Finding the right stocks in today’s market isn’t easy. With so many options, it’s tough to know which ones are worth your attention. But when you get it right, the payoff can be huge. That’s why we do the heavy lifting for you, sorting through the noise to bring you stocks that are set to move.
Each week, we dig into the data, look at market trends, and identify stocks with real potential. Our focus is on opportunities that aren’t just good for a quick win but have the strength to deliver ongoing growth.
This week, we’ve highlighted three stocks that stand out from the pack. Backed by solid analysis, these picks are positioned for a strong run in both the short and long term.
DigitalOcean (DOCN): A Mighty Mid-Cap Poised for Growth in 2025
As we approach the end of 2024, it’s time for investors to start thinking about which stocks to carry into 2025. Artificial intelligence (AI) will undoubtedly continue to be a dominant theme, and one mid-cap company competing in this space is DigitalOcean (DOCN), a cloud services provider catering to small and mid-sized businesses (SMBs).
DigitalOcean may not have the trillion-dollar market cap of industry giants like Amazon Web Services, Microsoft Azure, or Google Cloud, but it’s carving out its own niche by focusing on the SMB segment that the big players often overlook. With its market cap still under $4 billion, DigitalOcean provides cost-effective and transparent pricing, simplified deployment tools, and highly personalized service to SMBs—especially those in the start-up phase. This makes it the go-to cloud provider for smaller companies that don’t have the resources for in-house technical staff.
What’s more, DigitalOcean has been growing its portfolio of AI services, bolstered by cutting-edge data center infrastructure and chips from Nvidia. While the company’s focus remains on SMBs, DigitalOcean’s growing presence in the AI space could provide significant tailwinds moving into 2025, especially as demand for AI-driven cloud services increases.
Currently, DigitalOcean stock is trading near its lowest valuation in company history, based on a key valuation metric. With 474,000 of its 638,000 customers spending an average of just $15 a month, there’s plenty of room for growth as the company attracts more high-value customers. In fact, its 18,000 “scalers”—customers that spend an average of $2,153 a month—account for more than half of its monthly revenue, highlighting the potential for significant revenue expansion.
With a solid business model, growth potential in AI, and a market price near historic lows, DigitalOcean is an intriguing buy for those looking to add exposure to the cloud sector heading into 2025.
BWX Technologies Inc. (NYSE: BWXT): Strategic Advantages in the Nuclear Industry
BWX Technologies (BWXT) has quickly become one of the standout players in the nuclear fuel industry, and its growth trajectory is looking even more promising in 2024. The company has gained significant attention due to its key role as the primary supplier of naval nuclear reactors, fuel, and components for U.S. submarines and aircraft carriers. Given its unique position and growing demand in the nuclear sector, BWX is positioned to capitalize on the increasing interest in nuclear energy, especially with small modular reactors (SMRs).
The nuclear energy sector has been heating up recently, fueled by renewed interest from major tech companies like Microsoft, Amazon, and Google. These giants, driven by the massive demand for data centers, have turned to nuclear energy as a reliable and clean source of power to support their operations. This increased demand has sparked a wave of partnerships between tech companies and nuclear power providers, driving related stocks to new highs. Small modular reactors (SMRs), which are smaller, safer, and more scalable than traditional reactors, are expected to play a key role in this transformation of the energy landscape. BWX, as a leading supplier in the SMR market, is well-positioned to benefit from this shift.
Shares of BWX Technologies have surged 72.1% this year, largely driven by the “scarcity premium” in the SMR market. While the market for SMRs is still in its early stages, BWX’s role as a key supplier in the space gives it a clear edge. In addition to this, the company’s monopolistic position as the sole supplier for U.S. Navy nuclear power plants for submarines and carriers adds another layer of stability to its business. This unique advantage helps insulate BWX from challenges facing other players in the naval and shipbuilding industries, such as sluggish shipyard performance.
Analysts are optimistic about BWX’s future, with eight of the 11 analysts covering the stock recommending a buy or strong buy. Bank of America recently increased its price target for BWX to $160, up from $115, signaling more than 20% upside potential from its current share price. This optimistic outlook is based on the company’s growing role in supporting the Department of Defense’s Indo-Pacific strategy and the bipartisan backing it enjoys for its contributions to U.S. defense initiatives.
With a strong foothold in both the military and civilian nuclear sectors, and given the political tailwinds supporting its business, BWX Technologies presents a compelling investment opportunity. The stock’s strong fundamentals, its critical role in defense, and the growing nuclear energy market—especially with the rise of SMRs—make it a solid pick for those looking for high-growth opportunities in the energy sector.
Adobe Inc. (NASDAQ: ADBE) Strong fundamentals and oversold conditions create a compelling buying opportunity.
Adobe Inc. has recently positioned itself as an attractive investment following a strong earnings report that highlighted its robust growth across multiple segments. For the third quarter of 2024, Adobe reported a remarkable 10% year-over-year increase in revenue, reaching $4.89 billion. This growth is driven primarily by its core segments: Digital Media, Document Cloud, and Experience Cloud, which saw increases of 11%, 15%, and 11%, respectively. These figures underscore the ongoing demand for Adobe’s AI-enhanced creative solutions.
In the wake of Donald Trump’s recent election victory, the technology sector stands poised for renewed momentum, reminiscent of the performance seen during his 2016 presidency. A pro-business agenda, regulatory flexibility, and potential tax incentives under his administration could set the stage for technology stocks, including Adobe, to outperform in the coming years. These potential tailwinds may provide a significant boost to growth-oriented companies like Adobe.
Despite the positive results from Adobe, the stock has recently entered oversold territory, presenting a rare opportunity for investors. After showing signs of positive divergence, it appears that sellers are starting to get exhausted. This is a crucial indicator that could pave the way for a significant counter-trend rally. Currently, the stock is trading near support levels, which suggests a solid base from which it could rebound.
Moreover, Adobe’s operating margins remain impressive at 25.6%, well above the industry average of 16.8%. The stock trades at only 23.5 times forward earnings, compared to the industry average of 27.8 times. This 15% discount reflects a significant upside opportunity, especially considering Adobe’s superior growth rates and operational efficiency.
Given the favorable market conditions and the potential for Adobe to capitalize on its strong fundamentals, now is an opportune time to consider adding this stock to your portfolio. With the tech sector poised for renewed momentum and political support potentially driving growth, Adobe stands out as a solid investment choice.