As the stock market reaches dizzying heights, identifying promising investments becomes increasingly challenging. The bustling market presents a delightful conundrum for investors seeking to allocate their capital wisely. Despite the soaring valuations, there remain hidden gems awaiting discovery.
After a thorough quest, three standout technology stocks – SentinelOne (NYSE: S), Netflix (NASDAQ: NFLX), and Sea Limited (NYSE: SE) – have captured the attention of three astute contributors at Fool.com for their potential to outshine the market in the coming year.
SentinelOne: Paving the Way for Excellence in 2024 and Beyond
Justin Pope (SentinelOne): Boasting a fusion of cybersecurity and artificial intelligence (AI), SentinelOne emerges as a trailblazer in two of Wall Street’s most in-demand sectors. The company’s AI-driven security platform delivers state-of-the-art protection against cyber threats, earning accolades from industry-wide evaluations. The soaring costs associated with breaches have corporations turning to sophisticated solutions like SentinelOne’s autonomous platform, fueling remarkable revenue growth.
Notably, SentinelOne witnessed a 33% surge in revenue year-over-year during the second quarter of its fiscal year. Moreover, the company’s trajectory towards profitability has invigorated investor confidence, propelling its stock price up by nearly 40% in the past year. With promising prospects on the horizon, substantial returns could be in store.
SentinelOne recently unveiled a collaboration with Lenovo, the world’s largest PC manufacturer, to include its security software in new PC shipments. Following a similar pact with Dell Technologies last year, CrowdStrike reaped over $50 million in additional revenue. Should SentinelOne replicate this success, the impact could be transformative, especially considering analysts’ projections of $815 million in revenue this year and an estimated $1 billion next year – figures that may surge following announcements related to the Lenovo partnership.
Despite its impressive performance and remarkable investment returns, SentinelOne’s stock remains poised to outstrip the broader market. Following years of undervaluation, the company still commands a lower enterprise value-to-sales ratio compared to tech counterparts like CrowdStrike, Zscaler, and Palo Alto Networks. Thus, the window of opportunity to invest in SentinelOne remains open, even amidst its meteoric ascent this year.
While 2024 marked the inception of SentinelOne’s success story, the momentum appears poised to carry over into the forthcoming year.
Netflix: A Dominant Force in the Streaming Arena
Jake Lerch (Netflix): Demonstrating a robust year-to-date growth exceeding 45%, Netflix currently shines as a red-hot stock. However, the streaming behemoth is poised for even greater heights in 2025, backed by substantial strengths.
The streaming landscape witnesses Netflix emerging as a frontrunner, with data compiled by Nielsen indicating that streaming video commands a substantial 40% share of total TV usage, overshadowing cable (27%) and broadcast (20%). Delving further into streaming, notable winners include Alphabet’s YouTube leading with 9.9% of streaming share, closely followed by Netflix with 8.4%.
Notably, other significant players in the streaming domain, such as Amazon’s Prime Video (3.1%), Disney-owned Hulu (3%), Disney+ (2%), and Tubi (2%), fall markedly behind Netflix. Major platforms like Paramount+, Comcast’s Peacock, and Warner Bros. Discovery’s Max struggle to breach the 2% threshold.
Evidently, Netflix maintains a competitive edge in the streaming sphere while steadily eroding the market share of traditional TV sources like cable and broadcast television. Bolstered by robust fundamentals, Netflix reported a 17% year-over-year revenue growth in its latest quarter (ending June 30, 2024) alongside an impressive 27% operating margin – marking substantial improvements over the preceding year.
In essence, Netflix has not only weathered intense battles in the streaming domain but emerged stronger than ever, poised to leverage its past triumphs. As the company ventures into expanding its ad-tier business, 2025 is poised to be a stellar year for Netflix.
Sea Limited: A Stormy Sea but Clearing Skies Ahead
Navigating the Recovery in the Pandemic Stock Market
Investors should set their sights on Netflix as it sails into what could be a fruitful year ahead. While the sea might look turbulent, the winds of change are shifting in favor of this tech giant.
Rising from the Depths: A Sea of Opportunity
Once battered in the stormy seas of the market, Sea Limited faced a tempestuous period during the bear market of 2022. But like a resilient ship emerging from a fierce squall, the Singapore-based conglomerate rekindled its flame of success.
During the turbulent times of the pandemic, Sea Limited’s retail, gaming, and fintech divisions were a beacon for locked-down consumers. However, the tides turned as economies started to reopen, leading to a decline in fortunes for the company. The ban of its flagship game, Free Fire, in India and missteps in its retail expansion caused the stock to plummet by a staggering 91%.
Yet, like a skilled captain charting a new course, Sea Limited reoriented its strategy. By refocusing on its core Asian markets and investing in essential logistics infrastructure, the company regained momentum. The resurgence of Free Fire’s popularity, along with the continued success of its fintech arm Sea Money, propelled Sea Limited’s revenue to new heights in 2024.
While increased expenses caused a dip in net income, strategic investments in e-commerce and fintech are expected to yield substantial returns in the future. Investors heeded the siren call of Sea Limited’s revised strategy, driving the stock price to soar over 115% in the last year.
Charting the Course to Success
Despite the choppy waters, Sea Limited remains undervalued compared to its potential. With a price-to-sales ratio closely trailing behind e-commerce giant Amazon, Sea Limited’s current valuation hints at significant upside for investors. The stock, still trading 75% below its 2021 peak, presents a compelling opportunity for growth in 2025.
A Beacon of Light in the Stormy Market
Considering an investment in Sea Limited? Before setting sail on this venture, ponder this: leading analysts have identified 10 standout stocks for the future, with Sea Limited not making the cut. However, past recommendations like Nvidia in 2005, yielding a staggering return of $765,523 from a $1,000 investment, demonstrate the potential for wealth creation in the stock market.
Stock Advisor’s track record of outperforming the S&P 500 since 2002 underscores the potential for remarkable returns. In a market filled with volatility, strategic insights and expert guidance can be the lighthouse that guides investors to safe harbors of financial success.
Setting Sail to Prosperity
As investors weigh their options in the turbulent seas of the market, Sea Limited emerges as a phoenix rising from the ashes. While past storms have tested its resilience, the company’s strategic maneuvers and focus on core strengths illuminate a path to brighter horizons.