The Best Stocks to Invest $1,000 in Right Now
Key Points
Cisco can certainly serve the AI data center market, but it may not be able to meet its hardware needs as cost-effectively as Arista Networks can.
Where MercadoLibre is now is in many ways where Amazon was a couple of decades ago.
You’ll certainly want to consider a stake in BYD once you realize what it is and where it operates the bulk of its business.
Got an extra $1,000 you're ready to put to work for a while? There are always the obvious stock picks. But with the S&P 500 now priced at nearly 25 times its trailing earnings, most of the market's obvious picks have also become relatively expensive, crowded trades.
You may have more luck with something a bit off the beaten path that isn't quite as likely to run into a valuation headwind. Here's a closer look at three such stocks.
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1. Arista Networks
Cisco Systems remains the king of the computer networking world, with most estimates putting its market share in the ballpark of about half of this business (although some suggest an even higher figure). Being bigger isn't necessarily always better. More size can make it difficult to adapt quickly. Sometimes, it can also create a corporate culture that stifles innovation.
Enter Arista Networks (NYSE: ANET), a much smaller but arguably much scrappier networking name with a brilliant idea -- making networking equipment like routers and switches that are software-based rather than hardware-based. This allows for regular updating as well as more customization of its hardware's functionality, not only providing greater flexibility but also more longevity of its technology. This ultimately means lower, long-term equipment costs for its customers.
Perhaps more important to investors, Arista's solutions are proving ideal for artificial intelligence (AI) data centers where communication speed between processors is critical. AI is one of the key reasons analysts expect the company's top line to improve by 22% to $8.5 billion this year en route to nearly $11.7 billion by 2027. Earnings should grow in step with this progress by just as much, from last year's $2.23 per share to $3.59 per share in 2027.
That's still just the beginning, though. Market research outfit Roots Analysis suggests the global AI hardware market is set to grow at an average annualized pace of 31% through 2035.
2. MercadoLibre
Do you ever wish you could go back in time and invest in Amazon in its infancy? Given the stock's 313,660% gain since its 1997 public offering, I bet plenty of people do.
Well, you can't go back in time. You can, however, do what may well be the next best thing. That's stepping into a stake in what many investors refer to as the Amazon of Latin America -- MercadoLibre (NASDAQ: MELI).
The parallels are palpable. Chief among them is MercadoLibre's leadership of the South American markets where it chooses to focus its e-commerce efforts: Brazil, Argentina, and Mexico, although other markets are in its sights. The company's platform facilitated the sale of $51.5 billion worth of merchandise last year to 100 million consumers.
Perhaps just as compelling is the depth and breadth of its offerings. In addition to providing e-commerce solutions, it's a payment middleman in the same vein as PayPal. Its payment app handled nearly $200 billion worth of digital money transfers in 2024, up 34% year over year. Logistics, brick-and-mortar solutions, banking services, and advertising are also in its wheelhouse, making it a one-stop solution for Latin American businesses that are increasingly embracing technology.
Image source: Getty Images.
The chief argument for owning a stake in MercadoLibre as a parallel play to Amazon's early days, however, is the state of Latin America's e-commerce market itself.
In many ways, where North America was 20 years ago is where Latin America is now. That's when U.S. consumers were first starting to enjoy broadband connectivity en masse. This was soon followed by smartphones capable of connecting to wireless broadband networks. The online shopping industry exploded shortly thereafter. That's why regional industry research outfit Payments and Commerce Market Intelligence predicts Latin America's e-commerce market is poised to double in size between 2023 and 2027, growing from a little over $500 billion per year to over $1 trillion per year in just that four-year stretch.
MercadoLibre is cashing in on this ongoing expansion. Its 2023 top-line revenue of $15 billion should reach $42 billion in 2027, according to analysts, tripling profits in the process.
3. BYD
Last but not least, add BYD (OTC: BYDD.F) to your list of top stocks to buy if you've got $1,000 (or more) in idle cash you can commit to a long-term trade.
It may not ring a bell, but you're probably more familiar with BYD than you realize. The electric vehicle (EV) company that's bigger than Tesla in China? That's BYD. And its lead is significant. Numbers from the China Passenger Car Association say the company sold 352,081 battery-powered passenger vehicles in June, accounting for nearly 32% of the country's EV sales versus Tesla's second-best June market share of just a little over 10%, underscoring those drivers' preference. Indeed, despite the fact that its EVs are only available in and around China and in a few places in Europe (where, as of April, it's also now outselling Tesla), BYD is the world's biggest EV maker, enjoying an estimated market share in the ballpark of 20%. It's the world's third best-selling brand of any type of automobile, only behind Toyota and Volkswagen, according to numbers compiled by CleanTechnica.
This leading presence is no minor competitive advantage either, simply because consumers tend to buy from companies they're familiar with.
The crux of the bullish argument here, though, is the impending growth of the EV business itself.
While interest in battery-powered vehicles may be cooling in the U.S., that's not the case elsewhere. On a global basis, Bloomberg New Energy Finance (BNEF) predicts sales of passenger-oriented EVs will grow from last year's count of around 17 million to 30 million in 2027 on the way to 73 million units in 2040. And BYD's home country of China is likely to account for a huge part of this ongoing expansion. The International Energy Agency expects EVs to make up 80% of all of China's automobile sales by 2030, well up from around half the country's total vehicle sales now.
BYD is, of course, perfectly positioned to capitalize on this explosive growth even if it's running into some near-term headwinds.
James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Arista Networks, Cisco Systems, MercadoLibre, PayPal, and Tesla. The Motley Fool recommends BYD Company and Volkswagen Ag and recommends the following options: long January 2027 $42.50 calls on PayPal and short September 2025 $77.50 calls on PayPal. The Motley Fool has a disclosure policy.