#1 Stock To Buy Right Now!?

The market is always buzzing with noise—whether it’s overhyped enthusiasm or unnecessary panic. However, principled, data-driven investing focuses on finding fundamentally sound companies at reasonable prices. Today, we’re putting four game-changing stocks to the test to determine which one could be the best stock to buy right now. Let’s dive into the analysis, starting with Palantir Technologies.

Palantir Technologies: Riding the AI Wave

Year to date, Palantir is up a staggering 375%, with the stock trading at $78.75. This isn’t just another hyped-up name; it’s backed by impressive numbers. In Q3 2024, Palantir posted 30% year-over-year revenue growth, hitting $726 million for the quarter. U.S. revenue surged 44%, while commercial revenue increased 54% and government revenue climbed 40%.

Such growth is extraordinary for any company, especially one expanding in competitive markets. Partnerships with giants like SpaceX and OpenAI further cement Palantir’s position as a leader in AI. With a projected 43% earnings growthnext year, the excitement around this company isn’t misplaced. More importantly, Palantir’s free cash flow is impressive, hitting $1 billion over the last 12 months.

Despite the lofty PE ratio of 406 and price-to-free-cash-flow ratio of 198, the company’s balance sheet remains strong. However, one red flag is the increase in outstanding shares due to stock-based compensation. While this dilutes shareholder value, Palantir’s high free cash flow margin of 37% in the last year suggests significant long-term potential.

Running Palantir through the stock analyzer tool with revenue growth assumptions of 12%, 18%, and 24%, profit margins ranging from 15% to 35%, and a desired return of 9%, the tool produced:

• Low price: $10
• High price: $48
• Middle price: $21

At its current price of $76, Palantir appears overvalued. While it’s a phenomenal business, the valuation doesn’t yet offer a margin of safety for long-term investors.

Nvidia: The AI Gold Rush Leader

Nvidia is up an eye-popping 189% this year, with a market cap of $3 trillion. Nvidia’s data center revenue hit $47.5 billion in 2024, a 27% increase, while Q4 revenue was $22.1 billion, up 265% year-over-year. Even more impressive, earnings per share soared 765%.

Nvidia dominates the GPU market with an 88% market share, positioning itself as the essential supplier in the AI gold rush. However, competition is inevitable, and maintaining such dominance will require significant effort.

Currently, Nvidia trades at 61 times free cash flow and 55 times earnings, indicating a premium valuation. Running it through the stock analyzer tool with revenue growth assumptions of 10%, 20%, and 30% and profit margins between 30% and 50%, we get:

• Low price: $43
• High price: $450
• Middle price: $147

At its current price of $139, Nvidia offers around a 9.5% return based on these assumptions. While the growth story is compelling, prudent investors must question whether the current price fully accounts for potential risks.

Southwest Airlines: A Recovery Play

Southwest Airlines has faced challenges since the pandemic, but its $27.3 billion in revenue over the last 12 months represents a record high. Before COVID-19, Southwest operated with impressive profit margins of 11% to 15% and had never lost money in its history.

Currently, Southwest’s profit margin is just 1%, but the airline is making strategic moves, such as ending its open-seating policy to attract higher-paying business travelers. If Southwest can return to pre-COVID profit levels, the upside potential is significant. Using a 10-year analysis with revenue growth assumptions of 2%, 4%, and 6%, profit margins of 5% to 11%, and a desired return of 9%, the tool yielded:

• Low price: $32
• High price: $115
• Middle price: $66

With a current market cap of $20 billion and a potential upside of 3x, Southwest presents an intriguing recovery play.

Nike: A Cultural Icon with Enduring Value

Nike isn’t just a brand; it’s a cultural phenomenon. The company owns 25% of the global sportswear market, with over 40% of its revenue coming from high-margin direct-to-consumer sales. Despite being down from its all-time high of $180in 2021, Nike remains a solid business with a five-year return on capital of 18.66%.

Analysts expect earnings per share to grow from $2.81 to $6.36 in the next four years. Running Nike through the stock analyzer tool with revenue growth assumptions of 3%, 5%, and 7%, profit margins of 10% to 12%, and a PE ratio of 20 to 26, we get:

• Low price: $60
• High price: $119
• Middle price: $85

At its current price of $75, Nike offers a 10.73% return based on discounted cash flow analysis. Given its strong brand, global reach, and operational excellence, Nike deserves a premium valuation.

Final Thoughts: Merging the Story with the Numbers

In principled investing, the key is to combine a compelling story with solid numbers. While exciting stocks like Nvidia and Palantir dominate headlines, overlooked names like Southwest and Nike can offer substantial upside with less hype.

Our analysis highlights the importance of understanding a company’s fundamentals, avoiding overpaying for a good story, and maintaining a margin of safety. If you want to explore more opportunities and sharpen your investment skills, consider joining our community and accessing powerful tools like the stock analyzer.

Try our $7 for 7 days trial today by visiting everythingmoney.com and start making better, more informed investment decisions.

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