The best stocks to invest $1000 in right now

The stock market has done incredibly well in 2024 and 2024 S&P 500 is 25% higher year-on-year. Fortunately for investors looking to put capital into the market, things cooled off in December, with the S&P down 1% since the start of the month. Looking even deeper, some companies are facing challenges that have dragged down their stock prices.

Hoping for a discount in the stock price is only part of the equation for finding the best stocks to buy. Investors should also look for companies with competitive advantages and a solid track record of success. Short-term calls have created opportunities to buy shares of the two companies at a discount.

For investors with $1,000 to put in the market, buying one or both of these stocks could end up being a wise decision.

If you opened a PDF file, you used the file Adobe (NASDAQ: ADBE) product. While this ubiquitous file type may be Adobe's best-known application, it's its creative suite that's the main driver of financial results. Products like Photoshop and Premiere Pro are industry standards for creative fields, although competition has increased over time.

Adobe's position on the market is evidenced by its financial results. Like all businesses, there are sometimes short-term bumps along the way, but in the long run, Adobe is remarkably consistent. Consider revenue, net income, and free cash flow for the past five years.

While Adobe's track record is impressive, the investment is about the future, and the biggest potential disruption to Adobe's market dominance is artificial intelligence (AI). AI can already do many of the tasks that creators would do within Adobe products, and the capabilities of AI are increasing every day.

Adobe has decided to embrace this new technology and is working hard to integrate its AI product, Firefly, into its software suite. Rather than seeing AI as a replacement for Adobe products, the company believes it can be an aid to the creative process by taking care of some of the more menial tasks and freeing up creators to be creative.

Time will tell how successful this strategy will be and the market seems to be waiting to find out. Adobe currently trades at a price-to-earnings (P/E) ratio of 36. While that's not a cheap multiple, it's below Adobe's five-year average P/E ratio of 47. For investors who believe Adobe will harness the power of AI and don't let it disturb you, today's price could turn out to be a bargain.

Similar to Adobe, a Dutch manufacturer ASML (NASDAQ: ASML) is a leader in its field. ASML manufactures the lithography machines necessary for the production of all semiconductor chips. When it comes to the most advanced semiconductors, ASML is the only company in the world that produces the extreme ultraviolet lithography (EUV) machines necessary for these cutting-edge chips.

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With that kind of competitive advantage, one would expect ASML to trade at a very rich valuation, and that's usually the case. However, the cyclical center of the semiconductor industry (AI chips aside), combined with geopolitical restrictions on where advanced semiconductors can be sold, has thrown more uncertainty into the business than usual. This has resulted in ASML trading at almost the same discount to its five-year average P/E ratio as Adobe.

ASML PE ratio data according to YCharts

ASML management believes the challenges it faces will last until 2025 before any recovery occurs. While this could mean further stock falls, ASML's discount right now represents a compelling buying opportunity for a company that will be at the center of one of the industry's most important sectors for years to come.

ASML expects total semiconductor sales to grow at a 9% compound annual rate between 2025 and 2030, providing some insight into the demand waiting on the other side of this cyclical downturn. Perhaps more importantly, the company believes semiconductor sales for servers, data centers and storage will be twice as high as overall sales.

This should mean that there will be continued demand for ASML's most advanced EUV machines, as this is where AI spending should be focused.

Before you buy shares in ASML, consider the following:

The Motley Fool Stock Advisor a team of analysts has just identified what they believe 10 best stocks for investors to buy now… and ASML was not one of them. The 10 Stocks That Went Down Could Bring Out Monster Returns in the Years to Come.

Consider when Nvidia created this list on April 15, 2005… if you invested $1,000 at the time of our referral, you would have $842,611!*

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Jeff Santoro holds positions at ASML and Adobe. The Motley Fool has positions and recommends ASML and Adobe. The Motley Fool has a disclosure policy.

The best stocks to invest $1000 in right now originally published by The Motley Fool