Even though November is almost over, many stocks still look like great buys right now. Three I have my eye on are ASML (ASML -1.00%), Metaplatforms (META -0.88%)And Alphabet (GOOG 0.21%) (GOOGL 0.12%).
These three have great long-term prospects and I think now is a good time to take a stand.
Why now?
December is historically a strong month for stocks because of something called the “Santa Claus Rally.” This effect occurs when fund managers buy a number of stocks that they believe will position them well for 2025. Because there are more buyers than sellers in December, stock prices sometimes rise during the month. This doesn’t happen every year, but with a strong economy going on, I’m confident it will happen this year. That’s why buying stocks in November is a smart move.
It is also a good time to take a position in these three stocks in particular, as they are well positioned for 2025.
ASML
ASML makes lithography machines that are used to put electrical traces on chips. The company has a technological monopoly on these high-end machines, and any company that makes advanced chips must buy ASML’s machines. However, the company encountered a small hurdle as regulations prevented ASML from selling its machines to China and its allies. As a result, ASML lowered its 2025 revenue forecast from EUR 30 billion-40 billion to EUR 30 billion-35 billion.
This caused the stock to sell heavily, but is now priced at an attractive point.
ASML PE Ratio (Forward) data according to YCharts
At 33 times forward earnings, ASML is not necessarily a ‘cheap’ stock, but it is at an attractive level compared to the past year.
ASML is well positioned to benefit from the AI chip boom, and this near-term weakness is a buying opportunity.
Metaplatforms
Meta Platforms is probably better known by its former name Facebook. Facebook’s shift to Meta originally happened because of reverse ambitions, but now those desires have moved to AI.
While Meta still makes almost all of its revenue from advertising on its social media platform, its generative AI model, Llama, is starting to gain popularity. As a result of this demand, Meta plans to build out even more AI computing capacity in 2025, which management says will drive “significant” growth in capital expenditures.
Unlike the Metaverse, there’s a serious return on investment here, as Meta’s generative AI model could become the industry standard for areas it specializes in, like augmented reality and advertising.
Even though Meta is priced at the highest it has traded all year, it is still not that expensive compared to the broader market.
META PE ratio (forward) data by YCharts
The S&P500 (^GSPC -0.35%) trades for 24.6 times forward earnings, meaning Meta is valued as an average company. This valuation seems dirt cheap to me, and Meta could be another company that sees strong buying heading into the new year.
Alphabet
Alphabet, Google’s parent company, has a similar story to Meta. It is an advertising giant in its various fields that has channeled some of that money into AI technology.
This takes shape in multiple forms, but what investors are noticing most clearly is its cloud computing business, Google Cloud. Google Cloud gives its customers the computing power they need to run workloads, whether AI or not. However, AI workloads have skyrocketed in popularity. Part of this increase was due to the popularity of Alphabet’s generative AI model, Gemini. This resulted in sales increasing by 35% in the third quarter, which represented a significant acceleration in growth compared to the 29% growth in the second quarter.
Alphabet is also extremely cheap, trading at just under 21 times forward earnings.
GOOGL PE ratio (forward) data by YCharts
Part of this reduction is due to the Justice Department calling for the breakup of Google and the sale of Google Chrome. While this is an investment issue, we are still years away from what happens as this matter will be fought tooth and nail in court. As a result, using the short-term weakness in the stock from this news headline is a great way to get a discount on a stock that is successful but may not have a real fix for a while.
Both Alphabet and Meta trade well below the valuations of some of their peers, despite posting similar or better results. As a result, these two tech giants could get some love as we head into 2025, as they are both putting up incredible results and will continue their dominance in 2025.
Randi Zuckerberg, former director of market development and spokeswoman for Facebook and sister of Mark Zuckerberg, CEO of Meta Platforms, is a member of The Motley Fool’s board of directors. Suzanne Frey, a director at Alphabet, is a member of The Motley Fool’s board of directors. Keithen Drury has positions in ASML, Alphabet and Meta Platforms. The Motley Fool holds positions in and recommends ASML, Alphabet and Meta Platforms. The Motley Fool has a disclosure policy.
