Meta demonstrates strong profitability metrics and is poised to benefit significantly and quickly from AI advancements, particularly in its advertising business, making it an attractive investment at its current valuation.
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6 Stocks to Invest In Using 5 Proven Metrics
Ticker Take with Jon ErlichmanMar 3, 2026
Paul Harris, a successful investor, shares his five key metrics for identifying great businesses: gross margins, operating margins, return on invested capital, free cash flow, and interest coverage ratio. He then applies these metrics to six stock picks: Alphabet, Amazon, Visa, First Service, Bank of America, and Meta, highlighting their strengths and growth potential, particularly in the context of AI adoption and market dynamics.
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Bank of America is well-positioned due to loosened capital requirements, potential for large IPOs and M&A activity, and a strong management team, offering opportunities for growth in capital markets and potential for increased shareholder returns.
First Service is a great Canadian company with a strong servicing business (including gated communities) and a franchise division (like California Closets), consistently growing through disciplined acquisitions and long-term contracts.
Visa is a highly profitable 'toll booth' business with a massive network, significant international growth opportunities, and potential in B2B payments, making it a stable investment despite ongoing swipe charge litigation.
Amazon is a strong investment due to its efficient use of AI to reduce costs, its leading retail and logistics operations, its dominant AWS cloud business, and its rapidly growing advertising segment.
Alphabet is a great business due to its strong fundamentals, growing search and cloud businesses, and significant potential in AI with its Gemini 3 initiative, positioning it to help other industries adopt AI.