If you're planning to invest new money, position-sizing matters. Position-sizing means how much you allocate to each stock you own. Naturally, you'll want to invest more in your highest-confidence holdings while taking smaller positions in riskier stocks.
When investing $50,000 -- a considerable sum of money -- it makes sense to buy stocks with an excellent chance of delivering strong returns on your investment. It helps to find stocks with a track record of doing so and bright prospects. Here are two stocks that answer that call.
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1. The Trade Desk: Leading the digital advertising revolution
The Trade Desk (NASDAQ: TTD) is the leading independent demand-side platform (DSP), meaning it offers a self-serve, cloud-based platform to help ad agencies and brands manage and optimize their digital ad campaigns. The Trade Desk delivered phenomenal results since its 2016 initial public offering (IPO), with the stock up more than 2,000%. The company has a long history of delivering strong growth and has maintained at least 95% customer retention every quarter for the last nine years.
But it's not just The Trade Desk's track record that's a reason to buy the stock. The company also has a bright future. It launched a new AI platform, Kokai, in June and the major innovations from the new technology are expected to become available to most of its customers next year.
The digital advertising market has been sluggish over the last two years as advertisers scaled back on spending in anticipation of a recession. Nevertheless, The Trade Desk outperformed its peers during that time, delivering revenue growth of more than 20% and continued profit growth.
The stock actually sold off recently on its fourth-quarter guidance, which was weaker than expected due to macroeconomic headwinds. However, investors should take advantage of the sell-off as those headwinds will likely be temporary after the Federal Reserve said it planned to lower interest rates three times next year, which should help boost ad spending.
With its AI platform expected to accelerate growth, 2024 looks promising for The Trade Desk.
2. Old Dominion Freight Line: A longtime trucking leader
Old Dominion Freight Line (NASDAQ: ODFL) may not be a household name, but experienced investors know this stock is a longtime winner for investors. Old Dominion is a leader in less-than-truckload (LTL) transportation. Unlike full truckload, LTL is complicated and allows for high margins for operators able to provide the service efficiently. Old Dominion is regarded as the best-in-class operator in LTL.
In the third quarter, Old Dominion posted an operating margin of nearly 30%, and the company reported 99% on-time service performance and a 0.1% cargo claims ratio, showing why it has a reputation for superior service. That's how the company can charge premium prices and generate wide profits.
As an industrial company, Old Dominion is subject to broader economic demand and has little control over shipping volume, which ultimately drives revenue growth. However, the prospect of lower interest rates should help support a recovery in the industrial economy and shipping volume. Like advertisers, shippers have scaled back in response to weakness in demand for consumer discretionary goods after retailers pulled back on orders to reduce inventory levels after a series of supply chain challenges.
Old Dominion shares are expensive at a price-to-earnings ratio of around 35. However, the company has the ability to pass along price hikes, looks positioned to expand margins, and should benefit from a rebound in the economy. If you're looking for a stock poised to deliver solid returns for the foreseeable future, it's hard to beat Old Dominion Freight Line.
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Jeremy Bowman has positions in The Trade Desk. The Motley Fool has positions in and recommends Old Dominion Freight Line and The Trade Desk. The Motley Fool has a disclosure policy.
