Two Unyielding Shares to Purchase in November
Market indices keep climbing to new heights, with the S&P 500 and Nasdaq Composite recording gains of 26% and 28% respectively since the start of the year as of November 11th. The significant growth can be attributed to a select few highly profitable companies that dominate their respective sectors. Investing in these unyielding corporations can enhance your chances of safeguarding and augmenting your savings.
If you're aiming to boost your investment success rate, here are two unshakable stocks worth considering for acquisition:
1. Amazon
Amazon's shares soared to new heights following the release of robust third-quarter earnings. The company reported impressive sales growth in both its online retail stores and cloud services. Although the stock might seem expensive, it is reasonably valued due to its escalating free cash flow.
Amazon is a leader in the United States e-commerce and cloud services markets, effectively leveraging its business advantages to enhance profitability. Amazon's free cash flow surged to an impressive $70 billion on a trailing-12-month basis, recording a 253% increase over the last five years.
It's crucial to note that the growth in free cash flow can enable Amazon to invest in artificial intelligence (AI) technology, paving the way for future growth. Amazon plans to spend $74 billion on capital expenditures this year, contributing to AI services in the cloud business as well as supporting same-day delivery for its online retail store.
The company is also reinvesting to improve the user experience on its online platform. AI has long been utilized for product recommendations, but Amazon is now exploring new features like AI Shopping Guides and an AI-powered shopping assistant, Rufus, to help users discover products more efficiently. These investments could potentially widen Amazon's lead in the e-commerce market and drive sustained growth over the long term.
With free cash flow skyrocketing and the stock trading at a fair price-to-free cash flow ratio of 31, Amazon investors have the potential to achieve market-beating returns in the coming years.
2. Meta Platforms
Meta Platforms, formerly known as Facebook, is trading near record highs after its third-quarter business update. Meta enjoys a daily user base of over 3.2 billion people across its social media apps, fueling strong demand in advertising, similar to Amazon. Like its counterpart, Meta is generating substantial growing free cash flow that is fueling investments in AI and strengthening its competitive edge.
Although revenue growth has slowed in recent quarters, the Q3 report revealed a strong 19% year-over-year increase. Meta has significantly increased its capital expenditures this year compared to the previous year, yet it still managed to generate a trailing-12-month free cash flow of $52 billion.
These investments primarily cover servers, data centers, and network infrastructure to support AI enhancements and other business operations. Meta anticipates another substantial increase in capital expenditures in 2025, indicating a long-term opportunity in expanding its AI capabilities.
AI plays a substantial role in Meta's business. It offers tools to aid advertisers in managing their ad campaigns, but it's also showing promising signs of boosting user engagement. "We're seeing AI deliver a positive impact on almost every aspect of our business, from core business engagement and monetization to our future roadmaps for new services and computing platforms," said CEO Mark Zuckerberg on the Q3 earnings call.
Meta's free cash flow has more than doubled over the last five years and should continue to grow at double-digit rates. Wall Street analysts expect Amazon and Meta Platforms' earnings per share to grow at 21% annually in the near future, offering a promising proxy for free cash flow growth. Meta shares are reasonably valued in relation to those projections, trading at a price-to-free cash flow of 29.
Investing in companies like Amazon and Meta Platforms can be a strategic move for those interested in finance and money growth. Amazon's impressive free cash flow of $70 billion and Meta's $52 billion have enabled them to invest heavily in artificial intelligence (AI), which is expected to drive future growth in their respective markets. These investments in AI can potentially lead to market-beating returns for Amazon investors and enhance user engagement and advertising demand for Meta, as suggested by Wall Street analysts' expectations of 21% annual earnings per share growth for both companies.
