If you’ve got some cash on the sidelines, you might be looking to deploy some now that the economic outlook has shifted into a more positive light. Even though the market has run up a bit in the past month, there are still plenty of stocks worth buying.
Here’s my list of the five best stocks worth buying right now.
First is cybersecurity firm CrowdStrike (CRWD 4.91%). Its cloud-based end point protection software secures network end points (like laptops and phones) and cloud workloads. Most businesses’ cybersecurity solutions must be beefed up in the coming years, and CrowdStrike will significantly benefit from this spending wave.
Even now, CrowdStrike has seen impressive revenue growth, with annual recurring revenue rising 54% to $2.34 billion in its latest quarter. CrowdStrike also converts a high percentage of its revenue into free cash flow (FCF), posting a 30% margin in Q3 FY 2023 (ending Oct. 31).
With the stock trading for 43 times FCF, it is slightly pricey, but with its rapid growth pace and huge runway, it’s a price investors should be willing to pay.
Airbnb (ABNB 3.97%) benefited from several trends, like working from home and staying in places other than hotels while traveling. Those trends have directly translated into Airbnb’s financial results.
In Q3, Airbnb’s revenue rose 29% to $2.9 billion, mainly due to 25% more nights and experiences being booked over last year. It also produced a record $1.2 billion in net income and generated $3.3 billion in free cash flow over the past year. Yet despite the excellent results and a management team that is optimistic about the future, the stock is still cheaply valued at 24 times FCF.
With the economic slowdown likely affecting consumers less than initially anticipated, Airbnb seems like a no-brainer buy at these levels.
Some occupations cannot function without the software needed to do daily jobs. For engineering and architecture, Autodesk‘s (ADSK 2.71%) products are necessary software expenses that cannot be cut. This makes Autodesk a fantastic investment, in good times and bad.
However, with Autodesk’s revenue rising by 14% in its Q3 (ending Oct. 31), I’d say times are quite good at the company. It also produced a ton of free cash flow — $460 million in the quarter, equating to a 36% margin.
Autodesk is planning on utilizing some of that FCF to repurchase shares, as the board of directors recently approved a $5 billion share repurchase plan. That’s enough to repurchase about 11% of the company.
With the stock trading at a fairly valued 25 times FCF, investors can pick up shares of a company that will steadily grow regardless of economic conditions.
Few companies possess the technical skill and resources to implement cloud, cybersecurity, or other digital transformation initiatives. That’s where the consulting expertise of Accenture (ACN 3.70%) comes in. By utilizing Accenture’s services, a company has access to a vast team of experts that can create, implement, and maintain any solution it might need.
One fact investors need to know about Accenture is its global footprint — it’s headquartered in Ireland. This means converting revenues back into U.S. dollars isn’t representative of what business success it saw. In its Q1 (ending Nov. 30), Accenture’s revenues rose 15% in local currency and returned over $2 billion to shareholders through share repurchases and dividends.
At 21 times FCF, Accenture is a solid buy and will see its services heavily utilized if its clients decide to reinvest in their own technological solutions now that the economic uncertainty is receding.
5. Taiwan Semiconductor
Taiwan Semiconductor (TSM 2.02%) is one of the world’s premier semiconductor foundries. While it doesn’t market its chips, it produces those that go into Apple and Nvidia products (among many others), making it a great way to play the technological advancements these companies are making. It’s also rolling out its 3 nm (nanometer) chip technology, which will be a huge revenue booster in the coming years.
In Q4, Taiwan Semiconductor’s revenue rose nearly 27% and posted a 27% FCF margin. However, management is also guiding for a slowdown in Q1 2023, but it depends on if you convert currency to U.S. dollars or keep it in New Taiwan dollars.
|Q1 2023 Guidance Currency||Q1 2022 Revenue||Q1 2023 Guided Revenue||YOY Change (Midpoint)|
|U.S. dollars||$17.57 billion||$16.7 billion to $17.5 billion||(2.7%)|
|NT dollars||$491.08 billion||$512.7 billion to $537.3 billion||6.9%|
So, if you utilize the company’s native currency instead of converting it back to U.S. currency due to accounting rules, Q1 shouldn’t be all that bad.
With Taiwan Semiconductor trading at 14 times earnings, this Warren Buffett stock looks like a bargain.
Keithen Drury has positions in Accenture Plc, Airbnb, Autodesk, CrowdStrike, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Accenture Plc, Airbnb, Apple, Autodesk, CrowdStrike, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends the following options: long January 2025 $290 calls on Accenture Plc, long March 2023 $120 calls on Apple, short January 2025 $310 calls on Accenture Plc, and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.