The stock market has hit new highs nearly four dozen times this year, suggesting stock valuations are elevated. But as we near the end of 2024, there are still several compelling bargains to be found in the tech and telecommunications sectors.
If you have extra cash you don't need for paying expenses or bolstering an emergency fund, here are two bargain stocks worth considering that you can buy for less than $500. These companies benefit from favorable tailwinds in their industries that can send their share prices higher next year and beyond.
1. Micron Technology
Micron Technology(NASDAQ: MU) is a leader in memory and solid-state storage drives for consumer electronics and data centers. The stock is up 50% over the last 12 months, and that's after a 36% sell-off from its recent high.
Growing investment in the data center market remains a powerful tailwind for the company, which makes the stock an excellent buy on the dip.
Revenue jumped 93% year over year in the company's most recent quarter. "We are entering fiscal 2025 with the best competitive positioning in Micron's history," CEO Sanjay Mehrotra said in the fiscal Q4 press release. The company expects record revenue over the next year.
Micron can be a volatile stock due to the cyclical nature of its business. Memory products, such as dynamic random access memory (DRAM) modules, can experience swings in selling prices that impact Micron's revenue. It's a competitive market, but the long-term trends in artificial intelligence (AI) infrastructure require more memory and storage to handle higher data processing, which is a huge tailwind for Micron's business.
The cyclical nature of this market is also why the stock is a timely buy right now. With demand for advanced memory products running ahead of supply, profits are on the upswing. Looking out to fiscal 2027, Wall Street analysts expect Micron's earnings per share to reach $10.96. That leaves the current share price trading at less than 10 times those estimates, which is a bargain.
Next year, Micron should see growing demand from the availability of new AI-optimized PCs, AI smartphones, and AI servers. Investors should expect the stock to hit new highs over the next 12 months.
2. Verizon Communications
Shares of Verizon Communications(NYSE: VZ) have climbed 18% over the last year, as investors start to price in growing wireless revenue and growing 5G adoption from smartphone buyers. The stock's high dividend yield will also look more attractive to investors as interest rates come down, which could be a catalyst for the shares in 2025.
Recent earnings results have eased Wall Street's concerns over weakening growth amid macroeconomic challenges and competition among wireless operators. Verizon's postpaid phone net additions, which refer to the monthly billed plans for wireless phones, doubled in Q3 year over year, and the company also maintained low customer churn, which indicates a strong competitive offering to other wireless carriers.
Investors are starting to look to the future, where Verizon is expected to deliver profitable growth in 2024 and beyond. It has a pending acquisition of Frontier Communications for $20 billion, which will expand its fiber and broadband services. Full-year revenue is anticipated to increase by less than 1% in 2024 before growing 2% next year, according to Yahoo Finance.
Telecom stocks are attractive to dividend investors, particularly due to the consistent revenue from monthly billed services. Taking into account all the companies that merged over the years to create what is today Verizon Communications, the company has paid a growing dividend for 40 years. It currently pays out 59% of its 2024 expected earnings to bring the forward dividend yield to 6.48%.
Verizon should benefit from the demand for AI-enabled devices. Additionally, management's focus on driving profitable growth and paying down debt should cast a more positive halo around the stock on Wall Street. Lower interest rates also increase the appeal of the stock's high dividend yield. For these reasons, Verizon stock should climb higher over the next year.
Should you invest $1,000 in Micron Technology right now?
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John Ballard has no position in any of the stocks mentioned. The Motley Fool recommends Verizon Communications. The Motley Fool has a disclosure policy.
