HomeBusinessTwo supercharged stocks to buy in November and one to avoid

Two supercharged stocks to buy in November and one to avoid

Investing in the tailwinds behind technological innovation can deliver wealth-building returns in the stock market. But just because a stock is rising in value doesn’t mean it’s worth buying. It is always important to compare a company’s valuation with its business fundamentals.

To help you in your search, here are two stocks I would buy with my money today, and one I would avoid.

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Spending on data center infrastructure is increasing explosively. Companies are upgrading hardware and components to support artificial intelligence (AI) workloads. Broadcom (NASDAQ:AVGO) benefits from this trend as a leading supplier of semiconductors, networking hardware and software solutions for data centers. The stock has almost doubled in the last twelve months, but is still trading at a reasonable valuation that could deliver excellent returns in the coming years.

Broadcom’s components are an important part of smartphones. Apple signed a new long-term agreement with the chip company last year to supply 5G radio frequency components for the iPhone maker. But Broadcom is seeing monstrous growth for its custom AI accelerators, with revenue up 3.5x year over year in the latest quarter.

Revenues from other markets, including wireless and broadband, are not performing as well, but these markets are expected to recover. Management noted that performance in non-AI semiconductor products is stabilizing, which could become a catalyst in 2025 as more AI-enabled devices become available. Wall Street analysts expect Broadcom’s profits to rise 28% next year and grow 20% annually in the coming years.

That’s enough growth to support the share price, which currently trades at a price-to-earnings (P/E) ratio of 27. Broadcom is one of the strongest technology companies in the world. It delivered steady sales and profit growth for years, which has funded a growing dividend to shareholders. The stock’s current dividend yield is 1.2%.

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The most in-demand components for working with AI technology are graphics processing units (GPUs). Nvidia (NASDAQ: NVDA) has been the dominant supplier of these chips for years. Revenues are growing at triple digits, delivering excellent returns for investors.

Analysts currently expect Nvidia’s revenue to rise 42% to $179 billion next year. The company makes GPUs for gaming and general computing, but the data center segment currently generates more than 80% of its revenue. These advanced AI chips have high margins, generating an impressive $16 billion in profits in the second fiscal year alone.

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