Top Investment Picks for Kickstarting the New Year with Profitability
Investors had a prosperous year with big wins as the S&P 500, Nasdaq, and Dow Jones Industrial Average climbed by double digits. The enthusiasm for technology and growth stocks, along with an economically favorable environment, drove the market's momentum. But can we expect another year of gains? While it's too early to make a definitive prediction, there are some reasons for optimism.
The artificial intelligence (AI) growth story is still in its early stages, and the Federal Reserve's interest rate cuts could provide support for stock performance in the year ahead. However, it's the specific stocks that truly stand out, providing investors with a mix of growth and security. Here are the top 10 buys for the new year:
1. Eli Lilly
Eli Lilly, the manufacturer of weight loss drugs, has racked up billions of dollars in revenue with its blockbuster products, tirzepatide (sold as Zepbound for weight loss and Mounjaro for type 2 diabetes). Recently, tirzepatide was declared no longer in shortage, preventing compounding pharmacies from taking market share, and Zepbound received approval for sleep apnea along with obesity, securing Medicare coverage. Goldman Sachs Research forecasts the obesity drug market could reach $130 billion by 2030, and with its strong position, Lilly is well-prepared to capitalize on this growth.
2. Meta Platforms
Meta Platforms, the social media giant, has generated massive advertising revenue with its apps like Facebook, Messenger, Instagram, and WhatsApp. Moreover, Meta is heavy on AI investment, aiming to create AI agents that will benefit all users and improve ads for advertisers. With its dominance in social media and focus on AI, now's a great time to invest in Meta Platforms.
3. Salesforce
Salesforce, the customer relationship management software company, has consistently shown revenue strength and is now venturing into agentic AI. The goal is to develop AI software that can handle tasks 24/7, from processing transactions to addressing customer inquiries. The platform, called Agentforce, has already signed 200 deals, and the pipeline for future deals looks promising. Salesforce has a sizable total addressable market, which means significant growth is in the offing.
4. Chewy
Chewy, the e-commerce platform for pets, has transformed into a profitable business, with 80% of revenue coming from returning customers. Its recent launch of veterinary clinics will help expand its customer base and introduce the e-commerce platform to a new market. Chewy's financial health is robust, with debt-free status and increasing return on invested capital. This makes it an excellent long-term investment opportunity.
5. CRISPR Therapeutics
CRISPR Therapeutics made a significant milestone when it received regulatory approval for Casgevy, its gene-editing technology product for blood disorders. Although revenue growth will take time due to a lengthy treatment process, the approval is a vote of confidence in CRISPR Therapeutics' technology. CRISPR is already working on several other candidates in its pipeline, potentially setting the stage for exponential growth.
6. Intuitive Surgical
Intuitive Surgical is a leader in robotic surgery, with a solid moat that should keep its position. Most surgeons train on Intuitive's da Vinci robot, making it likelier they'll stick with the platform. Plus, hospitals investing in the robots are likely to utilize them for amortization. Intuitive's recurrent revenue comes not just from robot sales but also from the sale of instruments and accessories for each procedure. This makes Intuitive a promising long-term investment.
7. CrowdStrike
CrowdStrike faced adversity after a faulty software update led to a global IT outage. However, the company quickly recovered and won back customer loyalty. Its pipeline didn't suffer, and it even used the opportunity to offer enhanced compensation packages, ultimately leading to expanded customer relationships. CrowdStrike's impact on cybersecurity is consistently growing, with a recent Q4 quarterly earnings report showing a $4 billion annual recurring revenue climb and a Q4 jump of $153 million.
8. Amazon
Amazon's leadership in e-commerce and cloud computing has generated substantial earnings over time, and recent changes to its cost structure could lift earnings in the future. Amazon also stands to gain from the AI boom, thanks to its efficient fulfillment network and its AWS service. With a $110 annual revenue run rate for AWS, Amazon will likely maintain its leadership in e-commerce and cloud and could experience new growth due to AI.
9. Nvidia
Nvidia, the No. 1 chip designer, is well-positioned to capitalize on the AI growth wave. Nvidia's technology is crucial for various tech applications, and the ongoing AI trend provides significant future growth potential. Although Nvidia has already experienced significant price increases (up 140% over the past year), there might still be plenty of room for it to soar.
10. SPDR S&P 500 ETF Trust
The SPDR S&P 500 ETF Trust is an asset that allows you to invest in top-performing companies. With an expense ratio of only 0.09%, the ETF is a cost-effective way to diversify your portfolio and invest in 11 industries and a variety of top stocks. With the carefully selected stocks in this list and the SPDR S&P 500 ETF Trust, your portfolio is set for success in 2025.
In the context of investing in the new year, the Federal Reserve's interest rate cuts could provide support for stock performance, particularly for companies like Meta Platforms, which have a strong focus on AI and dominate the social media market. With its AI investment and robust advertising revenue from apps like Facebook, Messenger, Instagram, and WhatsApp, Meta Platforms presents an attractive investment opportunity.
Furthermore, finance experts predict that the obesity drug market could reach $130 billion by 2030. Eli Lilly, with its blockbuster product, tirzepatide, and strong position in the market, is well-prepared to capitalize on this growth, making it an appealing investment option for those interested in finance and medicine.
