Sometimes you should invest in stocks that are skyrocketing before they become truly stratospheric. In other cases, you want to buy stocks of big companies when they are way too cheap.
It’s easy to find both types of super-investable stock ideas in today’s market. Read on to see a great example in each category:
If you have $1,000 in cash to invest, you should consider these two tech stocks above anything else right now.
Netflix: the rising media star
Netflix is an undisputed leader in the streaming industry, with a well-known brand, a massive subscriber base of 270 million paid subscriptions, and an award-winning content library.
The stock may seem expensive at first glance, but the company’s recent streak of stock prices hitting a 52-week high is a testament to Netflix’s continued growth and potential for future expansion.
The main factors driving Netflix’s growth include:
Global expansion: Netflix is aggressively expanding into international markets, tapping into a large pool of potential subscribers. What started as a tentative launch in Canada over a decade ago has reached 69% of the global subscriber base – and continues to grow. This represents a significant growth opportunity as the company expands its streaming services into new regions and cultures.
Original content: Netflix’s massive investment in original content, including critically acclaimed series like Stranger Things and movies like Glass onion: a mystery at daggers drawn, has been a major driver of subscriber growth and engagement. This strategy not only attracts new viewers, but also helps retain existing viewers.
Technological innovation: The company continues to invest in technology, improving its streaming platform and user experience. This focus on innovation ensures that Netflix remains competitive and adapts to changing viewer preferences. Main rival Walt Disney (NYSE:DIS) can only hope to catch up to Netflix’s technological advantage, according to Disney CEO Bob Iger.
Potential risks include:
Growing competition: The streaming landscape is becoming increasingly crowded, with new entrants vying for subscribers’ attention. This could weigh on Netflix’s growth and market share.
Content costs: Investing in original content is expensive, and the rising cost of acquiring licenses for popular shows and movies could also limit Netflix’s profitability.
Market saturation: There is a limit to the number of subscribers Netflix (or the digital streaming industry as a whole) can acquire, especially in mature markets. The company must continually innovate and expand into new markets to maintain its growth trajectory.
Despite these risks, Netflix’s strong brand, vast content library and global expansion efforts make it an attractive investment opportunity. The stock is on the rise again and could soon reach record price levels.
The company’s soaring stock price reflects investor confidence in the long-term growth potential of video streaming services in general, and Netflix in particular. For investors looking to gain exposure to the growing streaming sector, Netflix remains a top competitor even at its current valuation.
SoundHound AI: The Undervalued Growth Story
SoundHound AI is a leading voice service provider artificial intelligence (AI) and conversational intelligence technologies. The company may not be a household name yet, but its potential for explosive growth is undeniable.
Based on a decades-long history of Voice-focused AI researchSoundHound AI has a staggering backlog of unfulfilled long-term orders, representing a huge revenue stream waiting to be unlocked.
“In the first quarter, we saw backlog growth of around 80% year-on-year to $682 million, with an average life of around seven years,” CFO Nitesh Sharan said during last month’s first-quarter earnings call.
This hidden gem of the technology sector appears poised for a breakthrough, making it an attractive investment opportunity for those looking for high growth potential.
SoundHound AI’s key growth catalysts include:
Massive long-term order book: SoundHound AI has a large backlog of unfulfilled orders. This order book, representing multi-year contracts with major customers such as the automobile manufacturer Stellantis and restaurant chain The beesprovides a clear path for significant revenue growth in the years to come.
Technology leadership in voice AI: The company’s advanced voice AI technology is gaining traction in various industries including automotive, entertainment, hospitality, and more. SoundHound AI’s conversational intelligence platform enables businesses to improve customer interactions, streamline operations and improve overall efficiency. Even tech giants like Amazon And Alphabet It might be better to buy SoundHound AI rather than trying to copy its sophisticated voice AI technology.
Growing Adoption of Voice AI: Global demand for voice AI technology is growing, as consumers and businesses increasingly adopt voice interactions. SoundHound AI is well-positioned to capitalize on this trend, with its innovative solutions and growing customer base.
Potential risks include:
Competition: The voice AI market is competitive, with several established players and new entrants competing for market share. SoundHound AI must continually innovate and differentiate its offerings to maintain its competitive advantage.
Execution risks: Successfully filling the huge order backlog and adapting operations to meet growing demand will be crucial to SoundHound AI’s future success. Any delays or setbacks in execution could impact the company’s growth trajectory.
Market Volatility: As a relatively young and emerging company (at least in the stock market), SoundHound AI is sensitive to market volatility and investor sentiment. The stock price could fluctuate significantly depending on market conditions and company performance.
SoundHound AI’s impressive backlog, coupled with its advanced voice AI technology and growing market adoption, make it an attractive investment opportunity. The stock is trading more than 50% below its 52-week high, a result of Nvidia make a small investment in the business.
The company’s current market valuation may not fully reflect its long-term growth potential, presenting a buying opportunity for investors seeking exposure to the booming voice AI market.
While there are inherent risks in investing in a young and growing company, the potential rewards could be substantial for those willing to take a chance on this promising tech player.
Should you invest $1,000 in SoundHound AI right now?
Before buying shares in SoundHound AI, consider this:
THE Motley Fool Stock Advisor The analyst team has just identified what they think is the 10 best stocks for investors to buy now…and SoundHound AI wasn’t one of them. The 10 selected stocks could produce monster returns in the years to come.
Consider when Nvidia made this list on April 15, 2005…if you had invested $1,000 at the time of our recommendation, you would have $808,105!*
Equity Advisor provides investors with an easy-to-follow plan for success, including portfolio building advice, regular analyst updates, and two new stock picks each month. THE Equity Advisor the service has more than quadrupled the return of the S&P 500 since 2002*.
*Stock Advisor returns June 10, 2024
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Anders Bylund holds positions in Alphabet, Amazon, Netflix, Nvidia, SoundHound AI and Walt Disney. The Motley Fool holds positions and recommends Alphabet, Amazon, Netflix, Nvidia and Walt Disney. The Motley Fool recommends Stellantis. The Motley Fool has a disclosure policy.
The Best Stocks to Invest $1,000 In Right Now was originally published by The Motley Fool
