3 Unstoppable Stocks to Buy Before the Next Market Rally — Including Netflix (NFLX) Stock

Key Points

• Netflix’s management has shown discipline, which bodes well for its stock.

• Microsoft is well diversified, and its AI business is growing especially briskly.

• Nvidia shares have surged, but its stock still seems appealingly priced.

• 10 stocks we like better than Netflix ›

It can be a bummer buying into great stocks after a big market rally, as you might focus on having missed out on a lot of gains. Many people might therefore try to buy before the next market rally.

But it’s difficult, if not impossible, to know exactly what the market will do next. As of July 1, halfway through the year, the S&P 500 was already up 10% — which is the average annual return for the index over many decades. And the S&P 500 has actually posted double-digit gains in six out of the past seven years! So there has been an overall market rally going on for quite a while.

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Still, there are some great stocks that you might buy into. Here are a few to consider.

Image source: Getty Images.

1. Netflix

Netflix (NASDAQ: NFLX) is a stock I don’t often suggest, because it has frequently seemed overvalued. That’s surely due to its impressing many investors with its robust returns over many years. Its shares may be down around 47% over the past year (as of June 30), but over the past 15 years, it has averaged annual gains of close to 22%. And that lower stock price presents a nice opportunity for long-term believers in Netflix.

So why are the shares down so much? Well, one reason might be that many investors are seeing the company as a kind of loser, as it has pursued several acquisitions — of Roku and Warner Bros. — and not won them. I actually see those events as positive things, because they show that Netflix’s management has the discipline to walk away instead of bidding higher and higher without regard for value. They are not willing to waste shareholder value.

The company is continuing to perform well and grow. Its first-quarter earnings report featured revenue up 16% year over year and operating income up 18%. That’s pretty good for such a massive company. The company is expanding its scope, too, having added games and live event programming and video podcasts, among other things, to its offerings.

Netflix shares seem more than reasonably valued, with a recent forward-looking price-to-earnings (P/E) ratio of 22.4 — well below the five-year average of 31.3.

2. Microsoft

Microsoft (NASDAQ: MSFT) is another solid growth stock that has seen its shares fall sharply over the past year — by about 24% as of June 30. As with Netflix, that only makes its stock a more promising buy.

Why Microsoft? Well, it’s home to the dominant Office 365 suite of applications (including Word and Excel), the Azure cloud computing platform, the Xbox gaming platform, the Windows operating system, and even LinkedIn, among many other things. Like many other big companies, it has deployed artificial intelligence (AI) across various products — a move it hopes will boost its business.

It, too, is growing at a robust rate for such a huge enterprise. (Its market value was recently $2.85 trillion.) In its third-quarter report, the tech giant posted revenue up 18% year over year, and net income up 23%. CEO Satya Nadella noted, “We are focused on delivering cloud and AI infrastructure and solutions that empower every business to eval-max their outcomes in the agentic computing era,” adding, “Our AI business surpassed an annual revenue run rate of $37 billion, up 123% year over year.”

Microsoft is also a dividend-paying stock, with a recent dividend yield of about 1%. That may not seem like much, but it’s been growing at an average annual rate of 10% over the past five years. The shares seem attractively valued, with a recent forward P/E ratio of 16.7, well below the five-year average of 28.9.

3. Nvidia

Then there’s market darling Nvidia (NASDAQ: NVDA), the semiconductor giant with a recent market value of $4.8 trillion. Unlike the other two companies, it has not seen its shares fall over the past year — instead, they’re up about 27% (as of June 30). And over the past 15 years, it has averaged annual gains of 51%.

It has been growing like crazy. Still, despite that, its shares don’t seem overvalued. The stock’s recent forward P/E ratio of 22.8 is well below the five-year average of 35.4.

It’s easy to be bullish about the company. In its last quarter, revenue popped by 85% year over year, as it continues raking in billions from companies that need its chips to run AI processes. Its new, next-generation Vera Rubin platform is likely to juice its performance more, and it’s getting more involved in networking technologies to support AI.

Take a closer look at any of these stocks that interest you, as each of them could deliver a lot of growth in the years to come.

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Selena Maranjian has positions in Microsoft, Netflix, Nvidia, and Warner Bros. Discovery. The Motley Fool has positions in and recommends Microsoft, Netflix, Nvidia, Roku, and Warner Bros. Discovery. The Motley Fool has a disclosure policy.