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Hey Bow Tie Nation, Joseph Hog here, with what could be the most important six weeks you'll ever have investing. That's because this earnings season, more than any other, could see the stock market bottom from this massive sell-off and open the door to prices that will make millionaires. In fact, the five stocks I'll highlight have an average 250% upside to my three-year price target—more than three times your money in just 3 years. I'll show you exactly what to watch for, the clues to when to buy, and then reveal those five stocks I'll be buying.
Just as important though, folks, please—I've had to update these numbers in this video three times because of how fast prices are plunging. What's important here is I want to show you how to do this analysis yourself, how to work through the valuations and find a target price and a return upside. So, no matter where stocks are when you watch this, you can do this analysis yourself. Please do not be one of those investors that just wants some YouTuber to feed them stocks to buy, because honestly, from what I've seen, 90% of the so-called experts here on YouTube wouldn't know real analysis if Warren Buffett personally explained it to them using a pair of sock puppets.
I'll show you those five millionaire-maker stocks. But understand what we're coming into, why the door to this opportunity is going to be open very soon, but closed just as quickly. Companies are about to start reporting their sales and profits made over the first 3 months of the year. While Wall Street generally has a good idea of what those profits are going to be, what is more important is going to be the forecast companies give for this current 3 months and then the full year, because the fact is, those forecasts are likely to be ugly. Wall Street has already taken a hatchet to the estimates for first-quarter profits.
Here, FactSet Earnings Insight is a weekly survey of estimates for profits and revenue on companies in the S&P 500 market index. It's a free publication and a great resource I use for researching stocks in it. This chart shows how much analysts have lowered their estimates for the first-quarter profits that are going to be reported by each company in the 11 sectors of the economy. And you see only stocks in the utility sector are expected to post higher profit growth than the market expected last December. The crash in consumer sentiment and spending has been so bad that Wall Street now expects companies in the consumer discretionary sector to post earnings that are 10% lower than we thought they would be just 3 months ago.
And more to our point here, analysts have already drastically cut full-year profit forecasts as well. This chart shows the change in earnings expected in each sector from what those expectations were at the beginning of the year versus right now. While financials are holding up relatively well, these don't include the changes from tariffs announced last week. So even these don't show the real damage to company profits. Overall, analysts have lowered their earnings per share estimates for companies in the S&P 500 by 1.6% to 6%, which might not seem like much, but that's before companies lower their guidance over the next 6 weeks.
And this problem is clear here, folks, when you look at the company profitability—these net profit margins, or the percentage of revenue left over after all costs—and you compare these with how much tariffs are going to be adding to those costs. This shows the net profit margin, that earnings profitability for the companies in each sector. For the overall market, the margin is just 12.1% across the S&P 500. And in some sectors, profit margin is even lower. In consumer staples companies, on average, have just 5.7% of their revenue left over after paying all costs. That's why inflation is so hard on those because they have a hard time passing on the increases to their customers for all the competition in the space. But any cost increases they don't pass on pretty much obliterate any profits.
Now consider that the new tariffs just increase costs by a minimum of 10% across all imports and as high as 70% for products from some countries. So then companies importing their product or even parts of it are now paying an extra 10 to 70% more on those costs of goods sold that could wipe out completely the profits for most companies that they don't pass much of those additional costs on to consumers. So it is right here why we see Q1 earnings season is going to be such a disaster over the next 6 weeks and why I've been talking about it so much on the channel over the past month. While people are hoping for those tariffs to get negotiated lower, we have no idea what that's going to look like yet. So as management looks to forecast their full-year profits, that giant level of uncertainty means they're going to have to cut their previous forecasts by a mile.
Already, Wall Street expects companies in three sectors to report profit growth this year that is below the rate of inflation. This chart shows forecasts for percentage increase in 2025 earnings for companies in each sector over the last year of profits. And those in the real estate, consumer staples, and energy sectors are expected to grow profits by less than 2% this year. That is negative earnings growth after accounting for inflation. And when companies update their own guidance for profits, most of these are going to be near zero or even below.
Let's get started with those millionaire-maker stocks though, and I'm going to show you exactly when to invest. But first, let's start with Broadcom Inc, ticker AVGO, one of my favorite data center stocks. While we have gotten some reports of Microsoft backing off data center leases and building, that buildout of infrastructure is still one of my favorite multi-year themes, even if we do see some cuts to JP Morgan's forecast of $1 trillion in AI data center infrastructure through 2027, it's still going to mean strong revenue growth for hardware names. Other hyperscalers like Meta and Alphabet are still planning on spending aggressively. And even Microsoft has said it's still going to budget $80 billion on AI infrastructure this year alone.
And it's here that perhaps no other company benefits across the entire data center infrastructure spending like Broadcom. From its Tomahawk and Jericho series of switches to its AS6 chips and storage area network solutions, Broadcom is dominating the entire hardware and software stack. Of course, heading into first-quarter earnings could bring a revaluation of data center and AI spending. From tariffs to lower economic growth, downgrades of that planned investment spending could hit Broadcom. But there are two reasons why I'm buying now and on any earnings dip: first is because we're already getting a great deal on a strong growth stock. I'm going to show you how to do this analysis next, but you can see here shares of Broadcom are trading for just 13.6 times on a price-to-sales basis right now. That is a 21% discount to the average 17.2 times valuation over the last year. And this company is forecast to grow sales by 17% a year over the next three. So even if shares dip further, I want to start building my position now ahead of what could be a $300 share price over the next few years.
But more fundamental to the Broadcom story is we haven't even scratched the surface on compute demand and the data center needs and the AI story. NVIDIA CEO Jensen Huang estimates that as the AI revolution transitions from just building and training those AI models to actually using them—to that inference stage—we're going to see a 100 times increase in compute demand. That is going to mean continued spending on that data center buildout theme for years, maybe decades, and it's going to take Broadcom higher with it.
Finding that target price and 108% potential return meant some very simple analysis that every investor can do. I first copied the price per share and the market cap—the total value of all shares in the market for each stock. When I first put the video together, shares of Broadcom were at $172 each and a total company value of just $800 billion. Of course, that's changed over the last few days, so the final return percentage will be different, but the return target will be the same and the analysis remains the same. I then went to the statistics tab here on Yahoo. And you can find these numbers on any investing site. But I'm looking here for the current price-to-sales ratio, which is just how much investors are paying for every dollar in sales—a core measure of how expensive a stock is. So right now, shares of Broadcom are valued in the market at $13.60 for every dollar of sales generated over the last year. I also want to get an average for this number over time—how much have investors been willing to pay for shares of Broadcom over the period—so I want to add up the valuation multiples over the last four quarters to get a yearly average. Here I see that over the past year, investors have been willing to pay $17.21 for every dollar of sales generated by the company. That means Broadcom has traded at a higher valuation in the past.
Using this to develop a target price means estimating how much revenue the company will generate into the future. So I'm going to use my E*TRADE account here, which gives longer-dated analyst forecasts. And we see that on average, Wall Street expects Broadcom to report $83 billion in sales in 2027. I can use that last year's sales of $51.5 billion to get that annualized growth rate for the stock here—expected to grow by 17% a year over the next three. From there, for our price target and return, it's just a matter of using these two pieces of analysis. If shares of Broadcom once again trade for that average valuation multiple of 17.2 times on a price-to-sales basis, that means the $83 billion in 2027 forecasted sales times that 17.2 multiple would mean a market cap of $1.43 trillion. Taking that divided by the current market cap of $89 billion would be a 77% return from that $172 share price or a target price of $300 per share.
Now understand here, folks, because the share price has come down from when I first started putting this analysis together, that target price remains the same because it's based on the price-to-sales ratio and the forecast for 2027 sales. But off that new lower price for AVGO, we're now looking at a 108% return instead of 77% over the period. Nation, this is why I spend so much time showing you how to invest, how to do this analysis yourself, because the market can turn in an instant and you need to make sure you're looking at the most recent information instead of waiting for some Yahoo on YouTube to do that for you or even hoping that they're doing the analysis in the first place. Five minutes and some simple analysis can help make sure that you're investing in the best stocks for your portfolio.
Another stock I love in that data center theme, now trading for a 30% discount, is Arista Networks, ticker ANET. And while Arista doesn't have that same soup-to-nuts data center coverage as Broadcom, ANET is the data center switching leader, specializing in the kind of high-speed, low-latency networking that AI data centers need. Within that data center buildout, the need to upgrade this networking hardware is going to be the biggest challenge. So I'm focusing on leaders like Arista that are going to specialize in the space. Its EOS software is a key differentiator, offering better programmability, automation, and scalability compared to Cisco's legacy systems. The single unified operating system means better reliability, automation, and scalability across all of ANET's products. Arista is forecasted to post $11.6 billion in sales through 2027 and 18% annual growth from the last year. And after the sell-off, shares are trading for just 13 times on a price-to-sales basis. That is a 30% discount to the longer-term average multiple, just under 19 times. Here, on that $11 billion in 2027 sales and that average multiple, shares could reach $172 each and a 168% upside to my target.
We are just getting started. I'm going to show you those other three stocks to buy. But I know with the market crash you're wondering when to buy and if stocks are done falling now. So I want to explain what I'm watching for and how I'm investing. First though, understand I've outlined why this won't be a bad market crash like we had in 2008 or likely even as bad as the 34% loss on stocks during the pandemic. The economy was in good shape going into this crash because of the jump in home equity values, with homeowners almost $12 trillion dollars richer in home value just in the last five years. And with the boom in stocks, household finances were very strong. Last year, even with higher credit card balances, the amount of debt US households owed relative to their assets was at a 50-year low. Americans also have more than $6 trillion stashed in money market funds and almost $4 trillion in checking accounts. So even as some consumers were feeling pinched at those lower income levels, the health of the consumer overall is very good. Inflation is also steadily coming closer to the Fed's 2% target, with the CPI at 2.8% in February, which means the central bank could continue to cut interest rates to support any economic weakness.
We are already down 20% for stocks in the S&P 500 as of last week. And I laid out in my investing plan in Monday's market update. At this point, even though I think stocks will fall further through earnings, I'm using some of my cash to buy more of these five stocks at these discounted prices. But I'm also using the covered call strategy to reduce my risk of a further sell-off. I'm going to get back to those three remaining millionaire-maker stocks to highlight, including one that could 5x your money to my price target. But you know this channel isn't just about telling you what stocks to buy. I want to get your input here as well. What are the stocks you're watching for that five or 10x potential? Let us know in the comments along with why you think these stocks could make millionaires.
And here, one of the cheapest stocks on the list, totally ignored by Wall Street but with a 250% upside potential: shares of Advanced Micro Devices, ticker AMD. This is one of the few companies I think could actually surprise higher when it reports earnings at the end of this month. That's because, against constant delays for new Nvidia chips, rumors are out that AMD has been able to push two to four times the inventory for retailers and wholesalers. Nvidia still has the clear lead in performance chips, but it doesn't matter if nobody can get their semiconductors. Near-term estimates are for a 30% pace in sales growth for the current quarter and for earnings to jump by 50% to 93 cents a share. Further out though, analysts expect the company to grow sales by almost 20% over the next 3 years to $44 billion in 2027, but investors have totally written this one off as a runner-up to Nvidia. Shares of AMD trade for just six times on a price-to-sales basis. That is the second cheapest on our list and sets it up for a potential 250% upside to my price target. And while that long-term return upside is enough to make any investor smile, the volatility in these stocks and the market overall has set up even higher returns for options investors.
I asked the Bow Tie Nation how they've been using our options investing course. I was blown away with the response. George made over $26,000 buying the $30 calls on SMCI—a 315% return in just 2 weeks. Justin made a 380% return on a call option strategy in one week. And longtime Bow Tie brother Chad generated over $10,000 in income in one month across five stocks from Amazon to Alibaba and Nvidia. And to help you get started, I'm relaunching my ultimate options course. Over 3 hours of video, I start with the basics, then walk you through 29 option strategies, when to use each and how to set it up, including a real-world example with shares of Tesla. The course also comes with a one-of-a-kind strategy finder to help you find the right strategy and an options calculator to show you exactly what to expect. Right now, I'm relaunching the course at a 38% discount—save $150 off, but only for the next 3 days. You'll get all the basics to get you started, the strategy finder to make sure you're using the best strategy, the options calculator to show you exactly how much money you can make, walkthroughs on all 29 strategies, and a 14-day money-back guarantee. That $150 launch discount is only available with the coupon code in the link below. So look for that link or scan the QR code here.
Back to our list and one of the biggest discounts this year: shares of The Trade Desk, ticker TTD, down 45% in the first 3 months. I highlighted Trade Desk as one of my favorite buy-the-dip stocks recently. The company is a leader in e-commerce advertising with more than 10% of the cross-device ad targeting category. Any market leadership in digital ads is going to mean growth, with Trade Desk estimating the digital market at just $135 billion—a fraction of the $900 billion global ad market. But then in its Q4 earnings, the company beat expectations by a long shot and reported sales up 22%, but missed analyst forecasts for the coming quarters. That sent shares plunging. Then the recent tear-off sell-off sent it down further on economic growth fears. Despite that sell-off, The Trade Desk is still expected to post 19% annual sales growth—strong growth stock territory—for $4.1 billion in revenue in 2027. Investors have all but given up on this stock though, and their shares are trading for just 10 times on a price-to-sales ratio—less than half the valuation over the last year. Nation, if this stock can even come close to that kind of continued growth, investors are going to return in droves and push the valuation back up to my target of $200 per share at a 339% return—more than four times your money.
This next stock is my favorite of the group, trading at a ridiculous discount and with a 384% return potential, but all this stock picking is pointless unless you have a plan for how to invest. Check out the video here in the corner next, and I'll not only show you five more stocks to buy but also how to invest in each to replace your income. My favorite of the group, a stock I believe has a nearly 5x potential on your money: shares of Super Micro Computer, ticker SMCI. Those of you in the Nation know SMCI is my largest position, with 24,000 shares, and the recent sell-off has brought it just under my average price—back into must-buy territory. Super Micro dominates the data center server market, controlling as much as 30% of the market share for the high-performance AI hardware. And even if those data center spending plans come down near term, this one is just too cheap to ignore. I've run down the full analysis on the fundamentals and the outlook several times. So instead of rehashing here, I'm going to link to our most recent update in the description below. But then SMCI doesn't even have to get to the $37 billion in forecasted 2027 sales, much less the $40 billion in revenue the CEO said was possible next year. At just one times price-to-sales, the stock is trading at less than half of where it has over the past year and an even bigger discount when you consider that 37% annualized revenue growth. Putting the accounting fears behind it and delivering on that growth could take the stock to $144 each over the next 3 years—a 384% return.
Get your $150 coupon to the ultimate options course with the special code linked in the description. See all 29 option strategies. Get the strategy finder and the options calculator to see exactly how much you can make. And all with a 14-day money-back guarantee. Don't forget to join the Let's Talk Money community by tapping that subscribe button and clicking the bell notification.