Buying these three stocks offers you instant diversification.
When considering an investment of $1,000 or more, diversification should be a key focus. Opting for two or three stocks that provide different benefits—whether through exposure to various industries or investment narratives like growth or recovery—can be a smart strategy. This approach helps mitigate risk; if one stock or sector underperforms, others may balance out the losses.
Currently, as the S&P 500 (^GSPC 0.01%) continues its upward trend and interest rates decline, it’s an ideal moment to consider adding a few growth stocks to your portfolio. The following three stocks not only offer potential but also present distinct investment stories.
One stock is a tech leader in the booming artificial intelligence (AI) sector. Another is a biotech firm whose stock has dipped, but promising drug candidates could turn its fortunes around. Lastly, a major cruise line has seen its revenue surge and stands to benefit from a favorable interest rate environment.
1. Nvidia
You may have heard of Nvidia (NVDA -0.77%), even if you’re not a tech enthusiast. This AI chip designer has gained significant attention due to its high-performance graphics processing units (GPUs) and essential enterprise software that supports companies on their AI journeys. As a result, Nvidia has experienced impressive double- and triple-digit revenue growth, with earnings soaring into the billions.
While competitors exist, they face a tough challenge in dethroning this market leader. Nvidia’s commitment to innovation ensures that it updates its top-performing chips annually, leaving little room for rivals to catch up.
The AI market is thriving, with spending aimed at developing AI solutions for real-world applications in the coming years. Nvidia’s GPUs are integral to this process, making it a compelling stock to buy now and hold for the long term.
2. Viking Therapeutics
Viking Therapeutics (VKTX 6.56%) has seen its stock decline by 55% over the past year, presenting a unique opportunity for investors seeking the next biotech star. This drop isn’t due to negative news about its development pipeline; in fact, Viking has reported excellent results from trials of its leading candidates, which target a high-growth market: weight loss.
Analysts predict that the market for weight loss drugs could approach $100 billion by the end of the decade, positioning Viking to capitalize on this growth.
The company’s candidate, VK2735, is being developed in both oral and injectable formats. The oral version is in a phase 2 trial, while the injectable is further along, currently in phase 3.
VK2735 is a dual GLP-1/GIP receptor agonist, similar to Eli Lilly‘s popular drugs, Mounjaro and Zepbound, which are prescribed for weight loss. With high demand, there’s ample opportunity for Viking to achieve significant growth.
3. Carnival Corp.
Carnival Corp. (CCL -0.97%) (CUK -0.79%) faced significant challenges during the pandemic, which forced it to halt operations and increase debt to stay afloat.
However, Carnival has recently demonstrated resilience, with soaring demand for its cruises leading to record revenue and a return to profitability. In its latest reporting period, Carnival achieved its highest quarterly revenue ever, exceeding $8 billion, with net income reaching a record $1.9 billion.
The company has made strategic moves to enhance profitability, such as replacing older ships with more fuel-efficient models. Additionally, a lower interest rate environment is favorable, reducing the cost of variable-rate debt and making consumers more inclined to book cruises.
Currently, Carnival stock trades at 13 times forward earnings estimates, a reasonable valuation for a company that has successfully navigated recovery and is well-positioned for future growth.
Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool recommends Carnival Corp. and Viking Therapeutics. The Motley Fool has a disclosure policy.
