Today’s best buys include two top AI stocks and a world-class company trading at its lowest valuation in years.
Given how well the broader stock market has performed for most of the past several years, you might assume that good deals are hard to come by. Ironically, there are still some very well-known stocks sitting at compelling prices right now. Let’s dive deeper into three of them.
First, you have two “Magnificent Seven” stocks that remain table-pounding buys, despite trading at all-time highs. Then there’s a longtime market-beating winner that has slipped to its lowest valuation in years. You can currently buy all three for under $1,000.
Here is why these stocks could be the best way to invest your mo…
Today’s best buys include two top AI stocks and a world-class company trading at its lowest valuation in years.
Given how well the broader stock market has performed for most of the past several years, you might assume that good deals are hard to come by. Ironically, there are still some very well-known stocks sitting at compelling prices right now. Let’s dive deeper into three of them.
First, you have two “Magnificent Seven” stocks that remain table-pounding buys, despite trading at all-time highs. Then there’s a longtime market-beating winner that has slipped to its lowest valuation in years. You can currently buy all three for under $1,000.
Here is why these stocks could be the best way to invest your money right now.
Image source: Getty Images
1. Alphabet continues to perform at a high level throughout the company
Google parent Alphabet (GOOGL +2.44%)(GOOG +2.40%) has gone from a potential victim of artificial intelligence (AI) disruption, to arguably the AI market leader in under a year. Despite fears that AI would erode Google’s ad revenue, it has thrived instead, including 14.5% year-over-year growth in the third quarter. At the same time, Alphabet’s AI app, Gemini, has soared to over 650 million monthly active users.
Its cloud business is surging as AI drives more cloud usage. And while all of Alphabet and the other AI hyperscalers continue to spend tens of billions of dollars to build data centers, the company has managed to fund these build-outs with cash flow, while some of its competitors are beginning to turn to debt.
Lastly, its Waymo segment is inching closer to becoming a difference-maker as its autonomous ride-hailing service continues to expand.
Today’s Change
(2.44%) $6.76
Current Price
$284.30
Despite blasting higher by 64% over the past year, the shares still look to be a compelling value. Wall Street analysts see the company growing its earnings at an annualized rate of 15% for the next three to five years. That growth easily justifies buying the stock at 27 times 2025 earnings estimates because Alphabet is planting the seeds for what could be an exciting decade ahead.
2. Amazon’s reaccelerating cloud growth makes the stock a buy
Tariffs and a struggling consumer had raised concerns about Amazon (AMZN +0.35%) since the spring. While tariffs haven’t gone away and consumer sentiment has been on a slide in recent months, the stock recently hit a new all-time high following its third-quarter earnings report.
The primary reason? Cloud revenue grew by 20.2%, signaling outstanding momentum for the company’s most profitable business unit. Amazon is the world’s largest cloud services company, and AI technology runs on its cloud data centers.
That is why these companies continue to invest heavily in building capacity. But Amazon is a sneaky AI play for other reasons, including the huge potential savings it could realize as AI software and robotics replace human workers over the coming years. A recent report based on leaked documents suggested that Amazon could fill as many as 600,000 jobs over the next decade with automation.
Today’s Change
(0.35%) $0.88
Current Price
$250.20
The profit margin implications are enormous, even if that figure ultimately is inaccurate. Amazon is one of the largest companies in the world by revenue, with trailing-12-month sales of $670 billion. Every margin percentage point means billions of dollars for its bottom line. Currently, Amazon trades at 22 times operating cash flow, still well below its 10-year average of 27.
3. Banking industry concerns have weighed on Jack Henry & Associates
An excellent stock doesn’t always need to become a multitrillion-dollar behemoth to generate outstanding returns. Jack Henry & Associates (JKHY +4.80%) has returned over 11,000% since the mid-1990s, and its market cap is still under $11 billion today. The company provides software and other technology to small and medium-size banks and credit unions across the United States.
It has thrived by staying focused on its core specialties, resulting in a robust return on invested capital averaging 22% over the past decade. Jack Henry also maintains a very conservative balance sheet and pays a dividend, which it has raised annually for 34 consecutive years.
However, the stock hasn’t hit a new high since early 2022. Concerns over how AI and fintech competition will impact the company’s customer base may have weighed on the stock.
Today’s Change
(4.80%) $7.31
Current Price
$159.73
But it has navigated an evolving banking industry for decades, so while investors shouldn’t dismiss any threats, it’s also worth considering that the company will likely adapt to change. The stock currently trades at a price-to-earnings ratio under 24, its lowest in over a decade.
The market typically holds the stock of Jack Henry & Associates in high regard, and it’s rarely cheap. So the shares’ slump may look like a fantastic buying opportunity in hindsight if the company delivers 9% annualized earnings growth, as analysts estimate.