Where should you invest your hard-earned money? That's probably the hardest question any investor faces. Different individuals arrive at different conclusions, of course.
I think, though, that three stocks especially stand out right now as excellent choices. Here are my picks for the best stocks to invest $5,000 in right now.
1. Alphabet
Two technologies hold the potential to transform our world over the next few decades -- artificial intelligence (AI) and quantum computing. Alphabet (GOOG 1.61%) (GOOGL 1.75%) is a leader in both of them.
NASDAQ: GOOGL
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The company's recent launch of its Gemini AI model proves that it won't be left behind in the AI race. Gemini Ultra beat the top AI models available (including GPT-4) on 30 of 32 key benchmarks. It's also the first AI system to outperform human experts on the MMLU (massive multitask language understanding) test, which includes 57 subjects.
I fully expect future versions of Gemini will be even more powerful. That's great news for Google Cloud, as more customers move their apps and data to the cloud to harness the power of AI.
Quantum computing still has a long way to go. However, Alphabet has achieved two key milestones. The company thinks it could realistically develop a functional commercial quantum computer within the next decade.
In the meantime, Alphabet is highly profitable with a huge cash stockpile. The company dominates multiple markets, including search. Its valuation also isn't as ridiculously high as many other top AI stocks. Alphabet's shares are trading at less than 21x forward earnings.
2. PayPal Holdings
You might be surprised to see PayPal Holdings (PYPL 0.26%) on this list. The fintech stock has been a big loser in recent years and is down more than 20% over the last 12 months.
NASDAQ: PYPL
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But this steep sell-off has caused PayPal's shares to become dirt cheap. The stock trades at a forward earnings multiple of less than 11.6x. Is PayPal a value trap? I don't think so.
The company's business continues to perform relatively well, even though growth isn't as impressive as in the past. PayPal's revenue jumped 9% year over year in the fourth quarter of 2023 and adjusted earnings per share soared 19%.
PayPal's Braintree payments platform, which processes credit cards, debit cards, and more, is an especially important growth driver. The company also has solid growth opportunities with its Venmo peer-to-peer payment offering.
3. Vertex Pharmaceuticals
Vertex Pharmaceuticals (VRTX +2.25%) is arguably one of the most resilient stocks on the market. The big-biotech's shares jumped in 2022 when the overall market plunged and last year, when the market was booming. Over the last 12 months, Vertex's share price has more than doubled.
NASDAQ: VRTX
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I expect those winning ways to continue. Vertex recently won U.S. and U.K. approvals for Casgevy in treating sickle cell disease and transfusion-dependent beta-thalassemia. The gene-editing therapy is effectively a cure for the two rare genetic diseases. Casgevy looks like a sure-fire megablockbuster.
Vertex expects to file for regulatory approvals for two other drugs this summer. VX-548 has significant potential as a non-opioid treatment for acute pain. The company's vanzacaftor triple-drug combo could be its most powerful and most profitable cystic fibrosis (CF) therapy yet.
Speaking of CF, Vertex still has plenty of growth opportunities in this market. The company continues to push for label expansions of its already-approved therapies to treat younger children and secure additional reimbursements.
More game-changing therapies could be on the way. Vertex is advancing inaxaplin into late-stage testing as a treatment for APOL1-mediated kidney disease (AMKD). There are currently no approved drugs that treat the underlying cause of AMKD, and the disease affects more patients than CF does worldwide. In addition, Vertex has multiple programs in early-stage testing that hold the potential to cure type 1 diabetes.
