Investing $200 in these two potentially high-growth stocks might double your investment:
Expansive equities have largely fueled stock market growth this year, and this upward trend appears to be continuing unabated. The S&P 500 officially marked its entrance into a bull market in January and has since surpassed previous records, reaching a potential 25% annual growth rate following its 24% increase in the previous year. The prolonged nature of bull markets, frequently outlasting their bear market counterparts, suggests that the favorable conditions for growth stocks may continue for some time. Growth stocks tend to thrive during periods of market optimism.
In terms of investment, it's not necessarily a requirement to limit your growth stock investments to a specific bull market. High-quality stocks can offer their most substantial returns over the long term, regardless of whether the market is consistently marching upward or experiencing a temporary lull.
Starting your investment journey today with a modest $200 could potentially yield substantial returns by purchasing a leading tech company trading at a discounted valuation and backing the early growth phase of a young artificial intelligence (AI) enterprise. Let's delve into two promising ventures that could potentially double your investment over time.
1. Google's Parent Company
Also recognized as Alphabet (GOOG -3.54%) and GOOGL -3.59%), this renowned entity is synonymous with Google Search, commanding an astonishing 90% of the worldwide search market share. The revenue and profit growth of Google Search attract a substantial number of advertisers in search of a suitable audience, thereby fueling Alphabet's long-term financial success. In addition to its dominance in search, Alphabet has made significant strides in the burgeoning field of cloud computing. Notably, Google Cloud surpassed $10 billion in quarterly revenue and $1 billion in quarterly operating profit this year, figures that continued to escalate in the most recent quarter.
Despite its impressive performance, Alphabet shares are currently trading at a relatively cheap price of 24 times trailing 12-month earnings. Compared to other cloud computing powerhouses like Amazon, Alphabet presents an appealing investment opportunity. Should Alphabet's stock price double from its current $180 level, and earnings per share remain constant at $7.53 on a trailing 12-month basis, the stock's price-to-earnings ratio would climb to 48, which is somewhat higher than Amazon's but is still within reasonable bounds for a growth stock. However, earnings growth is projected to increase at a double-digit rate over the subsequent five years, setting the stage for substantial returns on Alphabet stock without causing it to over-valuate.
2. SoundHound's AI Technology
Pioneering the field of AI-driven voice technology, SoundHound AI (SOUN 7.50%) has established a powerful platform that translates speech directly into meaning, bypassing the text translation step commonly used in the industry. SoundHound has made significant strides in the automotive and restaurant sectors and is now setting its sights on a wide array of industries, including finance and healthcare. The estimated total addressable market for SoundHound currently stands at approximately $140 billion, creating a vast venue for future growth.
Displaying impressive growth quarter after quarter, SoundHound reported a 89% increase in revenue in its most recent period and raised its full-year revenue projections to a range of $82 million to $85 million. The company's customer concentration and industry diversification have also strengthened, with only 12% of revenue attributed to its largest client and five different industries collectively accounting for 5% to 25% of its revenue.
Although not yet profitable, SoundHound is dedicating its resources to growth, having recently acquired Amelia and extending its reach into healthcare, finance, and insurance sectors. With its share price currently below $7, SoundHound appears to be a valuable investment opportunity despite its forward revenue estimates of 27 times. Keep in mind that this pricing measure is largely short-term in nature and does not take into account its potential for substantial growth over an extended time frame, positioning SoundHound as a prospective stock that could potentially double in value.
- For those interested in finance and investing, Alphabet's relatively low price-to-earnings ratio of 24 times trailing 12-month earnings could make it an attractive investment opportunity in the expanding field of cloud computing.
- SoundHound AI, a company working in AI-driven voice technology, might be an intriguing investment option for individuals looking to diversify their portfolio. Currently trading below $7, the company's estimated total addressable market of $140 billion and its focus on growth sectors like finance and healthcare could potentially lead to substantial returns over the long term.
