1976 movie All the President’s men It probably gave one of the best three word investment strategies around: “Follow the money.” No, the movie didn’t use the phrase in the context of investing. However, the best stocks tend to generate more money in terms of earnings, dividends, and free cash flow.
Money tracking can help you identify good stocks. With that in mind, here are three stocks to buy in 2025 that are money machines.
You won’t find many companies selling more than that Amazon(NASDAQ: AMZN). E-commerce and cloud services generated an estimated $620 billion in revenue over the past 12 months. The consensus revenue estimate for Amazon in 2025 among analysts surveyed by LSEG estimated at $707 billion.
In the past, Amazon wasn’t too concerned about delivering revenue and free cash flow. That is no longer true, however. Today, the company is laser-focused on both. The proof is in the pudding: In the third quarter of 2024, Amazon’s revenue rose nearly 55% year-over-year to $15.3 billion with its trailing 12-month free cash flow up 123% to $47.7 billion.
Amazon also has a net worth of around $88 billion. This amount is well below the company’s record revenue for the end of 2021, due to the increase in online shopping fueled by the COVID-19 pandemic.
The most important thing to know about Amazon, is that it should continue to be a money machine. Amazon Web Services has huge growth potential as organizations move their applications and data to the cloud. The e-commerce market still has significant room for growth. Amazon is also pursuing new growth opportunities including healthcare and robotics.
Parent of Google Alphabets(NASDAQ: GOOG)(NASDAQ: GOOGL) it lags well behind Amazon in revenue generation. The company’s sales were close to $340 billion in the last 12 months. However, it is a different story with benefits. Alphabet brought in earnings of $94.3 billion in the past 12 months and $26.3 billion in the third quarter of 2024 alone.
The tech leader is no slouch in the free cash flow department, either. Alphabet’s free cash flow over the past 12 months totaled $41 billion. The company reported free cash flow of $17.6 billion in Q3.
Most of Alphabet’s revenue, about 87%, comes from its Google Services, which include Google Search, YouTube, Google Maps, Google Play, Android, Chrome, and devices. Google Services is also the company’s biggest source of revenue, although Google Cloud’s revenue continues to grow rapidly.
Should investors be concerned about regulatory threats? I don’t think so, despite Alphabet’s damning court ruling last year. My take is that the company should maintain its dominance in the search engine market while expanding its share of the cloud services market. I also predict that Alphabet’s Waymo unit will play a major role in growth by the end of the decade as the robotics market takes off.
Eli Lilly(NYSE: LLY) it may seem like it is nowhere on this list. The drugmaker’s $40.9 billion in revenue over the past 12 months pales in comparison to Amazon and Alphabet’s sales figures. Lilly generated “only” 8.4 billion dollars in the last 12 months. Its free money was not good.
So why do I consider Lilly a money machine to buy in 2025? Sometimes following the money involves looking ahead. Lilly is poised to generate more revenue in the next few years than in the past.
The company’s Mounjaro/Zepbound franchise targeting obesity and type 2 diabetes stands out as a major cause of my optimism. These two products (which are the same drug under the hood) combined to make 11.6 billion dollars in the first three quarters of 2024. UBS the franchise project could be “the biggest drug ever.”
Meanwhile, Lilly is looking for other key growth factors, including the autoimmune drug Taltz and the cancer drug Verzenio. Sales of its Alzheimer’s drug Kisunla are still in the early stages. The company also has a promising program that contains 24 late plans.
Have you ever felt like you missed the boat on buying the most successful stocks? Then you will want to hear this.
On rare occasions, our expert team of analysts releases a “Double Down” stock recommendations for companies they think are about to come out. If you are worried that you have missed your investment opportunity, now is the best time to buy before it is too late. And the numbers speak for themselves:
Nvidia:if you invested $1,000 when we doubled in 2009,you will have $363,385!*
Apple: if you invested $1,000 when we doubled in 2008, you will have $45,870!*
Netflix: if you invested $1,000 when we doubled in 2004, you will have $474,140!*
Right now, we are issuing “Double Down” alerts for three amazing companies, and there may not be another opportunity like this anytime soon.
See 3 “Double Down” Stocks »
*Stock Advisor returns from 6 January 2025
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Keith Speights has positions in Alphabet and Amazon. The Motley Fool has positions and recommends Alphabet and Amazon. The Motley Fool has a policy of disclosure.
3 Stocks to Buy in 2025 That Are Virtually Money Machines was originally published by The Motley Fool.
