As we enter 2025, many growth stocks are trading at high valuations and could be running out of room to rise in the near term.
Three growth stocks that look particularly cheap right now are AstraZeneca (AZN -0.09%), Uber Technologies (UBER -1.88%), and Zoom Communications (ZM -0.68%).
AstraZeneca AstraZeneca is a leading healthcare company that over the years has gotten bigger and better.
That would be impressive growth for a company that has generated around $51 billion over its past four quarters.
Zoom’s stock trades at a modest forward P/E of 15, and could be one of the better growth stocks to buy and hold right now.
A lot of growth stocks are trading at high prices as 2025 approaches, and they may not have much more room to rise in the near future. Now might be a good time for long-term investors to review their portfolio holdings and determine whether it would be worthwhile to sell some of their recent top performers and replace them with some less expensive growth stocks. By doing this, you may position yourself to make better gains both now and in the future.
At the moment, AstraZeneca (AZN -0.09 percent), Uber Technologies (UBER -1.88 percent), and Zoom Communications (ZM -0.68 percent) are three growth stocks that appear especially expensive. Consider including them in your portfolio right now for the following reasons.
1. AstraZeneca. .
AstraZeneca is a well-known healthcare organization that has grown and improved over time. These days, it’s spending money on next-generation treatments like cancer treatments, which are more focused than radiation or chemotherapy, which both harm healthy cells while killing cancerous ones.
Fusion Pharmaceuticals was acquired by AstraZeneca last year. Fusion was a clinical-stage company that created radioconjugates, which, according to the company, “use molecules like antibodies, peptides, or small molecules to precisely target cancer cells and deliver a radioactive isotope directly to them.”. “,”.
By 2030, AstraZeneca anticipates that its revenue could reach $80 billion from acquisitions and its own internal R&D pipeline. For a business that has made about $51 billion in the last four quarters, that would be a remarkable increase.
Given that AstraZeneca’s stock dropped 3% last year and that its forward price-to-earnings (P/E) multiple is only 14, investors may be able to get a great deal at this time. The Health Care Select Sector SPDR Fund’s average stock is trading at almost 20 times the anticipated profits for the upcoming year.
AstraZeneca might rank among the top healthcare stocks to own over the next five or more years if it continues to grow and meets its lofty goals.
2. Uber Technologies.
Due to investor overreaction to worries that Alphabet’s Waymo subsidiary would soon erode its market share, ride-hailing company Uber’s stock dropped 2% last year. However, I think the market’s perception of the risks Uber faces is currently exaggerated, as robotaxi companies still have a long way to go in demonstrating that autonomous vehicles are safe enough to operate in a variety of weather and traffic conditions.
The fact that Uber remains a popular and useful choice for customers is unlikely to alter anytime soon. Over the years, the company has experienced tremendous growth, and its profits have been rising as well. Its operating profit increased from $458 million to just over $2 billion year over year, and its revenue increased by 17% to over $32 billion through the first nine months of 2024.
Given the company’s improving fundamentals and promising growth prospects, Uber’s stock is attractively valued at a forward P/E of 25 and a price/earnings-to-growth multiple of about 0.70.
3. . Communications Zoom.
Given Zoom’s stock performance over the last five years, one could easily conclude that it was just another pandemic play and is now a bad investment. However, as it bases its future on its amazing videoconferencing product, the company continues to expand.
Even though videoconferencing isn’t particularly new, Zoom has made it simple and adaptable, which is why many businesses are willing to pay for Zoom’s service instead of Microsoft Teams, even if they already have access to Teams through their Microsoft 365 subscriptions. Zoom’s success is amply demonstrated by that alone.
Zoom’s business has been growing steadily. During the nine months ending in October. 31 Its revenue increased to $3.05 billion, or about 3%, year over year. With a low monthly average online churn rate of 2 percent, the business enjoys high levels of customer satisfaction. Furthermore, the company’s operations may continue to expand in the long run as it introduces more varied solutions like Zoom Mail and artificial intelligence features.
At a reasonable forward P/E of 15, Zoom’s stock might be among the better growth stocks to purchase and hold at this time.
