Picking up the latest hot growth stock can be smart, but only if it’s at the right price. Following the crowd after a stock has made a huge move sometimes doesn’t work out, so there are a few considerations to take note of before making the move.
However, I’ve found three red-hot growth stocks that are worth buying now and whose valuations aren’t too high to profit from.
1. Nvidia
After Nvidia‘s (NVDA 3.08%) latest sell-off, it’s more than 10% down from its 2024 highs, making it an interesting stock to catch on sale. Nvidia’s growth has been unbelievable, as its latest quarter saw its revenue rise by 94% year over year. This red-hot growth comes from its top-tier graphics processing units (GPUs) that are used to train artificial intelligence (AI) models.
Demand for this hardware started in 2023 and is set to continue expanding in 2025. Wall Street analysts project 51% revenue growth in FY 2026 (ending January 2026), so Nvidia will continue to stay red-hot.
However, the price investors have to pay for Nvidia’s stock has come down significantly, as it only trades at a price to earnings (P/E) ratio of 51, at the time of this writing. Compared to Apple or Microsoft, which trade for 41 and 36 times earnings, respectively, Nvidia’s stock doesn’t seem that expensive, especially when you consider that Apple and Microsoft are only projected to grow revenue by 6% and 14% in 2025, respectively.
Nvidia’s stock is both red-hot and much cheaper than it used to be. I think it’s an excellent stock to scoop up before 2025 is here.
2. Taiwan Semiconductor
If Nvidia is a hot growth stock, what about the chip company that manufactures most of Nvidia’s chips that go into its GPUs? Taiwan Semiconductor (TSM 1.32%) has been a dominant company in this space and also makes chips for giants like Apple. Its chip foundries have become the best in the business, and its dominance has directly impacted its financial results.
In Q3, TSMC’s revenue rose 36% year over year in U.S. dollars, thanks to its strong AI business that is projected to triple this year. Wall Street analysts expect this dominance to continue into 2025, with revenue projected to rise about 25% in New Taiwan dollars.
Taiwan Semiconductor’s stock trades for 31 times trailing earnings — far cheaper than the previously compared Apple and Microsoft, despite growing much faster. As a result, Taiwan Semi still looks like a great buy, and there will be plenty of future growth ahead of it.
3. MercadoLibre
MercadoLibre (MELI 3.26%) is a significant diversion from the previous two companies. It doesn’t have anything to do with AI or tech. Instead, it’s a Latin American e-commerce giant with a significant presence in the fintech space. Essentially, it’s Amazon if it also included PayPal.
This combination has been critical in growing e-commerce in Latin America, and MercadoLibre has emerged as the top company in the region. This has led to outsized growth over the past decade.
MELI Operating Revenue (Quarterly YoY Growth) data by YCharts
Few companies have sustained 30% or greater growth for as long as MercadoLibre, and the results for shareholders have been incredible.
MercadoLibre’s growth is expected to extend into 2025, with revenue projected to rise 24% in U.S. dollars. However, as MercadoLibre matures, all eyes are on the bottom line. Recently, MercadoLibre has struggled with some bad debt in its fintech division, which has hurt profits. If it can sort that out, Mercado’s profits are set to surge even faster.
Although MercadoLibre may look expensive at 61 times trailing earnings, if you look ahead to what’s expected in 2025, which includes its profit margins getting better, it trades at a forward P/E ratio of 38. That’s a far more attractive price tag and will likely give investors a solid return on their investment.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Keithen Drury has positions in Amazon, MercadoLibre, Nvidia, PayPal, and Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Amazon, Apple, MercadoLibre, Microsoft, Nvidia, PayPal, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft, long January 2027 $42.50 calls on PayPal, short December 2024 $70 calls on PayPal, and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
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