You may think $5,000 isn't enough to make a life-changing investment, but with enough time and the right stocks, it could grow to $20,000, $50,000, or even $100,000 or more.
The power of compounding means that the longer you hold stocks, the faster your portfolio will grow as it will be generating returns off a higher base. The S&P 500 (SNPINDEX: ^GSPC) has historically returned an annual average of 9% yearly, a strong clip. You can earn even higher returns by investing in growth stocks, including tech stocks, which have the potential to generate high returns through technological disruption and the exponential growth of new technology.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. See the 10 stocks »
Keep reading to see two stocks, in particular, that look like bargain buys right now.
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1. ASML
ASML (NASDAQ: ASML) might not be a household name, but it's one of the most important tech companies in the world. The company is the leading maker of lithography machines that chip manufacturers like Taiwan Semiconductor Manufacturing use to make semiconductors. It's also the only maker of extreme ultraviolet (EUV) lithography machines, which are used to make the most advanced chips (including the ones used for artificial intelligence (AI)-related work).
That position gives ASML a significant competitive advantage, but it hasn't been able to parlay that into a winning performance in 2024. Year to date through Dec. 26, the stock is down 5.5% as demand has slowed from China, bookings have been surprisingly weak, and the company cut its guidance for 2025.
The semiconductor equipment industry operates in its own cycle, separate from actual chips, and there's been a lull across the sector due (partly) to delays in new foundries. However, those foundries are coming.
Companies like Intel, Micron Technology (NASDAQ: MU), and TSMC have all been awarded billions of dollars by the U.S. government via the CHIPS Act to build new factories in the U.S., and the AI boom is leading to production expansion in other parts of the world as well. However, these projects tend to take years so the timing of that windfall is uncertain.
Nonetheless, ASML should return to strong and steady growth. In 2025, ASML management estimates revenue of 30 billion to 32.5 billion euros, or 15% growth. Margins are also set to improve as headwinds from 2024 roll off and the business scales up.
ASML should bounce back after a rough year and it has a bright future beyond 2025.
2. Micron Technology
Another semiconductor stock that is limping into the end of the year is Micron Technology, an integrated maker of memory chips. Micron shares soared earlier in the year as it was seen as one of the winners in the AI boom, but that rally gave way to a pullback after its next round of results wasn't as strong as expected.
However, that puts Micron in an appealing position heading into 2025 as the company is still growing rapidly on a year-over-year basis and trades at a price-to-earnings ratio of 10 based on earnings estimates for the current fiscal year.
Unlike most chip companies, Micron both designs and manufactures its own chips, and that and its exposure to memory chips make the business highly cyclical. The good news for investors is that the business is on an upswing as it capitalizes on AI demand.
Revenue nearly doubled to $8.7 billion in its recently reported fiscal first quarter, and the company said that for the first time in its history, data center revenue topped more than 50% of its total. The data center segment is where the AI boom is taking place so Micron's growth in that category shows it's capitalizing on the emerging market. Micron's biggest customer is believed to be Nvidia, which should also help its growth.
With demand for AI chips likely just beginning, Micron shares could easily surge over the next few years. At a forward P/E of just 10, the stock looks like a downright bargain.
Don’t miss this second chance at a potentially lucrative opportunity
Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.
On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:
- Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $355,269!*
- Apple: if you invested $1,000 when we doubled down in 2008, you’d have $48,404!*
- Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $489,434!*
Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.
*Stock Advisor returns as of December 23, 2024
Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends ASML, Intel, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends the following options: short February 2025 $27 calls on Intel. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
