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Yahoo
18 minutes ago
- Yahoo
The Newest Stock in the S&P 500 Has Soared 510% Since Its 2015 IPO, and It's a Buy Right Now, According to Wall Street
Key Points Block has been added to the S&P 500, one of just six companies to make the cut so far in 2025. The company is a fintech pioneer and continues to expand its market. Despite some hiccups earlier this year, Wall Street remains convinced the stock is a buy. 10 stocks we like better than Block › The S&P 500 (SNPINDEX: ^GSPC) is generally recognized as the most comprehensive measure of the U.S. stock market, made up of the 500 leading publicly traded companies in the country. Given the broad reach of the businesses that make up the index, it is regarded as the most reliable benchmark of overall stock market performance. To be considered for admission to the S&P 500, a company must meet the following criteria: Be a U.S. company Its market cap must be at least $20.5 billion Shares must be highly liquid Have at least 50% of its outstanding shares available for trading Must be profitable based on generally accepted accounting principles (GAAP) in the most recent quarter Must be profitable during the previous four quarters in aggregate Block (NYSE: XYZ) is the latest addition to the S&P 500, added to its ranks on July 23. That makes it one of only six companies to make the grade so far this year. Since its IPO in late 2015, Block has easily outpaced the market, generating gains of 510%, compared to a 206% increase for the S&P 500 (as of market close on Wednesday). The stock price gains have been fueled by an ever-expanding fintech ecosystem, as its revenue has soared 1,640%, while net income has jumped 867%. Yet, despite the stock's market-beating gains and the company's strong track record navigating the fluid fintech space it helped pioneer, many believe Block is just getting started. Let's examine the opportunity ahead and why Wall Street believes the stock is a buy. A Square peg in a round hole Block, formerly Square, made a name for itself by pioneering mobile payment processing solutions and point-of-sale systems for small businesses. From those humble beginnings, the company now offers a growing suite of tools for entrepreneurs and consumers alike, including payment processing, point-of-sale systems, business loans, digital retail, loyalty programs, marketing, digital wallet, and -- mostly recently -- consumer loans. At the heart of Block's expanding ecosystem is its two-pronged approach: Square Business, which provides services to merchants, and Cash App, which caters to consumers. The seamless integration between the two segments helps spin the flywheel that has been key to Block's success. It was also among the first major public companies to add Bitcoin to its balance sheet, making its initial purchase in October 2020. Block has thus far spent roughly $261 million and currently holds 8,584 Bitcoin, worth roughly $1.03 billion. The company also announced plans to begin accepting Bitcoin as a payment method later this year. Despite a highly competitive landscape, Block continues to expand its role as one of the leading fintech providers. Paint by numbers You don't have to take my word for it. Despite a backdrop of economic uncertainty caused by persistent inflation and tariffs, Block's recent results tell the story. In the first quarter (excluding Bitcoin), revenue of $3.47 billion grew 8% year over year, while gross profit of $2.29 billion climbed 9%. Operating income of $329 million rose 32%, resulting in adjusted earnings per share (EPS) of $0.56, an increase of 19%. Unfortunately, investors were looking for better gross profit, which sent the stock lower -- but the results were solid nonetheless. Block's performance was fueled by gross payment volume (GPV) that grew 7.2% (8.2% in constant currency). Cash App did its part, increasing user engagement, as gross profit per monthly active user grew 9%. Wall Street is bullish Block lowered its guidance earlier this year in response to the continuing uncertainty, but Wall Street remains bullish. Of the 47 analysts who covered the stock thus far in July, 35 -- or an impressive 75% -- rate it a buy or strong buy. TD Cowen analyst Bryan Bergin is a longtime Block bull, maintaining a buy rating and a $115 price target on the stock, which represents potential upside of 44% compared to the stock's closing price on Wednesday. While he acknowledged the macroeconomic headwinds and a slow start in 2025, he believes that the company is on track for continued improvement in the back half of the year. Bergin also points to improvements toward achieving the Rule of 40. The oft-cited metric evaluates growth in relation to profits, and Block is looking to make the grade by the end of 2025 or early 2026. Despite all that potential, Block is remarkably cheap. The stock is currently selling for just 19 times trailing-12-month earnings and 2 times sales. Block's inclusion in the S&P 500 is an important milestone. It's not only a testament to the company's position in an evolving industry, but also the growing adoption of Bitcoin into the mainstream. Given its long track record, strong secular tailwinds, and Wall Street's bullish take, I would submit that Block is a buy. Should you invest $1,000 in Block right now? Before you buy stock in Block, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Block wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $636,774!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,064,942!* Now, it's worth noting Stock Advisor's total average return is 1,040% — a market-crushing outperformance compared to 182% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 21, 2025 Danny Vena has positions in Bitcoin and Block. The Motley Fool has positions in and recommends Bitcoin and Block. The Motley Fool has a disclosure policy. The Newest Stock in the S&P 500 Has Soared 510% Since Its 2015 IPO, and It's a Buy Right Now, According to Wall Street was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
3 hours ago
- Yahoo
10 shares I wouldn't want to hold in a stock market crash
There are several warning signs suggest the stock market may be entering an overheating phase, reminiscent of prior late-stage bull markets. It's certainly more prevalent in the US, but even some UK stocks look a little too hot to touch. Key indicators include technical metrics, valuation levels, investor behaviour, and macroeconomic signals. The S&P 500 is trading significantly above its 200-day moving average, a pattern often seen near market peaks. Meanwhile the market has been climbing the so-called Wall of Worry. Market participants have been shrugging off negative news, fuelling elevated investor optimism despite conflicting signals from credit markets and underlying economic risks. Valuations are looking stretched all over the place, even when accounting for the transformative impact of artificial intelligence (AI). For context, the forward price-to-earnings-to-growth (PEG) ratio for the global IT sector now sits at 1.83, suggesting that growth is more than priced in. High-performing sectors, particularly technology leaders, have experienced the kind of parabolic rallies that historically precede sharp corrections. Modest rallies are typically more indicative of sustainable price movement. And many commentator are highlighting that the market will need to acknowledge some of the broader economic challenges we see today. Inflation is stubborn in many parts of the world, geopolitical tensions remain elevated, and US trade policy will have a material impact on global development. So, which shares would I not want to hold in a stock market crash? Well, stocks with strong momentum that could reverse amid demanding valuations. Stock 6-month price change Arm Holdings -1.5% Holdings 88% Credo Technologies 25.8% Oracle 32% Palantir 96% Quantum Computing Inc 55% Rightmove 21% Rocket Lab 58% SoundHound AI -24% Tesla (NASDAQ:TSLA) -24% There's no particular pattern here. However, many trade at multiples far in excess of their averages, display unsustainable share price movements, and have an element of speculation baked in. I even owned some until recently, and continue to own Quantum Computing Inc — this is a short-term trade not an investment. I sadly decided to part with my Rocket Lab shares — up 100%, but I think the gains were unsustainable. What's wrong with Tesla? I like Tesla. I own a Tesla. But I wouldn't buy Tesla stock at the current price. Simply, at 177 times forward earnings, the stock is detached from its fundamentals and even its prospects. The stock has become so expensive because of the belief that Tesla will dominate the autonomous driving revolution. Indeed, it's certainly ahead of the game in relative terms, having rolled out robotaxis in limited numbers. However, there is no guarantee it will dominate in the autonomous era. And there's no guarantee uptake will be unanimous. And that's an issue for a company with a price-to-earnings-to-growth (PEG) ratio of eight times. Ironically, Ferrari, the antithesis of autonomous driving, also trades with an outrageous PEG of six times. Long story short, as much as I like the brand, the valuation is built on a degree of speculation. And when the market goes into reverse, speculators get hurt the most. That's why I think investors should consider other stocks with stronger metrics for now. Or possibly sell if they hold them. Nonetheless, I still think there are some excellent investment opportunities out there, even in the current market. The post 10 shares I wouldn't want to hold in a stock market crash appeared first on The Motley Fool UK. More reading 5 Stocks For Trying To Build Wealth After 50 One Top Growth Stock from the Motley Fool James Fox has positions in Quantum Computing Inc. The Motley Fool UK has recommended Oracle, Rightmove Plc, and Tesla. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Motley Fool UK 2025 Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Business Insider
3 hours ago
- Business Insider
TSM, ASML, and LRCX: The 3 Semiconductor Stocks Investors Must Know About
Semiconductor stocks have enjoyed a strong uptick over the past few years as semiconductors are crucial for making some of the market's most exciting themes possible, whether it's generative AI, self-driving cars, or humanoid robots. That said, their importance to these powerful secular trends is now widely appreciated by the market, and therefore many top semiconductor stocks already enjoy fairly elevated valuations. Elevate Your Investing Strategy: Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence. However, shares of some of the most essential semiconductor manufacturing and equipment companies, which are crucial to the semiconductor supply chain, still offer a pocket of fairly reasonable valuations within the sector, especially given their indispensable role in the industry. Here, we'll take a look at three top semiconductor equipment and manufacturing stocks — Taiwan Semiconductor Manufacturing (TSM), ASML Holding (ASML), and Lam Research (LRCX) — that should all be on investor watchlists looking for exposure to the growth of these dynamic themes at a reasonable price. Taiwan Semiconductor Manufacturing Co. (TSM) Taiwan Semiconductor is the world's largest chip maker, with a dominant 60% share of the market. It also manufactures many of the world's most advanced semiconductors and enjoys a significant moat, as producing these chips requires considerable technological and engineering expertise and capital investment. Only a small number of companies globally have the capability to manufacture the most cutting-edge semiconductors, and Taiwan Semiconductor is the preeminent player in this segment of the market, boasting an estimated 90% market share of advanced chips. The company counts some of the world's most prominent semiconductor and technology companies as its customers, including Nvidia (NVDA), Advanced Micro Devices (AMD), and Apple (AAPL). Taiwan Semiconductor's unrivaled capabilities and substantial market share within advanced chips are paying off, as the company increased revenue 38.6% during the second quarter, with CFO Wendell Huang reporting that 'Our business in the second quarter was supported by continued robust AI and HPC-related demand.' There is a lot to like about TSMC's strong business model, yet the stock trades at a reasonable valuation of just 24x 2025 earnings estimates, just a slight premium to the broader market as the S&P 500 (SPX) trades for roughly 22x forward earnings estimates. This appears to be an attractive valuation for a company exhibiting Taiwan Semiconductor's revenue growth and a considerable moat. Is TSMC Stock a Buy, Hold, or Sell? Turning to Wall Street, TSMC earns a Strong Buy consensus rating based on six Buys, one Hold, and zero Sell ratings assigned in the past three months. The average TSM stock price target of $267.57 implies 10.75% upside potential. ASML Holding (ASML) Like Taiwan Semiconductor, ASML Holding (ASML) is an integral link within the global semiconductor supply chain. The Netherlands-based company manufactures photolithography machines for chip manufacturers, including TSMC, Samsung, and Intel (INTC). These are highly complex and expensive systems (with price tags of up to $200 million) that use light to etch circuit patterns onto a silicon wafer, a crucial part of the semiconductor manufacturing process. ASML is the only firm currently providing extreme ultraviolet lithography (EUV) machines, which are used to make the most advanced chips, giving ASML a powerful moat. ASML also manufactures deep ultraviolet (DUV) lithography machines, used in the production of older chips, and earns revenue from servicing these EUV and DUV machines for its customers. For these reasons, ASML is arguably one of the most important companies in the world. However, it isn't really priced as such. The stock trades for a reasonable 25x 2025 earnings estimates, just a slight premium to the S&P 500. The stock isn't ultra cheap, but it does carry an appealing valuation that the semiconductor industry is heavily reliant on. ASML is a dividend stock, currently yielding 0.92%. While this isn't a high yield, the company has slowly but surely been growing its dividend over time as its earnings power increases. For example, ASML has increased its dividend payout for nine consecutive years and grown it at an attractive 21.5% compound annual growth rate (CAGR) over the past five years. In addition to the dividend, ASML has also made extensive use of share buybacks to return capital to shareholders. Share buybacks are often beneficial to shareholders, as they reduce the company's share count, thereby increasing earnings per share and concentrating the company's earnings among a smaller pool of investors. They are also often seen as a sign that management believes that the stock is undervalued. Through the first two quarters of 2025, ASML has repurchased approximately 4.6 million shares of the company this year, worth roughly €4.25 billion. Despite its unique capabilities and strong business model (not to mention beating both revenue and earnings estimates), ASML fell sharply after reporting Q2 earnings earlier this month and has yet to recover. The stock is down more than 10% over the past month and 23.5% off of its 52-week high. The recent sell-off was based on the company guiding for lower Q3 revenue than the market expected, and stating it cannot confirm further growth in 2026 due to macroeconomic and geopolitical uncertainty. While the year ahead may indeed pose challenges, we are confident that over the long term, ASML's equipment and services will continue to be in high demand by the world's leading semiconductor manufacturers, making the stock an attractive long-term opportunity to buy on the dip. Is ASML Stock a Buy, Hold, or Sell? ASML earns a Moderate Buy consensus rating based on four Buys, five Holds, and zero Sell ratings assigned in the past three months. The average ASML stock price target of $863.83 implies 19% upside potential over the coming year. Lam Research (LRCX) Finally, let's examine Lam Research (LRCX), a vital player in the global semiconductor supply chain. The company designs advanced equipment for etching, deposition, and cleaning—critical steps in the chip manufacturing process. Like ASML, Lam also generates recurring revenue from servicing its complex and highly specialized machinery. While it faces competition from names like Applied Materials (AMAT) and Tokyo Electron, Lam operates in a niche with high technological barriers to entry, making it an attractive long-term prospect. Lam Research currently trades at around 24x forward earnings—only a modest premium to the broader market, suggesting a reasonable valuation given its position in the semiconductor ecosystem. In terms of shareholder returns, Lam offers a dividend yield of 0.94%. Though the yield is modest, the company has consistently increased its dividend for 10 consecutive years, with a robust 14.9% compound annual growth rate over the past five years. Additionally, Lam is returning capital through share buybacks, highlighted by its $5 billion repurchase program announced in May. Is LRCX Stock a Buy, Sell, or Hold? LRCX earns a Strong Buy consensus rating based on 11 Buys, two Holds, and zero Sell ratings assigned in the past three months. The average LRCX stock price target of $108.75 implies 11.2% upside potential over the coming year. Semiconductor Supply Chain Stocks Offer Long-Term Value I'm bullish on all three of these semiconductor supply chain stocks, as I believe they offer compelling long-term value for investors. Each company plays a critical role in the production of semiconductors that will power transformative technologies such as generative AI, autonomous vehicles, and robotics. Their highly specialized products and services create durable competitive advantages and significant barriers to entry. Yet, despite their strategic importance and strong positioning, all three stocks trade at valuations only modestly above the broader market. Additionally, each company is actively returning capital to shareholders, further enhancing its investment appeal.
