This year is coming to an end, but investors shouldn’t ignore some reasonably priced stocks before the calendar flips to 2025. Often, fund managers reposition their portfolios in December, which can lead to one calls a « Santa Claus Rally“This effect causes stock prices to rise significantly in December because many people are buying.
Three stocks seeing strong buying interest in December are Alphabet (NASDAQ:GOOG)(NASDAQ:GOOGL), Metaplatforms (NASDAQ:META)And ASML Holding (NASDAQ: ASML). Every company is well positioned for the long term, but has short term reasons why it is a good buy.
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Alphabet is best known as the parent company of Google, but it also has other strong areas under its umbrella. It is deeply involved in the generative AI arms race through its Gemini model, which has established itself as a high-end model for use in this area. Part of that strength comes from its cloud computing division, Google Cloud.
Google Cloud allows customers to rent computing space so they can easily scale up or down. It also gives them access to cutting-edge graphics processing units (GPUs) and AI accelerators to quickly train their AI models. This division has been on fire lately, with revenue up 35% last quarter.
Overall, Alphabet is performing at a very high level, but its stock price doesn’t reflect that fact. The stock trades at just 21.5 times forward earnings, which represents a huge discount to other tech peers like Microsoft And Applewhich trade at 31.7 and 30.4 times forward earnings, respectively. Additionally, Alphabet is growing earnings much faster than those two, so this undervaluation makes no sense.
To add even more fuel to the fire, Alphabet is trading at a lower price than S&P500which trades at 24.6 times forward earnings. Alphabet is a great company trading at a deep discount, and I expect fund managers and investors to take advantage of this price soon.
I could almost copy and paste the Alphabet paragraph onto the Meta Platforms part and make most of the same be true. Instead of dominating search engines, Meta dominates social media.
The company earns a considerable portion of its revenue from its Facebook, Instagram and other platforms through advertising. Meta also has generative AI aspirations through its Llama model, which has also become a top choice for anyone developing a generative AI-powered model.
Meta is also performing at a very high level, with revenue up 19% year-over-year and diluted earnings per share (EPS) up 37%. These are very high levels, given Meta’s size, and demonstrate the strength of the company.
One area where it differs from Alphabet is its price, as it trades at 24.5 times forward earnings. This is essentially the same price as the S&P 500, but considering how quickly Meta is growing its profits and revenues, it’s a cheap stock price.
Meta-platforms could see another rise before the end of the year. I think it also makes a great long-term investment.
ASML is quite different from Alphabet and Meta. It does not need to advertise and is the only company in the world that can build its extreme ultraviolet (EUV) lithography machines.
Semiconductor manufacturers use these machines to leave traces on chips at microscopic levels. Without ASML technology, there would not be the same computing capabilities as today, putting AI progress on hold.
As ASML is the only company in the world with these capabilities, its machines are highly regulated and a growing number of them are increasingly banned from sale to China and its allies. This is a problem because China accounted for almost 50% of sales in the third quarter.
However, this is an outsized share compared to historical averages, and management expects its China revenue share to decline to around 20% in 2025. This decline has also affected the company’s revenue outlook. ASML for 2025, because it reduced the range from 30 billion to 40 billion euros. up to 30 to 35 billion euros.
Investors didn’t like this news and sent the stock tumbling after the release. However, management has made it clear that long-term growth is still intact and this is just a bump in the road. The damage is done and the stock is now trading at 33 times forward earnings.
While it may be expensive compared to the other two, it is ASML’s cheapest stock in a long time. Additionally, ASML has no competition in this area. While the short term may be a bit rocky, the long-term trend of consumers using more chips and more powerful chips is undeniable. Therefore, ASML is a fantastic buy ahead of 2025.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, former director of market development and spokesperson for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Keithen Drury holds positions in ASML, Alphabet and Meta Platforms. The Motley Fool holds positions and recommends ASML, Alphabet, Apple, Meta Platforms and Microsoft. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
