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AMD’s third-quarter sales jumped 18% year over year, driven by a 122% surge in the data center segment. That’s the division accounting for AMD’s Epyc and Instinct chips, which are used in AI servers.

In Micron’s recent fourth-quarter report, revenue rose 93% year over year. Again, the fuel for this fire was “robust AI demand” and soaring data center sales, the report said.

Both stocks look expensive if you focus on their reported results. AMD trades at 124 times trailing earnings and 145 times free cash flow. These metrics stand at 147 and 909, respectively, for Micron. So I get it if traditional value investors are staying away from these stocks.

But the chip experts are coming back from an extended downturn in the semiconductor sector, held back by a stubborn shortage of manufacturing capacity and the recent inflation crisis. Switching to a forward-looking perspective, AMD shares are changing hands at 27 times next-year earnings estimates, and Micron’s forward price-to-earnings ratio stops at 7.7.

So I think it’s a big mistake to write off Micron and AMD as overpriced growth stories. It just took some time to overcome recent back-end challenges and deliver robust bottom-line profits again. These AI stocks look tempting right now, and I highly recommend picking up a few shares while they’re cheap.

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

• Amazon: if you invested $1,000 when we doubled down in 2010, you’d have $23,818!*

• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $43,221!*

• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $451,527!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

See 3 “Double Down” stocks »

*Stock Advisor returns as of November 11, 2024

Anders Bylund has positions in Intel, Micron Technology, and Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Intel, and Nvidia. The Motley Fool recommends the following options: short November 2024 $24 calls on Intel. The Motley Fool has a disclosure policy.

2 Artificial Intelligence (AI) Stocks to Buy on the Dip was originally published by The Motley Fool

PayPal’s active accounts increased slightly in Q3, marking the first growth since first-quarter 2023. Transaction margin also ticked up — something it hasn’t done in a couple of years. These slight improvements helped PayPal’s revenue rise 6% year over year, which isn’t all that impressive. However, investors need to focus on profits with PayPal, as it isn’t a growth story anymore. Operating income was up 19% to $1.4 billion, which is outstanding.

With its cash flows, PayPal is repurchasing a ton of stock and retired 28 million shares in Q3 alone. With about 1 billion shares outstanding, that means PayPal retired nearly 3% of its shares in one quarter. Most companies would be happy if they could do that in a year, yet PayPal is doing it much faster. This is occurring for two reasons.

First, PayPal’s management devotes all of its cash flows to repurchasing shares. It can afford to do this because its balance sheet is in a healthy spot. Second, it’s a good idea because the stock is cheap. At the start of Q3, PayPal’s stock traded for around 12 times forward earnings and 14 times trailing earnings.

PayPal’s stock is no longer as cheap after the rally, so the repurchases will be less effective, but it still has plenty of room to run, considering that it’s still well below the S&P 500’s price tag.

I wouldn’t be surprised if PayPal’s rally continues to the end of the year, making it a great stock to purchase now.

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

• Amazon: if you invested $1,000 when we doubled down in 2010, you’d have $23,818!*

• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $43,221!*

• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $451,527!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

See 3 “Double Down” stocks »

*Stock Advisor returns as of November 11, 2024

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Keithen Drury has positions in Alphabet and PayPal. The Motley Fool has positions in and recommends Alphabet and PayPal. The Motley Fool recommends the following options: long January 2027 $42.50 calls on PayPal and short December 2024 $70 calls on PayPal. The Motley Fool has a disclosure policy.

2 Stocks That Could Crush the Market in 2025 was originally published by The Motley Fool

However, after the pandemic surge, Shopify faced a slowdown in merchant base growth, raising concerns about its ability to retain customers, especially as competition intensified. On the other hand, Block experienced significant volatility in its Bitcoin-related revenue through Cash App, making its earnings more unpredictable and more exposed to market cycles and crypto price fluctuations. These factors contributed to major drawdowns for both stocks, with Shopify falling 82% and Block dropping 85%.

Although I have a neutral outlook on Shopify, this stance is not a reflection of the company’s fundamentals. Shopify’s investment thesis is supported by its impressive growth trajectory in recent quarters, particularly its ability to sustain strong revenue growth while expanding profitability margins.

Over the past three years, Shopify’s revenue has grown at a CAGR (compound annual growth rate) of 25%, while maintaining gross margins of 51%. Looking ahead, the company is expected to grow EPS at an impressive 43.6% annually over the next three to five years. However, my main concern lies in valuations. With a forward P/E ratio of 88.8x, Shopify trades at a relatively high multiple, resulting in a PEG ratio of 2x, which suggests the stock is somewhat richly valued.

These stretched valuation multiples reflect Shopify’s strong momentum, further supported by its Q3 2024 earnings, reported on November 12, which helped boost Shopify’s stock by more than 25%. The company posted 26% year-over-year revenue growth, reaching $2.16 billion and marking the sixth consecutive quarter of growth above 25%.

Noteworthy, this growth is not only in the top line but also in operational efficiency and profitability. A standout achievement in Q3 was Shopify’s ability to drive strong revenue growth while simultaneously expanding profit margins, a rare feat among high-growth tech companies. Operating income surged 132% from $122 million in Q3 2023 to $283 million in Q3 2024, driven by scaling operations rather than cost-cutting. As a result, operating expenses grew by just 7% year-over-year, while gross profit increased by 24%, showcasing Shopify’s ability to scale efficiently.

In comparison, Block has shown strong performance similar to Shopify, with a 52% increase in the stock price over the past year. I maintain a slightly more bullish view of the company despite its slower growth profile and lower margins (36% gross margin) compared to Shopify. Over the past three years, Block has grown its revenue at a CAGR of 12.5%, which is respectable but not exceptional for a growth stock.

Given this more modest growth trajectory, Block currently trades at a forward P/E ratio of 24.2x, nearly double the industry average. However, the company is forecasting robust bottom-line growth, with an expected CAGR of 39.9% over the next three to five years, which gives Block a PEG ratio of just 0.6x, suggesting the stock is undervalued relative to its growth potential.

Even though the current momentum for Block is highly bullish, its Q3 results, reported on November 7, were mixed: the company met bottom-line expectations but missed revenue estimates, despite posting 6% revenue growth. However, investors seemed to focus more on profitability, as Block made notable progress in gross profit growth. Total consolidated gross profit reached $2.25 billion, reflecting a 19% year-over-year increase.

What stood out in Block’s earnings report was the strong momentum in its Cash App segment, which saw 21% year-over-year growth in gross profit, outperforming the Square segment, which delivered a 16% rise in its gross profit. Cash App now represents 58% of Block’s total gross profit, highlighting its crucial role in driving the company’s overall growth.

Looking at the Wall Street consensus, Shopify stock is rated a Moderate Buy, with 11 out of 18 analysts bullish, six having a Hold rating, and only one analyst assigning a Sell recommendation. The average SHOP stock price target of $85.31 suggests a downside potential of about 22%, highlighting concerns about the company’s valuations.

See more SHOP analyst ratings

On the other hand, Block stock is rated a Strong Buy based on 22 Buys, four Holds, and one Sell recommendation. The average SQ stock price target is $89.50, implying 7.3% upside potential.

See more SQ analyst ratings

While both Shopify and Block have been standout performers this year, with strong progress in recent quarters, especially in Q3, Block appears to be the better investment right now.

Shopify offers greater growth potential and stronger margins, but this comes with a much higher valuation, which I believe is justified by its premium growth prospects. In contrast, Block has a more modest growth trajectory, yet it is steadily progressing toward profitability, driven largely by the momentum in its Cash App business. Moreover, Block trades at valuations that seem undervalued relative to its strong EPS growth forecast, making it a less risky investment in my view.

Disclosure

In a fee-only relationship, fees are often paid quarterly and are drawn directly from the portfolio balance. Fee-only advisors typically calculate the percentage fee using a tiered or scaled system – as assets under management increase, the percentage fee generally decreases. (And if you need help finding an advisor to work with, try SmartAsset’s free tool matching tool.)

While factors such as experience, credentials, firm size and brand can influence pricing, service delivery will likely serve as the primary difference between the two advisors under consideration. Let’s walk through a few key areas within “service” to evaluate and some questions that you can ask yourself and the prospective advisors.

Sometimes, advisors who charge a flat fee provide only a financial plan for you to follow. This means they might not manage your assets on a daily basis. If that is the case, how will you manage your investment accounts? Will the advisor outsource it? If so, what additional fees are associated with the engagement, and how will the advisor ensure the investment strategy is aligned with the plan they created?

If the advisor doesn’t outsource portfolio management, will you have the capacity, interest and capabilities necessary to do it on your own? Given how fees are structured with fee-only advisors, it’s likely that they will manage your investments directly. Still, it’s important to understand what those services entail and how the strategy aligns with your overall financial plan.

Managing estates and estate planning, as seem to be central to your situation, tend to be complex, with several generations to consider. While it’s not always the case, larger asset pools like yours can increase the complexity of services that are required to meet your needs. You will want to understand how well-equipped each advisor is to help you address the complexities unique to your situation.

A good question to ask is: “Can you describe how and when you make adjustments to our plan and portfolio (if directly managing your assets)?” Similarly: “What influences your decisions as an advisor and team when making these adjustments?” This will help inform you of how the team is structured and what drives their decision-making process.

With any advisor, you will want to know often they’ll be meeting with you. How many sessions do you get with each advisor per year? What deliverables do they provide you with? How hands on with implementation are they?

In other words, do they provide a plan and leave you to implement each piece, or do they do most of the subsequent execution for you? At the high end of touch, do they effectively serve as an on-call, outsourced CFO? Who is the primary point of contact and how much support do they have behind the scenes? Lastly, ask yourself what level of accessibility you need and how much help you’ll need with respect to implementation, considering the level of complexity and customization required to execute your plan.

When thinking about the differences in services, remember to keep them in the context of your goals for managing your estate. Are you seeking to protect and preserve the estate for transfer to the next generation, generate retirement income or fund philanthropic goals? It’s possible that it’s a combination of a few of these, but which advisor and fee structure would ultimately best advance these goals?

If you determine that the advisor with the higher fee provides the right services for your needs and goals, then the fees could be justified. (And if you want to expand your search for a financial advisor, SmartAsset’s free tool can match you with up to three fiduciary advisors.)

Ultimately, the choice comes down to your personal priorities, which of course include fees. While it’s imperative to assess how well each each advisor’s services align with your needs, it’s equally important to consider various subjective factors that go into the decision. How did you feel when meeting with them? How would you compare the level of trust established with each advisor? What are their motivations and do they align with your goals? Finding the right fit both functionally and emotionally is vital since successful advisory relationships tend to be long-term in nature.

A useful practice to help gather your thoughts and make an unbiased choice is to list your priorities, assign weights to each, and score each item on a scale of 1 to 3 or 1 to 5. You might pick a tiebreaker if the weighted scores come out equal. This exercise could help you to remain objective and avoid making a decision that is motivated by the wrong factors.

• There’s a lot that goes into finding a financial advisor. You’ll want to work with someone who offers the specialized services you need, like education planning or alternative investment management, for example. You’ll also want to find someone who clearly communicates how their fees work and how much you’ll pay for their services. Also, look into the legal and regulatory history of the advisor and/or their firm. Disclosures on an advisor’s record can be a significant red flag, but not always. To help you navigate this process, we’ve created a comprehensive guide for how to find and choose a financial advisor.

• Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

• Keep an emergency fund on hand in case you run into unexpected expenses. An emergency fund should be liquid — in an account that isn’t at risk of significant fluctuation like the stock market. The tradeoff is that the value of liquid cash can be eroded by inflation. But a high-interest account allows you to earn compound interest. Compare savings accounts from these banks.

• Are you a financial advisor looking to grow your business? SmartAsset AMP helps advisors connect with leads and offers marketing automation solutions so you can spend more time making conversions. Learn more about SmartAsset AMP.

Jeremy Suschak, CFP®, is a SmartAsset financial planning columnist who answers reader questions on personal finance topics. Got a question you’d like answered? Email AskAnAdvisor@smartasset.com and your question may be answered in a future column.

Jeremy is a financial advisor and head of business development at DBR & CO. Additional resources from the author can be found at dbroot.com.

Please note that Jeremy is not a participant in SmartAsset AMP, nor is he an employee of SmartAsset, and he has been compensated for this article. Some reader-submitted questions are edited for clarity or brevity.

Photo credit: ©iStock.com/fizkes, ©iStock.com/hobo_018

The post Ask an Advisor: I’m Hiring an Advisor to Manage My $4-5 Million Estate. Should I Choose the $8k Flat Fee Over a $35k Asset-Based Fee? appeared first on SmartReads by SmartAsset.