Every month, we ask our freelance writers to share their top US stocks with investors — here’s what they rate highly for December!
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Amazon
What it does: Amazon is a technology company that operates in the e-commerce, cloud computing, and digital advertising markets.
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By Edward Sheldon, CFA. Amazon (NASDAQ: AMZN) stock has performed really well in 2024. However, as we approach 2025 I remain very bullish on it.
I’m really excited by the level of innovation at Amazon right now. Recently, it launched ‘Haul’ – an online shopping service designed to compete with Temu. It has also been developing ‘Trainium 2’ AI chips. It’s hoping that these chips can rival those made by Nvidia.
I’m also excited by the financials here. This year, the company’s earnings per share are projected to grow 77%. Next year, analysts expect growth of another 20%.
One other reason I’m bullish is that the stock has massively underperformed other mega-cap tech stocks like Microsoft and Apple in recent years. With the valuation near historic lows currently, I reckon there’s potential for a catch up.
Of course, Amazon operates in competitive industries. So, there’s no guarantee that its shares will do well in the years ahead.
I think they have a huge amount of potential though. Currently, Amazon is my largest individual stock holding.
Edward Sheldon owns shares in Amazon, Nvidia, Microsoft, and Apple.
Five Below
What it does: Five Below is a US discount store that sells a whole range of items (mostly) for $5 or less.
By Stephen Wright. Shares in Five Below (NASDAQ:FIVE) have been falling again. The stock might be above its August lows, but it’s still at a level where I think it’s an interesting opportunity.
Discount retail can be a minefield. Targeting households with relatively low incomes – especially with discretionary items – makes a business especially vulnerable to economic downturns.
Nonetheless, I find Five Below’s position difficult to ignore. For one thing, the firm has plenty of scope for growth – it’s looking to expand its store count by 12% per year over the next five years.
Importantly, the payback period for a new outlet is less than a year. That means the company should be able to keep growing without putting its balance sheet under stress.
The latest decline in the stock brings the price-to-earnings (P/E) ratio down to around 16. And at that level, it’s top of my list of US stocks to consider buying in November.
Stephen Wright owns shares in Five Below.
Novo Nordisk
What it does: Novo Nordisk is a pharmaceutical giant specialising in diabetes care, obesity treatment, and other serious chronic diseases.
By Ben McPoland. Novo Nordisk (NYSE: NVO) stock has been volatile since Donald Trump nominated Robert F. Kennedy Jr. to be head of the US health department. Kennedy is critical of weight-loss medications, making investors nervous about the growth implications for Wegovy, the company’s blockbuster anti-obesity treatment.
So that’s a risk, while clinical trial setbacks for its next-generation weight-loss treatments are always possible.
Still, I think the stock’s 30% drop (as I write) since June makes it worthy of consideration. It’s now trading at its lowest forward price-to-earnings multiple all year (26).
The company is firing on all cylinders. Revenue jumped 24% to approximately $29bn in the first nine months of 2024, boosted by surging Wegovy sales.
The weight-loss medication has just been approved in China, where there are thought to be over 100m people living with obesity. Wegovy is now available in at least 16 countries (surely more will follow).
Meanwhile, the company’s operating profit margin remains above 40%. So this is an extremely high-quality business.
Looking ahead, some analysts forecast a $150bn weight-loss market by the early 2030s. Novo Nordisk appears perfectly positioned to continue leading this rapidly growing market.
Ben McPoland does not have a position in any stocks mentioned.
PayPal Holdings
What it does: PayPal is a digital payment processing platform enabling 426 million users to execute transactions online.
By Zaven Boyrazian. PayPal (NASDAQ:PYPL) is one of the biggest digital payment processors in the world, controlling an estimated 46% of market share within the global payment service sector, according to WallStreetZen. However, the company’s valuation became quite rich, leading into the 2022 stock market correction. And consequently, the digital payments giant watched its market cap collapse.
Yet over the last couple of months, PayPal has been quietly bouncing back climbing by almost 50% in the past year. While top-line growth is still subdued, expansion in profit margins paired with increased user activity is driving profits and cash flows even higher. Yet its price-to-earnings ratio is still sitting around 20 versus its historical average of 45.
Obviously, there’s a growing competitive threat from alternative digital payment companies like Stripe and Revolut. However, the currently cheap valuation makes this a risk worth taking, in my opinion. That’s why I’ve already added more shares to my portfolio this month.
Zaven Boyrazian owns shares in PayPal.
Twilio
What it does: Twilio offers software to integrate communication services into apps, like connecting drivers and riders.
By Dr James Fox. Twilio (NYSE:TWLO) stock is finally expected to deliver on its earnings potential. The company surged during the pandemic as investors chased the next big winner in communications tech, but until recently, it had failed to deliver.
The company’s previous underperformance can be traced to a bloated cost structure, wreckless acquisitions, and broader inefficiencies. However, with recent cutbacks, Twilio is starting to look like a well-oiled machine.
Earnings are expected to grow by 30% annually over the next three to five years reflecting a strong operating environment and better cost management. The communications company now trades at 26.3 times forward earnings and has a price-to-earnings-to-growth ratio of 0.88.
Now, because investors have high expectations (as shown by its high P/E ratio), there’s a risk that the company might not be able to meet these expectations, which could negatively impact its stock price.
However, the company has outperformed analysts’ expectations time after time in 2024, and I’m confident this will continue.
James Fox owns shares in Twilio
