Navigating the stock market can be a high-stakes game. Choose incorrectly, and your portfolio might suffer. But the right choices? They could be your ticket to financial triumph. With thousands of stocks to choose from, pinpointing those poised for success is no small feat. It’s a daunting task, requiring hours of market analysis and company research – time that many people simply don’t have.
That’s where we come in. Each week, we delve deep into the market’s vast array of options, sifting through countless possibilities to bring you a select few. These are not just any stocks; they are carefully chosen based on solid research, current market trends, and potential for noteworthy growth.
This week, we’ve honed in on three stocks that stand out from the crowd. Our picks go beyond the mainstream; they’re strategic selections, crafted for significant impact in both the immediate future and over the long haul.
Read on and discover the full watchlist and unveil these exceptional stock picks.
Roku (ROKU) – A Beaten-Down Growth Stock with Big Upside
Roku has had a rough few years, with its stock down about 50% over the past three years. A slowdown in digital ad spending, weaker revenue growth, and a lack of profitability have kept many investors on the sidelines. But the story is starting to shift, and Roku’s upcoming fourth-quarter earnings report could be a turning point.
Despite the challenges, Roku continues to expand its platform, adding more users and increasing streaming hours. The company now serves 80 million active accounts, up 13% year over year, while total streaming hours have climbed 20%. Yet, average revenue per user (ARPU) has remained stagnant due to weakness in the digital advertising market and international expansion, which brings in lower per-user revenue than its U.S. business. However, there are signs that ad spending is improving, which could be a major tailwind for Roku moving forward.
Roku is also making smart financial moves. The company generated $149 million in free cash flow over the past year, showing it can operate profitably despite its net losses. It has aggressively cut costs, and analysts expect operating expenses to decline in 2024 while revenue continues to grow. With its partnership with The Trade Desk helping to drive ad revenue and the broader ad market showing signs of recovery, Roku could be on the verge of a major rebound.
Wall Street is starting to take notice. More analysts have upgraded Roku in recent months, and short interest has fallen, indicating that bearish sentiment is easing. Roku has beaten earnings estimates in each of its last four reports, and with its next earnings release on Feb. 13, this could be the moment when investors start to recognize the company’s long-term potential. For those looking to buy a high-growth stock before sentiment shifts, Roku is an attractive pick right now.
Union Pacific (UNP) – A Dividend Powerhouse with Long-Term Growth Potential
Union Pacific has once again proven why it’s a top-tier dividend stock, surging recently following a strong Q4 earnings report and an optimistic 2025 outlook. As one of the dominant railroad operators west of the Mississippi River, Union Pacific benefits from limited competition, extensive infrastructure, and steady demand for freight transportation. These competitive advantages allow the company to grow earnings consistently while rewarding shareholders with dividends and stock buybacks.
Operational efficiency has been a major driver of Union Pacific’s recent success. The company managed to transport 5% more freight in 2024 while reducing its workforce by 3%, leading to higher margins and profitability. Despite only a modest 1% revenue increase, operating income rose by 7%, and net income jumped 6%. With an operating margin of 40% and a profit margin nearing 28%, Union Pacific continues to demonstrate why railroads remain some of the most capital-efficient businesses.
The company also boasts a highly diversified revenue stream, moving everything from agricultural products to industrial goods. While coal shipments declined 23% in 2024, growth in other categories helped offset the weakness. Looking ahead, management is optimistic about new opportunities in renewable diesel feedstocks and petrochemicals, helping position the business for long-term stability even as traditional energy sources like coal decline.
Beyond its operational strengths, Union Pacific is an income investor’s dream. The company has paid dividends for 125 consecutive years and has increased payouts annually since 2008. Over the past decade, the dividend has climbed 144%, while aggressive share buybacks have reduced the share count by 31%. Even after last week’s stock surge, Union Pacific trades at a reasonable 22.9 times earnings, with a forward P/E of 20.6. Given its strong balance sheet, consistent cash flow, and commitment to shareholder returns, Union Pacific remains a high-quality dividend stock worth owning for years to come.
Salesforce (NYSE: CRM) – Driving AI Integration in Business
Salesforce has become a major player in the AI space, seamlessly integrating AI into its customer relationship management (CRM) tools. The company’s flagship AI product, Salesforce Einstein, is a generative AI tool that enhances productivity and automates tasks for businesses. Additionally, Tableau and MuleSoft provide powerful solutions for data visualization and software integration, making Salesforce a comprehensive platform for businesses embracing AI.
The stock has gained nearly 17% in the last year, and analysts are bullish, with 42 out of 55 giving it a buy or overweight rating. The average price target of $401.36 suggests 26.3% upside potential, while some, like Michele Schneider, see the potential for Salesforce to hit $500, depending on broader market conditions.
For investors who want to ride the AI wave while focusing on a company with an established customer base and cutting-edge tools, Salesforce offers both stability and growth potential.
