Historically, June has not been one of the best months for the stock market. It, along with January and September tend to be weaker overall. However, such analyses take into account all stocks available to investors. In any month there are countless opportunities to secure returns at the individual level of the best growth stocks to buy.
June will continue to be interesting. The overall economic picture continues to be muddled. While first-quarter earnings were strong overall, the economy continues to battle the effects of inflation. One or more rate cuts appear to be ahead this year and as we pass the middle of June there is reason for optimism.
Leading indexes including the S&P 500 continue to be strong. As with any period, it is about separating the winners from the losers and investing wisely.
Taiwan Semiconductor Manufacturing (TSM)
Taiwan Semiconductor Manufacturing (NYSE:TSM) stock is already high-priced relative to its history. To most, that would signal that the shares are not positioned to rise much moving forward.
However, I think there are a few factors to consider that strongly suggest Taiwan Semiconductor Manufacturing will continue to rise from here. For one, headlines continue to hint at the notion that the company will charge Nvidia more to produce chips moving forward.
TSM’s CEO is clear that he hopes to charge higher prices to Nvidia. Nvidia CEO Jensen Huang appears to be okay with those price increases, suggesting TSM’s reliability has extreme value. If TSM can charge Nvidia more for AI chips then the company may also be able to charge other firms higher prices as well. The result is of course higher revenues overall which should lead to higher prices for TSM shares.
The recency of those media headlines leads me to believe that TSM shares could soon pop. The other point I want to note is that although Taiwan Semiconductor Manufacturing’s P/E ratio is currently high on a historical basis, it is still middle of the road in the chip industry. The point is, for such an important company, Taiwan Semiconductor Manufacturing continues to be underpriced relative to its utility among growth stocks to buy. That should change going forward.
Meta Platforms (META)
Meta Platforms (NASDAQ:META) stock has performed strongly over the last month, rising nearly 9%. In discussing why the company stands best positioned for June, let’s simply start where we left off in discussing Taiwan Semiconductor Manufacturing: Value.
Meta’s P/E ratio is quite low relative to historical trends and remains lower than its 10-year median at the moment. There’s a reasonable argument that Meta Platforms trades underpriced at the moment.
Meanwhile, the company continues to develop AI which is one of the primary reasons to believe its shares will rise higher. The company just announced a global expansion of AI services. That means the company’s AI bots will soon be trained using public posts outside of the U.S., where training has already begun.
Meta Platforms is concurrently reducing its VP headcount from 300 to 250. That will free up some capital which, when combined with the potential efficiency gains from AI, promises to increase earnings overall.
Nvidia (NVDA)
Nvidia’s (NASDAQ:NVDA) recent stock split is performing as intended. Shares are no longer trading for $1,200 and instead are available for $120, a much more accessible price for retail investors.
That increased affordability has increased demand due to accessibility, and prices are very close to $130 as I write this. Something else has happened quietly behind the scenes in the meantime. Just a few weeks ago Nvidia’s high target price was $1,200. Those shares now benefit from a high target price of $150.
Nvidia’s earning power did not increase by 25% during that time frame. Instead, analysts recognize the psychological effects of the forward stock split and the company’s strong recent earnings.
The company has continued to outperform over the last year and prices could test that $150 high-water mark in the coming weeks. Investors can continue to look forward to the positive effects of the Blackwell chip release. It’s very easy to find bullish narratives in Nvidia and there’s no reason to bet against it running higher in June, making it one of the best growth stocks to buy.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
