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There are better stocks to buy instead of Nvidia (NASDAQ:NVDA). Although the chipmaker has been an absolute workhorse and promises to radically alter the artificial intelligence landscape, let’s be real and admit NVDA stock is not cheap.
The leading AI stock trades at 64 times earnings, 34 times sales, and 70 times free cash flow (FCF). Those are all nose-bleed valuations. Essentially, if you were to buy Nvidia outright, it would take you 64 years to earn back your investment through its profits. As the popular meme says, ain’t nobody got time for that!
That’s why I say there are better stocks to buy instead of Nvidia. The chipmaker is an excellent company, but there is concern that the melt-up in AI stocks may have run too far too fast. NVDA stock has fallen 22% from its recent high. As the market rotates away from former high-flying tech stocks, the following three companies just might be better for your portfolio.
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DaVita (DVA)
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Dialysis treatment center DaVita (NYSE:DVA) is one of the two largest dialysis centers in the U.S. It generates almost all of its revenue and profits from the procedure and runs neck-and-neck with Fresenius Medical Care (NYSE:FMS) for the claim to being top dog.
Second-quarter revenue grew 6% to almost $3.2 billion as profits soared 25% to $222 million. The total volume of U.S. dialysis treatments rose to 7.27 million, or over 93,000 treatments per day, a 1.1% increase year-over-year. DaVita is benefiting from better Medicare reimbursement rates and timing due to patients meeting their co-insurance and deductible levels.
Although DaVita stock is up 37% year-to-date, shares trade at less than 13 times next year’s earnings estimates, a fraction of its sales, and a bargain-basement of 9x FCF. It makes the discounted stock an attractive investment for those able to see the long-term value of treating the growing incidence of diabetes.
Brinker International (EAT)
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Restaurant owner Brinker International (NYSE:EAT) might not be as exciting as owning Nvidia stock but it is a good long-term value nonetheless. Brinker owns the Chili’s chain of Tex-Mex restaurants as well as the Maggiano’s Little Italy chain. Mexican food remains a popular trend and investors will get a taste of just how popular when the restaurateur posts earnings on Wednesday, Aug. 14.
So far, business has been popping. Fiscal third-quarter revenue rose 3.4% earlier this year to over $1.1 billion on a 3.3% increase in comparable sales. Consumers are looking to save money and are finding it within its Chili’s and Maggiano’s chains.