Investing $5,000 in these Two Potential Bargains for 2025 and Beyond.
Investing $5,000 in these Two Potential Bargains for 2025 and Beyond.
You might think $5,000 isn't substantial enough to make a life-transforming investment, but given time and the right stocks, it could swell to $20,000, $50,000, or even $100,000 and beyond.
The magic of compounding ensures that the longer you hold stocks, the more rapidly your portfolio will expand, given that it will be generating returns off a larger foundation. The S&P 500 (down by 1.11%) has traditionally presented an annual average yield of 9% year on year, a formidable pace. You can even prosper by sinking your money into growth stocks, such as tech stocks, which have the potential to deliver remarkable returns through technological upheaval and the exponential growth of emerging technology.
Carry on reading to find out about two stocks that are currently looked upon as bargain buys.
1. ASML
Whilst ASML (down by 0.32%) may not be commonly recognized, it's one of the world's most crucial tech companies. The company specializes in creating lithography machines, which are essential for chip manufacturers such as Taiwan Semiconductor Manufacturing to generate semiconductors. It's also the sole producer of extreme ultraviolet (EUV) lithography machines, which are used to manufacture the most advanced chips, including those utilized for artificial intelligence (AI)-related activities.
This unique position gives ASML a significant competitive advantage, yet it hasn't been able to translate that into impressive performance so far in 2024. Year-to-date up until Dec. 26, the stock has dipped by 5.5% due to decreased demand from China, underwhelming orders, and the company's revised 2025 guidance reduction.
The semiconductor equipment sector operates independently of actual chips, and it's currently experiencing a lull (partly due to delays in initiating new foundries). Nonetheless, those foundries are coming soon.
Notable companies like Intel, Micron Technology (down by 1.32%), and TSMC have been granted substantial sums by the U.S. government via the CHIPS Act to develop new factories in the U.S., and the AI surge is also responsible for production advancement in other parts of the world. Nevertheless, these projects typically take several years to materialize, so the exact timing of this windfall remains uncertain.
Nevertheless, ASML is expected to rebound to solid and persistent growth. In 2025, ASML's management estimates revenue ranging from 30 billion to 32.5 billion euros, representing a growth of 15%. Margins are also projected to improve as challenges from 2024 cease and the company scales up its business.
ASML should regain momentum following a challenging year and possesses a promising future beyond 2025.
2. Micron Technology
Another semiconductor stock that is struggling towards the end of the year is Micron Technology, a company that produces various types of memory chips. Micron shares had a significant increase earlier in the year, as it was considered one of the winners in the AI boom. However, that bullish sentiment faded, resulting in a pullback after its subsequent financial results did not meet expectations as anticipated.
However, this situation offers a promising outlook for 2025, as Micron is still experiencing rapid growth on a year-over-year basis and is currently trading at a price-to-earnings ratio of 10 based on estimated earnings for the current fiscal year.
Differentiating Micron from most chip companies is its capacity to design and manufacture its own chips, as well as its focus on memory chips, making its business highly cyclical. The good news for investors is that its business is currently booming as it capitalizes on AI demand.
Revenue nearly doubled to $8.7 billion in its recently reported fiscal first quarter, and the company reported that data center revenue for the first time surpassed 50% of its total revenue. The data center segment is where the AI boom is taking place, so Micron's growth in that category validates its positioning in the emerging market. Micron's key customer is believed to be Nvidia, which should further boost its growth.
With demand for AI chips likely just starting to grow, Micron shares could potentially skyrocket over the next few years. At a forward P/E of just 10, the stock appears like a remarkable bargain.
After recognizing the potential of small investments in the stock market, one might consider investing in ASML, a tech company specializing in lithography machines, despite its recent dip in price. Given the potential growth in the semiconductor market due to government funding and AI advancements, this could prove to be a lucrative finance decision, utilizing and potentially multiplying your money.
Surveying the market, Micron Technology, a company known for producing various types of memory chips, is currently trading at an attractive price-to-earnings ratio of 10. Given its focus on memory chips and its capacity to design and manufacture its own chips, this could prove to be an excellent opportunity for finance-savvy individuals looking for promising stocks to invest in, leveraging the current boom in AI technology.