funds. Ultimately, the stock market is exactly what its name implies: a market of stocks. Just because some of those stocks are more expensive doesn’t necessarily mean there are no more deals to be made.
After an extensive search, SentinelOne (NYSE:S), Netflix (NASDAQ:NFLX)And Sea limited (NYSE: SE) stood out to three Fool.com contributors as hot stocks with market-losing upside for next year.
SentinelOne is performing better in 2024, and it’s possible this won’t stop
Justin Pope (SentinelOne): SentinelOne combines cybersecurity and artificial intelligence (AI), two of Wall Street’s hottest themes. The company’s autonomous security platform uses AI to provide advanced protection against cyber threats, and has earned high praise from third-party testing across the industry. The costly consequences of breaches drive companies to seek out high-quality solutions like those from SentinelOne, resulting in some of the best revenue growth on the market.
Not only did SentinelOne grow revenue 33% year over year in the second quarter of its fiscal year ended July 31, but the company is also making strides toward profitability, which has investors bullish on the stock and it has helped it rise almost 40%. % over the past year. However, more big returns could be on the way.
SentinelOne recently announced a deal with LenovoThe world’s largest PC manufacturer will include its security software on new PC shipments. Since entering into a similar partnership with Dell Technologies last year, CrowdStrike has added more than $50 million in revenue to date. Achieving similar results would move the stock of SentinelOne, which analysts expect to generate $815 million in revenue this year and about $1 billion next year. These estimates could rise once SentinelOne speaks to the Lenovo partnership in future earnings calls.
Despite all the good things happening at SentinelOne and the great investment returns, the stock can still outperform the broader market. SentinelOne’s valuation has fallen so low in recent years that it still trades at a lower enterprise value-to-revenue ratio than high-tech peers, including CrowdStrike. ZscalerAnd Palo Alto Networks. So no, it’s not too late to buy SentinelOne, despite its meteoric rise this year.
The SentinelOne party started in 2024, but I expect this momentum to continue next year.
Netflix might have that has already won the streaming wars
Jake Lerch (Netflix): With an increase of over 45% year to date, there’s no doubt that Netflix is a hot stock right now. However, I think 2025 could be an even better year for the streaming giant. This is why.
The streaming wars aren’t over yet, but it’s clear that Netflix is gaining the upper hand.
According to data collected by Nielsen in June, streaming video now accounts for about 40% of total TV usage, while cable (27%) and broadcast (20%) lag far behind.
And when you dig deeper into the streaming component, it becomes clear who the big winners are. Alphabet‘s YouTube leads the away with 9.9% of streaming usage, while Netflix is in second place by 8.4%.
The next nearest streamers are Amazon‘s Prime Video (3.1%), followed by Disney-owned by Hulu (3%) and Disney+ (2%), and Tubi (2%). None of the others important streamers, including Decisive+, Comcast‘s Pauw, and Warner Bros. Discovery‘s Max, reach the 2% limit.
In short, Netflix has maintained its competitive advantage in the streaming market. Not only that, but the overall streaming market continues to gain market share from traditional sources of viewership such as cable and television.
As a result, Netflix’s fundamentals continue to shine. In its most recent quarter (the three months ending June 30, 2024), Netflix reported year-over-year revenue growth of 17% and an operating margin of 27%. Both figures are considerably higher than a year earlier.
In summary, Netflix has not only survived a serious challenge to its business model, but has also come through the streaming wars stronger than ever and is well positioned to build on past success. 2025 could be prove shaping up to be a banner year for Netflix as the company expands its advertising business. Investors would be wise consider Netflix now, ahead of what could be a banner year.
The recovery in this pandemic stock is in full swing
Will Healy (Sea Limited): After a brutal sell-off in the 2022 bear market, it may finally be time to return to Sea Limited. The Singapore-based conglomerate thrived during the pandemic as its retail, gaming and fintech segments served its locked-down customer base.
However, conditions turned negative as lockdowns ended and economies reopened. It was previously the number 1 smartphone game, Free firelost some of its popularity after 2021 and was banned in India due to national security concerns. Furthermore, instead of investing in logistics in Southeast Asian markets, where it is the largest online retailer, Shopee entered markets in Europe and Latin America, where it had no competitive advantage.
All of these factors caused the stock to fall 91% between fall 2021 and early 2024.
Fortunately for Sea Limited shareholders, Shopee has exited most non-Asian markets and invested heavily in logistics infrastructure in its home region. Moreover, Free fire experienced a resurgence in popularity, and Garena continues to work with the Indian government to make this happen Free fire back to that country.
Additionally, fintech arm Sea Money has continued to thrive, contributing to Sea Limited’s revenue growth of 23% year-on-year to more than $7.5 billion in the first half of 2024.
However, a 73% increase in sales and marketing costs caused net income to plummet. Most of that increased spending was on e-commerce investments, while a lot of money was also spent on the Sea Money business. However, these investments should lead to higher income and profits in the longer term.
Investors appear to have bought into the company’s new strategy, as the stock is up more than 115% in the past year. While the lower net income distorts the price-to-earnings ratio, its price-to-sales ratio (P/S) of 3.8 isn’t far above that of much larger e-commerce conglomerate Amazon, with 3.3 times revenue. Considering the stock is still 75% below its 2021 high, such a valuation should position Sea Limited for significant gains in 2025.
Should you invest $1,000 in Sea Limited now?
Before you buy shares in Sea Limited, consider the following:
The Motley Fool stock advisor The analyst team has just identified what they think is the 10 best stocks for investors to buy now… and Sea Limited was not one of them. The ten stocks that survived the cut could deliver monster returns in the coming years.
Think about when Nvidia created this list on April 15, 2005… if you had $1,000 invested at the time of our recommendation, you would have $765,523!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including portfolio building guidance, regular analyst updates, and two new stock picks per month. The Stock Advisor is on duty more than quadrupled the return of the S&P 500 since 2002*.
View the 10 stocks »
*Stock Advisor returns September 30, 2024
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, 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. Jake Lerch has positions at Alphabet, Amazon, CrowdStrike and Walt Disney. Justin Pope has positions in SentinelOne. Will Healy holds positions in CrowdStrike, Sea Limited and Zscaler. The Motley Fool holds positions in and recommends Alphabet, Amazon, CrowdStrike, Netflix, Palo Alto Networks, Sea Limited, Walt Disney, Warner Bros. Discovery and Zscaler on. The Motley Fool recommends Comcast. The Motley Fool has a disclosure policy.
3 Hot Tech Stocks Poised to Crush the Market in 2025 originally published by The Motley Fool
