The best stocks to invest $1,000 in right now

The stock market performed incredibly well in 2024 and S&P500 has increased by 25% for the reason that starting of the 12 months. Fortunately for investors wanting to invest capital in the market, the situation calmed down in December, and the S&P fell by 1% for the reason that starting of the month. Looking even deeper, some corporations are facing challenges which have caused their stock prices to decline.

Hoping for a share price decline is simply a part of the equation for locating the best stocks to buy. Investors also needs to search for corporations with competitive benefits and a solid track record of success. Short-term challenges have created opportunities to purchase shares of each corporations at a reduction.

For investors with $1,000 to put to market, purchasing one or each of those stocks could prove to be a smart decision.

If you opened a PDF file, you used a file Adobe (NASDAQ: ADBE) product. While this ubiquitous file type could also be Adobe’s best-known application, the corporate’s creative suite is a significant driver of its bottom line. Products like Photoshop and Premiere Pro are industry standards in creative fields, despite the fact that competition has increased over time.

Adobe’s market position is proven by its financial results. Like any company, there are occasional short-term bumps, but in the long term, Adobe has shown remarkable consistency. Take into consideration revenue, net income and free money flow during the last five years.

While Adobe’s track record is impressive, investing is concerning the future, and the largest potential disruption to Adobe’s market dominance is artificial intelligence (AI). Many of the tasks that developers would perform in Adobe products can already be performed by AI, and the capabilities of AI are growing day-after-day.

Adobe decided to embrace this latest technology and worked hard to embed its AI product, Firefly, into its software suite. Instead of viewing AI as a alternative for Adobe products, the corporate believes it may aid in the creative process by performing a few of the more minor tasks, freeing the creator to be creative.

Time will tell how successful this strategy will probably be, and the market seems to be waiting to discover. Adobe currently trades at a price-to-earnings (P/E) ratio of 36. While this shouldn’t be an affordable multiple, it’s lower than Adobe’s five-year average P/E ratio of 47. For investors who consider Adobe will find a way to leverage the ability of artificial intelligence, as a substitute of being disrupted, today’s price may end up to be a bargain.

Like Adobe, a Dutch manufacturer ASML (NASDAQ: ASML) is a pacesetter in its industry. ASML produces the lithography machines vital to produce all semiconductor chips. When it comes to essentially the most advanced semiconductors, ASML is the one company in the world that produces the intense ultraviolet (EUV) lithography machines vital for these cutting-edge chips.

The story continues

With such a competitive advantage, you’d expect ASML to trade at a really wealthy valuation, and that is generally the case. However, the semiconductor industry’s cyclical focus (AI chips notwithstanding) coupled with geopolitical restrictions on where advanced semiconductors may be sold are creating greater uncertainty than usual for the industry. This resulted in ASML trading at almost the identical discount to its five-year average P/E as Adobe.

ASML PE Ratio data according to YCharts

ASML management believes that the challenges it faces will last until 2025 before any recovery occurs. While this might mean further share declines, ASML’s current discount represents a horny buying opportunity for an organization that will probably be at the middle of one among its most significant industries for a few years to come.

ASML expects total semiconductor sales to grow at a compound annual growth rate of 9% from 2025 to 2030, providing some insight into the demand that awaits on the opposite side of the cyclical downturn. Perhaps more importantly, the corporate believes that sales of semiconductors for servers, data centers and storage will probably be twice its total sales.

This should mean continued demand for ASML’s most advanced EUV machines, as that is where AI spending must be focused.

Before you purchase shares in ASML, consider this:

The Motley Fool Stock Advisor a team of analysts have just identified what they think it’s Top 10 stocks for investors to buy now… and ASML wasn’t one among them. 10 stocks that made a cut could deliver monster returns in the approaching years.

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Jeff Santoro holds positions at ASML and Adobe. The Motley Fool covers and recommends ASML and Adobe. The Motley Fool has information disclosure policy.

The best stocks to invest $1,000 in right now was originally published by The Motley Fool