Investing Spotlight: Two Unstoppable Stocks to Consider Now

The major market indexes continue to rise, with the S&P 500 and Nasdaq Composite gaining 26% and 28%, respectively, year to date as of November 11. This growth is largely driven by a handful of highly profitable companies that dominate their markets. Investing in stocks of these industry leaders can help you safeguard and grow your wealth.

If you’re keen on successful investing, consider these two strong stock picks right now.

1. Amazon: A Leader in E-Commerce and Cloud Services

Amazon (NASDAQ: AMZN) has seen its shares climb to new heights following impressive third-quarter earnings. The company reported robust growth in its online retail and cloud services. While the stock isn’t the cheapest option, it is fairly valued given its increasing free cash flow.

As the leader in the U.S. e-commerce and cloud services markets, Amazon is successfully translating its competitive advantages into rising profits. Its free cash flow soared to a remarkable $70 billion over the last twelve months, a stunning 253% increase over the past five years.

This growing free cash flow positions Amazon to invest significantly in artificial intelligence (AI) technology to drive future growth. The company plans to allocate $74 billion toward capital expenditures this year, enhancing its cloud services with AI and improving same-day delivery for its online retail offerings.

Moreover, Amazon is refining its online shopping experience. While AI has long influenced product recommendations, the company is expanding its capabilities with new features such as AI Shopping Guides and an AI-powered shopping assistant named Rufus, aimed at helping customers easily find the products they’re seeking. These initiatives may further strengthen Amazon’s lead in the e-commerce sector and support long-term growth.

With free cash flow significantly increasing and a reasonable price-to-free cash flow ratio of 31, Amazon investors could still enjoy market-beating returns in the future.

2. Meta Platforms: Harnessing AI for Growth

Shares of Meta Platforms (formerly Facebook) (NASDAQ: META) are nearing new highs after its recent third-quarter business update. With over 3.2 billion daily users across its social media platforms, demand for advertising remains strong. Similar to Amazon, Meta is generating substantial and growing free cash flow, which is being invested into AI to fortify its competitive position.

Although revenue growth has decelerated in recent quarters, the Q3 results revealed a healthy 19% year-over-year increase. Meta has increased its capital expenditures significantly this year compared to 2023 yet still posted a trailing-12-month free cash flow of $52 billion.

These expenditures are directed towards servers, data centers, and network infrastructure to enhance AI capabilities and overall business functions. Meta anticipates additional increases in capital spending by 2025, reflecting its belief in the long-term potential of its AI advancements.

AI plays a vital role in Meta’s operations, providing tools for advertisers and showing potential for increased user engagement. CEO Mark Zuckerberg commented during the Q3 earnings call, “We’re seeing AI have a positive impact on nearly all aspects of our work from our core business engagement and monetization to our long-term road maps for new services and computing platforms.”

Meta’s free cash flow has more than doubled in the last five years, and forecasts suggest continued double-digit growth. Analysts predict that both Amazon and Meta Platforms will see earnings per share grow at 21% annually, serving as an indicator for free cash flow growth. Currently, Meta shares trade at a price-to-free cash flow ratio of 29, which seems reasonable relative to these estimates.

Seize a Second Chance at Profitable Investments

Have you ever felt like you missed out on investing in the most successful companies? If so, pay attention to this opportunity.

Occasionally, our expert analysts issue a “Double Down” stock recommendation for companies poised for significant growth. If you’re concerned about having already missed your chance, this may be the best time to invest before it’s too late. The numbers illustrate the potential:

• Amazon: A $1,000 investment when our analysts recommended it in 2010 would now be worth $23,446!*
• Apple: A $1,000 investment when recommended in 2008 would have grown to $42,982!*
• Netflix: A $1,000 investment when recommended in 2004 would now stand at $428,758!*

We’re currently issuing “Double Down” alerts for three outstanding companies, and another opportunity like this might not come soon.

See 3 “Double Down” stocks »

*Stock Advisor returns as of November 11, 2024

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. John Ballard has positions in Meta Platforms. The Motley Fool has positions in and recommends Amazon and Meta Platforms. 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.