There are plenty of great companies to buy before the calendar flips to 2025.
The market is still at record highs, but many stocks are still good buys. The point is not to see what the market is doing now. The reason is to consider whether some stocks can maintain their growth trajectory.
If these four stocks maintain their overall direction, they could continue to rise faster than the market, making them great buys right now.
1. Taiwan Semiconductor Manufacturing
No matter where you look in the technology field, you’ll see highly sophisticated chips in every device. Whether it’s GPUs or the latest smartphones being used to train artificial intelligence (AI) models, they all have cutting-edge chips. There is a good chance that these chips are being manufactured. taiwan semiconductor manufacturing (TSM 2.71%)commonly known as TSMC because it works with almost all the biggest technology companies to produce chips.
This positions TSMC well in today’s technology-driven environment. In fact, management believes revenue will grow at a compound annual growth rate (CAGR) of 15% to 20% over the next “several years.” It has outgrown the market, making it a company every investor should consider owning.
Taiwan Semi is by far the most expensive stock in this group, trading at a forward P/E of 28.
TSM PER (futures) Depends on the data Y chart
But its long-term execution, above-market growth, and industry-leading position earn it that premium. I think Taiwan Semi is a great buy here and will be a successful investment in the coming years.
2. Alphabet
alphabet (GOOG 0.82%) (Google 0.72%) It is probably best known as the parent company of Google. Although the company’s dominance in the search market provides it with a huge revenue stream, it is a mature business and is not growing as quickly as some of its peers.
However, Alphabet has also invested heavily in the generative AI technology race and has sufficient funds to be the best in this field. Yet despite this turnaround from two industries that are expected to grow rapidly over the next decade, Alphabet’s stock trades at only 21.2 times forward earnings. The most common indexes that Alphabet is compared to are: S&P500trading at a forward P/E ratio of 23.5x.
This is a healthy discount to the market, even though Alphabet has consistently grown its profits by more than 30% year over year over the past year. Alphabet stock has a strong value in a market crowded with expensive stocks, making it a great place to invest your cash.
3. Metaplatform
meta platform (meta 1.05%) The company is similar to Alphabet in that most of its revenue comes from social media platforms such as Facebook, Instagram, and Threads. This generates incredible cash flow, as the “Family of Apps” division achieved a 50% operating margin in the second quarter.
The company is spending much of its funding on AI research and the development of mixed reality products, including new Orion glasses currently in development. Many investors are hoping not to waste cash on this pursuit, but Meta remains a great company despite the Reality Labs division squeezing profits. Additionally, if Meta develops essential technology in this area, it will provide new revenue streams.
Meta trades at a price-to-earnings ratio of 27.6x, but its incredible growth (Q2 sales up 22% year-over-year and earnings per share up 73%) makes up for its premium price. I am able to obtain it.
4.Paypal
paypal (PYPL 1.94%) The upturn scenario has been going on for the past few years. However, CEO Alex Criss, who took office in August 2023, has achieved amazing results. Although revenue is no longer growing at breakneck speed (it was up 8% in the second quarter), Chris has redirected much of PayPal’s cash flow to stock buybacks and new product launches.
It took investors a while to realize that, but things seem to be turning around, with the stock up about 40% since July. The stock is still trading at only 18.5 times forward earnings, so it’s still a bargain at this price.
But if management continues to innovate and buy back stock, future earnings expectations could increase, making the stock look even cheaper. This is just the beginning of PayPal’s turnaround, making it a great stock to get into now.
Randi Zuckerberg is a former head of market development and spokesperson at Facebook, sister of Meta Platforms CEO Mark Zuckerberg, and a member of the Motley Fool’s board of directors. Suzanne Frey, an Alphabet executive, is a member of the Motley Fool’s board of directors. Keithen Drury has worked at Alphabet, Meta Platforms, PayPal, and Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Alphabet, Meta Platforms, PayPal, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends the following options: Place a $70 short call in December 2024 on PayPal. The Motley Fool has a disclosure policy.
