As the new bull market kicks off, many investors might wonder which stocks to buy. After all, it’s only “officially” declared a new bull market once the market reaches new all-time highs. As a result, many stocks are expensive, but not every stock is that way.
I’ve got five that still look like solid buys right now, and I think investors would be wise to snag this group while they’re still fairly valued.
1. Alphabet
Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) is a wide-ranging company. It has multiple AI investments, a cloud computing division (Google Cloud), and other properties like YouTube. But at the end of the day, Alphabet is primarily an advertising company. With nearly 80% of its revenue coming from ads, the ad market must stay strong.
It showed signs of strength in the third quarter, with ad revenue rising 9.5% — a significant improvement compared to recent quarters. Advertising market strength is expected to persist throughout the year as the economy shrugs off recession expectations.
This is part of why analysts expect 11% revenue growth and 26% earnings growth in 2024. As a result, the stock trades for a reasonable 23 times forward earnings (reasonable, at least when compared to other big-tech stocks).
Alphabet’s main business is in recovery mode, and with the upside of AI, it could be a strong year for the third-largest company in the U.S. markets.
2. Airbnb
Airbnb (NASDAQ: ABNB) was supposed to be ruined by a recession in 2023 or 2024. However, that hasn’t happened, and the company has continued to deliver strong results. In Q3, revenue rose 18% to $3.4 billion and produced an impressive $1.3 billion in free cash flow. With nights and experiences rising 14% year over year, it’s clear that Airbnb is still a popular choice when traveling.
With fourth-quarter revenue expected to grow around 13%, it should be another strong quarter when Airbnb reports results. Despite that, Airbnb trades at a fairly cheap price-to-earnings (P/E) ratio when 2024 results are used. Wall Street analysts expect earnings per share of around $8.07 in 2024, pricing the stock at 18 times forward earnings. Considering the S&P 500 trades for a forward P/E of around 20, Airbnb stock looks like a bargain.
3. UiPath
UiPath (NYSE: PATH) is a bit of an artificial intelligence (AI) play, as its robotic process automation (RPA) software uses AI to broaden what it can automate. However, it doesn’t come with the price tag you’d expect from an AI-related company. UiPath trades for under 11 times sales — a reasonable level that would still make sense even if it was fully profitable (Airbnb trades at 10 times sales).
UiPath is rapidly growing, too, with annual recurring revenue (ARR) rising 24% year over year to $1.38 billion. While it’s nowhere near profitable, it has enacted several improvements to increase its operating efficiencies in pursuit of breaking even.
UiPath provides this group with rapid growth without needing to overpay for it.
4. Meta Platforms
Like Alphabet, Meta Platforms (NASDAQ: META) is also heavily exposed to the advertising industry. While it has other investments in mixed and virtual reality, the metaverse, and AI, Meta’s primary revenue stream comes from its Family of Apps, consisting of Facebook, Instagram, Messenger, WhatsApp, and Threads.
Ad revenue struggled in late 2022 and into 2023 but dramatically recovered in Q3 by rising 24% year over year. Thanks to this massive revenue boost and operating expenses decreasing, Meta’s earnings per share (EPS) shot up from $1.64 to $4.50.
If it can keep this up throughout 2024, the stock will look dramatically undervalued. With a forward P/E ratio of 22, it still looks like a strong buy at these prices.
5. Visa
Last is Visa (NYSE: V), which recently reported its most recent earnings for the first quarter of fiscal year 2024 (ended Dec. 31). While Visa’s revenue growth didn’t reach double digits (it grew 9%), its stock buyback program and operational improvements allowed its EPS to increase by an outstanding 20%.
These results allowed Visa to notch a new all-time high stock price. However, the stock still isn’t that expensive.
Over the past decade, you could rarely buy Visa’s stock for under 30 times earnings. However, with strong expected earnings growth this year, Visa is hovering around some of the cheapest available levels in recent history. As a result, it’s a strong buy in today’s markets.
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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Keithen Drury has positions in Airbnb, Alphabet, Meta Platforms, UiPath, and Visa. The Motley Fool has positions in and recommends Airbnb, Alphabet, Meta Platforms, UiPath, and Visa. The Motley Fool has a disclosure policy.
We’re In a New Bull Market. Here Are 5 Brilliant Stocks I’m Buying Hand Over Fist. was originally published by The Motley Fool
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