2 Dirt Cheap Stocks to Buy With $1,000 Right Now

Key Points

• Alphabet's valuation is significantly lower than its peers.

• Taiwan Semiconductor's management expects monster growth over the next few years.

With the market at or near all-time highs, finding so-called dirt cheap stocks isn't always easy; however, there are plenty of examples out there. Two stocks that I'd consider dirt cheap are Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) and Taiwan Semiconductor Manufacturing (NYSE: TSM). Each has a different reason for being labeled as cheap, but I think both qualify.

Both of these stocks look like great bargains and can be bought confidently today without fear of losing a ton of money.

Image source: Getty Images.

Alphabet

Alphabet is the parent company of Google, alongside other notable brands such as YouTube, Android, and Waymo. However, Alphabet's stock is unloved by the market due to its core business, Google Search. Investors are convinced that the Google Search engine will be a loser in the artificial intelligence (AI) arms race. But that hasn't come to fruition yet.

In Q1, Google Search, the largest part of Alphabet's business, saw revenue increase 10% year over year. That doesn't sound like a failing business to me.

While some may argue that this is still in the early innings of generative AI rollout, these technologies have been available for use for many years. Google has already introduced AI search overviews, and this feature is likely enough AI for the vast majority of users. As a result, I think the fear of Google being replaced is overblown.

Additionally, the rest of Alphabet's businesses are performing well, helping to propel the entire company to 12% revenue growth in Q1, along with 49% diluted earnings-per-share growth. Those are impressive figures, but the market doesn't value Alphabet's stock very highly. The stock trades for a mere 18.6 times forward earnings.

GOOGL PE Ratio (Forward) data by YCharts

Compared to the S&P 500 (SNPINDEX: ^GSPC), which trades for 23.2 times forward earnings, Alphabet's stock looks far cheaper. I expect Alphabet's stock to at least revert to a market-average valuation, if not more, if it can continue its excellent earnings growth throughout 2025 and beyond. As a result, I believe Alphabet can be considered a relatively inexpensive stock that is worth buying now.

Taiwan Semiconductor Manufacturing

Taiwan Semiconductor Manufacturing, also known as TSMC, is the leading chip foundry, having achieved this position by offering leading technology alongside best-in-class production yields. This has caused nearly every major tech company that relies on chips to partner with the company, exposing it to the largest growth trends, such as autonomous vehicles and AI computing power.

This has led to strong growth for TSMC over the past few years, but it's not done yet.

Due to Taiwan Semiconductor's market position, its management has an excellent understanding of what chip demand looks like for the years ahead, as chip orders are placed years in advance. This prompted TSMC's management to issue bold guidance at the start of 2025, predicting that AI-related revenue would increase at a 45% compound annual growth rate (CAGR) over the next five years. That means that AI-related revenue will increase by 541% over the next five years.

However, that isn't the companywide growth rate. For that, management estimated it would approach a 20% CAGR. That still indicates 148% growth over the next five years. Considering the long-term average growth rate for the market is 10%, that would provide massive outperformance.

Still, TSMC's stock recently traded for 24.7 times forward earnings, which is only slightly more expensive than the broader market. However, if a stock is valued at nearly the same level as the market yet is projected to vastly outgrow it, then that indicates a potentially undervalued stock.

I believe Taiwan Semiconductor is one of the top stocks to own moving forward, and its market-average stock price, combined with market-crushing growth, makes it a great stock to buy right now.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Keithen Drury has positions in Alphabet and Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Alphabet and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.