Best Buys March 2025

With the markets being down it is time to review your buying list

In this short format, I want to present to you companies and stocks that are currently valued at an attractive level. Writing a deep dive takes me many hours, and with this format, I can introduce you to interesting ideas as of today.

I will only recommend high-quality businesses, and I am not interested in cheap but mediocre companies. Always keep in mind that the quality of the company is the first filter. If it does not possess a very good business model, I am not interested in the company, even if it is dirt cheap.

If you haven’t done so, make sure to check out my last two deep dives on AMD and Adobe and learn about these two fascinating companies.

AMD Stock Analysis & Deep Dive

Adobe Stock Analysis & Deep Dive January 2025

State of the nation

The new US government’s dumb or more politically correct “interesting” attacks on friends and foes alike sent the markets into turmoil. Annocing tariffs to blackmail your friends and then revisiting those tariffs when the targeted countries are ready to retaliate is a no-go and certainly not what you should do easily. Mr. Trump seems to have different ideas, and all the back-and-forth is the opposite of what companies need to make long-term decisions and investments.

While some companies have certainly been overvalued and the current corrections are long overdue, others were already priced at an attractive level and became even more attractive. Now is a great time to have a closer look at those companies.

The S&P 500 is down 11% from the ATH, and the NASDAQ 100 is down 12% from their respective ATH. This is far away from crashed we have seen in the past but interesting enough to have a close look at your watchlist of potential buys.

The S&P 500 is still trading at the higher end of its historical valuation. When looking at the chart below, ignore the COVID-19 peak.

In case you wonder if the world will ever recover from the shocks and if WW3 is on the horizon, I would like to refer to a lovely story from Morgan Housel. In case you don’t know Morgan Housel yet, make sure to a) buy his two books and b) check out his podcast and blog. He is one of the very best storytellers out there.

I once had lunch with a guy who’s close with Warren Buffett.

This guy – we’ll call him Jim (not his real name) – was driving around Omaha, Nebraska with Buffett in late 2009. The global economy was crippled at this point, and Omaha was no exception. Stores were closed, businesses were boarded up.

Jim said to Warren, “It’s so bad right now. How does the economy ever bounce back from this?”

Warren said, “Jim, do you know what the best-selling candy bar was in 1962?”

“No.” Jim said.

“Snickers,” said Warren. “And do you know what the best-selling candy bar is today?”

“No,” said Jim.

“Snickers,” Warren said.

Then silence. That was the end of the conversation.

Without further ado, here are the companies that I like most at the current level:

ASML

ASML is one of the very few European companies that are crucial in the high-tech sector. One might argue that no other company is as important to the further advancement of chip technology and everything AI-related than ASML. Nvidia, AMD and all the other players rely mostly on TSMC or Samsung to produce their newest chips in their fabs, and those fabs are running with ASML machines.

I just recently published my ASML earnings analysis; make sure to read it:

ASML Q4/2024 Earnings Review

This video gives a good overview of ASML. Even if you know the company, it is worth your time.

ASML has a monopoly on EUV technology and is the only company in the world that can produce 5-nanometer (nm) and 3 nm process nodes. Even if a Chinese company could get its hands on all the building plans for this machine, the process of manufacturing and sourcing the individual parts is so complex (maybe even impossible) that they are not able to just build one of their own. This is as wide a mode as you’ll find.

The newest high-NA EUV machines cost around $380 million per piece, and the foundries can’t wait to get their hand on one of these. ASML has a very long runway and it is the most important company many people have never heard of. Luckily for us, we can buy shares in this fantastic company. Even better yet, the shares are at an attractive level at the moment.

Meta, Alphabet, Microsoft, and Amazon keep spending massive amounts of money on data centers, and indirectly, a lot of this spending will benefit ASML since ASML provides the machines that manufacture these chips. The trend will accelerate in the upcoming years. These two graphs give you a good indication of what is happening in this field.

ASML is currently valued at an EV/net income of 32.8, which is supposed to go down to 26.8 for FY 2025. Looking two years ahead, we arrive at an EV/net income of just 18.4.

Companies like ASML rarely come cheap, but there are moments of relative undervaluation. If you have missed those in the past, now is your chance to buy some ASML.

Amazon

Amazon is the largest river by water discharge in the world and also by length. Starting in Peru it flows through Colombia and Brazil before it discharges into the Atlantic ocean.

Since this publication is about investing, you have correctly guessed, that I am not talking about the river Amazon, but the US company named after aforementioned river.

Amazon is just like the river dwarfing all competitors. Net sales in 2024 increased by 11% compared to 2023 to $638 billion. Even better. Net income almost doubled to $59.2 billion compared to $30.4 billion in 2023. AWS (Amazon Web Services) is just like Google Cloud: a cash printing machine after huge investments in the past. In Amazon’s case, the cloud segment brings the highest operating income. North America has always been strong, but International is also finally catching up.

If you want to read the full article and learn about Amazon’s valuation and the third company that is really attractive at these levels, please subscribe and support my work. To all existing subscribers: Thank you for your support, and enjoy the rest of the article!