With inflation hitting everyone’s pockets, $1,000 may not seem like a lot of money anymore. That said, it could still help lay the groundwork for huge long-term returns in the stock market if you invest in the right companies at the right time. Let’s dig deeper to find out why stocks Rivian Automotive(NASDAQ:RIVN) and Micron technology(NASDAQ:MU) They look like great choices in 2026 and beyond.
It’s been more than three years since OpenAI’s ChatGPT introduced generative artificial intelligence (AI) to the world. And since then, many technology companies have added billions (if not trillions) to its market limitsmaking its shares less attractive to investors looking for a deal. While Micron has also risen in recent months, its valuation is still very attractive considering how much its memory hardware business can earn.
Micron specializes in creating high-performance memory chips. These are vital to the rise of AI because great language models (LLM) are trained on large amounts of data, which must be stored on these devices. Reuters reports that massive demand for computer memory has created shortages, allowing producers to raise prices across their product lines.
Image source: Getty Images.
Micron appears to be benefiting from favorable industry dynamics. In its fiscal first quarter (which ended in December), revenue increased 57% year over year to $13.6 billion, driven by the strength of the company’s cloud memory unit, where it serves AI data center clients. Margins remain high and the company reports $8.4 billion in free cash flow from operations.
The most attractive thing about Micron might be its valuation. Despite stellar growth, the stock trades for a forward price-to-earnings (P/E) multiple of just 11.5, which is significantly lower than the S&P 500 average of 22.
Electric vehicles (EV) have fallen somewhat off Wall Street’s radar as investor enthusiasm turns toward new opportunities like generative AI. But that doesn’t mean there aren’t opportunities in this struggling sector. Rivian stands out for its ability to benefit from decreasing competition and launching new products to drive growth.
Last year, the Trump administration effectively eliminated US government support for electric vehicle adoption, which previously included a $7,000 tax credit on new purchases and several emissions regulations that penalized automakers for producing traditional gasoline-powered vehicles. Electric vehicle sales in the United States fell a whopping 41% in November, reflecting the importance of these incentives in driving adoption. That said, Rivian appears poised to turn this short-term challenge into a long-term opportunity.
For starters, the company’s vehicles generally didn’t even benefit from the incentive due to battery sourcing requirements and price. Additionally, the loss of government support is driving away Rivian’s biggest rival, Ford Motor Companywhich has completely scrapped its all-electric F-150 Lightning, which competes directly with Rivian’s R1T pickup truck.
In December, Ford disclosed assets of $19.5 billion. amortization charge related to a number of canceled electric vehicle models. And the larger company’s withdrawal from the market gives Rivian more room to capture market share and establish brand recognition in the all-electric truck market.
Rivian’s valuation is also attractive. With a price-to-sales (P/S) ratio of just 3.2, the stock is dramatically cheaper than a pure-play alternative. teslawhich has a P/S multiple of 15.5. Rivian’s third-quarter revenue grew 78% year over year to $1.56 billion. And the beleaguered electric car maker may finally be on the cusp of a sustainable recovery.
The stock market has absolutely gone up lately, with the S&P 500 is up about 77% in recent years, partially driven by new hype cycles like generative AI. But while this is great news for investors, it is also a sign to be cautious about a possible correction. Rivian and Micron are good options in this expensive market because they trade for lower valuations than their peers, significantly reducing long-term downside risk.
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Will Ebiefung has no position in any of the stocks mentioned. The Motley Fool positions and recommends Micron Technology. The Motley Fool has a disclosure policy.
The 2 Best Stocks to Invest $1,000 in Right Now was originally published by The Motley Fool
