The companies below are riding solid long-term trends and have strong numbers that can let them capitalize on big opportunities. They are also trading at levels significantly under their all-time highs — which is surprising because of the ongoing stock rally.

Investors can get attractive profits from any of these powerful stocks using just $1,000.

1. TSM

An exceptionally good way to spend your $1,000 wisely is to buy shares of Taiwan Semiconductor Manufacturing.

The spike in demand for electronics has added to the already heightened chip demand from areas like 5G and the Internet of Things, high-performance computing, and AI. However, supply chain problems and geopolitical tensions have resulted in a global chip shortage. TSM is now trying to to assuage this problem and announced plans to invest $100 billion over three years in capacity and R&D.

The company does however expect a demand-supply mismatch until 2022. Yet TSM is currently 57% of global chip production, the company is positioned to benefit from this with higher pricing.

While competitors like Intel (INTC) and Samsung have unveiled expansion plans, their success is far from certain. Against this backdrop, TSM seems a superior pick, especially since it pays a dividend yield of near 1.5%. Hence, although TSM is at 11.6 times trailing-12-month sales, which isn’t cheap, but investors can still bring in robust returns from this stock.

2. Nio

Investors might also invest their $1,000 into Nio for some great profits. This stock has gone down over 38% from its high of $66.99 in early January of this year. The company’s problems come mainly from retail investors changing away from growth stocks and into value stocks. The company also missed its consensus earnings estimate in Q4 of last year.

Despite all these problems, the underlying strength of Nio are very strong. In 2020, China was 41% of global EV sales. Estimates say that 1.9 million EVs will be sold in the country this year, a y/y increase of 51%.

While EVs will account for 9% of total auto sales in China, the percentage is expected to expand to 35% by 2025. Nio is well stationed to gain a significant share of this increasing market.

Nio is also now guiding for Q1 revenues in between $1.13 billion to $1.16 billion, which means a y/y growth of between 438% to 451%. These estimates match Nio’s 423% y/y increase in vehicle sales to 20,060 units.

With Nio trading at 25.7 times trailing-12-month sales, which is high. Investors can still get handsome profits from this stock even at elevated levels, considering that Nio has a bold strategy to capture the huge opportunity in China.

 

3. Gilead Sciences

Finally, Gilead Sciences is also a smart place to invest $1,000, especially for risk-averse investors. The company gives a solid dividend of 4.3%, much greater than the S&P’s yield of 1.4%. With a trailing-12-month sales dividend ratio of 46.25%, the company is flexible enough to keep its dividend policy going into the long-term future.

However, this stock has lowered by over 15.8% in the past year. The first covid treatment for patients approved by the FDA, Veklury, may soon decline as more vaccinations lower the number of people getting treatment. In November of last year, the WHO even recommended against Veklury, which hurt the drug’s sales.

But there is more to Gilead Sciences than the Covid drug Veklury. The company also has a very strong foothold in the HIV market and is developing a presence inside the oncology sector. To offset older HIV drugs like Truvada and Atripla being phased out, the company has been focusing on creating new HIV drugs with better safety. The company’s recently released HIV drug, Biktarvy, is the top drug for HIV patients in the States. The company also expects to apply to the FDA for Lenacapavir as a six month treatment for HIV patients. In oncology, Gilead Sciences is using cell therapy drug Trodelvy and Yescarta, a drug for breast cancer. Additionally, Trodelvy has the possibility to be approved for several other tumor indications.

 

Gilead Sciences brought in $5 billion or almost 67% of its total cash to shareholders using their dividends and share repurchases last year. Despite many attractive possibilities and achievements, the stock is trading at just 3.3 times trailing-12-month sales. Making it an attractive bet for income investors and value investors.

 

Author: Scott Dowdy

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