Investing $50,000: Two Stocks Poised for Growth

If you have $50,000 to invest, you have a valuable opportunity to build wealth. A diversified approach focusing on growth and stability can be a prudent strategy. This article highlights two companies, Meta Platforms and Axon Enterprise, that exhibit these qualities.

Key Takeaways

• Meta Platforms: Dominates the social media and digital advertising landscape with substantial growth potential. The stock is trading at an attractive valuation given its growth rate.
• Axon Enterprise: Leads the law enforcement technology sector, expanding into new markets with innovative hardware and software solutions, displaying robust growth and profitability.

1. Meta Platforms: A Digital Advertising Powerhouse

Meta Platforms (NASDAQ: META) has demonstrated an impressive ability to innovate and maintain market dominance. Despite significant investments in its metaverse division, Reality Labs, the company's core advertising business and family of apps continue to thrive.

Over the past three years, Meta's stock has surged, surpassing the threat posed by TikTok with its Reels feature. Furthermore, Meta's AI tools are enhancing advertising monetization and empowering advertisers with AI-driven image and ad copy capabilities.

Meta enjoys a virtual duopoly with Alphabet in digital advertising, and it's currently outpacing its competitor in growth. In the first quarter, revenue climbed by 16% to $42.3 billion, resulting in an operating profit of $17.5 billion and a 41% operating margin.

The business model of selling ads on user-generated content is highly lucrative, with over 3 billion daily active users across Facebook and Instagram. Meta's significant competitive advantage in social media and digital advertising is expected to endure, driving continued growth as long as the economy remains healthy.

Meta is also a major player in AI. Its chatbot has nearly 1 billion users, making it the largest AI platform. Furthermore, its partnership with Scale AI is expected to expedite its AI ambitions.

With a price-to-earnings ratio of 27, Meta's valuation appears attractive for a company of its growth rate. Meta offers a compelling combination of growth, profitability, competitive advantage, and valuation, making it an excellent stock for a substantial investment.

2. Axon Enterprise: Revolutionizing Law Enforcement Technology

Axon Enterprise (NASDAQ: AXON) commands its specific market of law enforcement technology.

Axon manufactures Taser electrical weapons, body and dashboard cameras, and software systems. These systems help law enforcement agencies leverage the data that cameras produce. This product suite provides a substantial moat, with the stock gaining over 2,000% in the last decade.

Axon is expanding into the private sector, like package delivery. One of Axon's largest 2024 contracts came from a logistics company, illustrating the applications beyond law enforcement.

Axon has released Draft One, a generative-AI tool that writes first drafts of police reports. The product saves valuable time, allowing officers to focus on other issues.

Axon continues to grow, with revenue up 31% in the first quarter to $604 million. Adjusted net income was $115 million, displaying high growth and profit margins.

Moreover, the company raised its full-year revenue guidance from $2.55-$2.65 billion to $2.6-$2.7 billion, displaying confidence in its continued growth.

With limited competition, Axon is well-positioned for continued innovation and growth in markets like logistics.