Meta Platforms and Circle Internet Group have compelling long-term growth prospects.
The S&P 500 (^GSPC +0.54%) has advanced 16% year to date, and several Wall Street analysts anticipate another strong performance next year. JPMorgan says the index could reach 8,000 in 2026, and Evercore sees a bull-case scenario where the S&P 500 hits 9,000. Those forecasts imply upside of 17% and 31%, respectively, from the current level of 6,849.
Among the 70 stocks (more or less) that I follow, many trade at very expensive valuations. Palantir is a good example. While the business is firing on all cylinders, the stock has a price-to-sales multiple that is 3 times higher than the next-closest member of the S&P 500. That is unreasonable.
However, I see compelling buying opportunities in Meta Platforms (META +2.26%) and Circle Internet Group (CRCL +10.04%). Investors with $5,000 could split the money evenly between the two stocks, provided doing so does not create uncomfortably large positions. I get nervous if a single stock comprises more than 5% of my portfolio, but comfort thresholds vary.
Here’s why Meta and Circle are my two best investment ideas right now.
Image source: Getty Images.
1. Meta Platforms
Meta reported solid financial results in the third quarter. Revenue surged 26% to $51 billion, and GAAP (generally accepted accounting principles) net income (excluding a one-time tax charge) increased 20% to $7.25 per diluted share. But the stock dropped sharply following the report because the company will spend even more money on artificial intelligence (AI) next year. Shares currently trade 18% below their record high.
In the near term, the investment thesis for Meta centers on its status as the second-largest adtech company, a position that indicates how valuable social media platforms like Instagram and Facebook are to advertisers. Meta is leaning on AI — from custom chips to proprietary large language models — to improve user engagement and advertising outcomes across those web properties.
In the long term, Meta has a big opportunity in smart glasses, an industry where it already has 73% market share. The company hopes to develop a superintelligence system that can be integrated into its recently introduced augmented reality smart glasses. CEO Mark Zuckerberg believes such products will be our “primary computing devices” in the not-too-distant future.
Here’s the bottom line: With AI advancements helping advertising sales in the near term and given the possibility that smart glasses become a major source of revenue in the long term, Meta stock is a compelling buy. That is particularly true because it trades at 29 times earnings, a reasonable price for a company whose earnings are forecast to increase at 16% annually in the next three years.
Today’s Change
(2.26%) $14.34
Current Price
$647.95
Key Data Points
Market Cap
$1633B
Day’s Range
$635.50 – $648.05
52wk Range
$479.80 – $796.25
Volume
11M
Avg Vol
17M
Gross Margin
82.00%
Dividend Yield
0.32%
2. Circle Internet Group
Circle is a fintech company that issues stablecoins and provides software tools that let developers build digital asset storage and payments into their applications. Its best-known product is USDC, the second-largest stablecoin by market value, but the largest one that adheres to stringent regulations in the United States and Europe.
The company currently makes the vast majority of its money from interest. USDC tokens are backed 1:1 by U.S. dollars, and those reserve assets are either held in cash or invested in short-term Treasury bills to earn interest. But the company is moving into payment processing with the Circle Payments Network (CPN), which promises faster and cheaper transactions than traditional systems.
Circle reported encouraging financial results in the third quarter. Revenue increased 66% to $740 million as the number of USDC in circulation doubled, offset by a modest decline in interest rates. Meanwhile, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) increased 78% to $166 million.
Circle also provided two important updates in the earnings press release. First, 29 financial institutions are now part of the CPN, and the company has another 500 potential customers in the pipeline. Second, Circle started testing its Arc blockchain, which is purpose-built for stablecoin finance. Arc removes the problem of unpredictable gas fees on other blockchains.
Here’s the bottom line: Circle is the preferred stablecoin issuer among financial institutions due to its focus on regulatory compliance. Stablecoin revenue is forecast to grow at 54% annually through 2030, which makes Circle stock a compelling long-term investment. That is particularly true given that it trades at 7.5 times sales, which is essentially the lowest price since the company went public earlier this year.
