Even though stocks have rallied this year, many still trade at bargain prices. In fact, even some of this year’s gainers offer you plenty of bang for your buck today — like track records of growth and bright long-term earnings prospects. These players often are high-quality companies that have long been at the top of investors’ “buy lists.”
Here’s even more good news. With $1,000, you can buy some shares of three major consumer goods companies and one up-and-coming player that recently reached the milestone of profitability — and with a smaller investment, you can scoop up a share of each or make a bigger bet on each one. Let’s take a closer look at four exciting stocks to invest in while they’re on sale.
Image source: Getty Images.
1. Alphabet
Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) is the market leader in something we use every day: internet searches. Its Google search tool has held a 90% share of the market over time, and it’s unlikely that will change any time soon for two reasons.
First, internet users are used to “Googling” something when they need information, so it would be difficult for a rival to change those habits. Second, Alphabet has invested in artificial intelligence (AI) to make its search capabilities even better.
And speaking of AI, the company recently introduced its most powerful AI model ever, Gemini. It’s starting to roll out this tool across its products and right now is experimenting with it in Search.
Alphabet also is growing its cloud service, which reported a double-digit increase in revenue in the recent quarter. The company’s focus on AI should boost this business over time, too.
Right now, Alphabet shares trade for only 23x forward earnings estimates — even after this year’s gains.
2. Chewy
Chewy (NYSE: CHWY) is the younger player I was talking about. This e-commerce pet supplies shop reached the big milestone of profitability last year and has continued to grow revenue this year, despite a difficult economic environment.
What’s key is that Chewy customers keep coming back — and are spending more and more. The company offers an Autoship service that automatically reorders and sends your favorite products to you. This service continues to grow and represents more than 76% of Chewy’s overall net sales. What I like about Autoship is it shows us customer trends, offering visibility into future revenue.
In addition, there may be another growth catalyst just ahead. The company recently expanded into Canada — a country where it sees significant opportunity — and says customer demand has been high.
Chewy shares have declined this year, and the stock is trading at 36x forward earnings estimates. This is a reasonable price for a young, high-growth company.
3. Carnival
Carnival (NYSE: CCL) (NYSE: CUK) shares have climbed this year but are still well below their pre-pandemic levels. At the same time, the company has been managing its recovery from coronavirus shutdowns well and is even reporting impressive levels of growth.
First, a bit about recovery. After the pandemic temporarily halted cruises, Carnival built up $34 billion in debt. But the company’s efforts to cut costs — like shifting to more fuel-efficient ships — have been bearing fruit, and a sharp increase in cruise demand has helped, too.
Carnival paid down almost $4 billion in debt this year, and thanks to growing adjusted free cash flow, it can progressively lower debt in the months and years to come. The results of recent quarters offer us reason to be optimistic. In the third quarter, revenue hit an all-time high — and the advanced booking position for 2024 cruises surpassed historic highs.
Even though Carnival shares have performed well in recent times, they still trade at 1.1x sales, lower than their pre-pandemic level by this measure.
4. Apple
Apple (NASDAQ: AAPL) has a solid earnings track record, growing everything from profit to return on invested capital over the years. The popularity of Apple’s products hasn’t let up, and the company continues to not only keep users loyal but also to attract new customers. In the most recent quarter, half of Mac and iPad purchases were made by customers new to those particular products.
And thanks to these products, Apple has built up a second major revenue stream: services. The company now has more than 1 billion paid subscribers — and it offers them a vast range of services from digital content to payment tools. This generates revenue for Apple, and in the most recent quarter, this services revenue has reached a record high.
There’s reason to be optimistic about products and services revenue continuing to grow over time — products, thanks to Apple’s strong brand and innovation, and services, due to the number of people using Apple devices. That’s why the stock looks dirt cheap at 29x forward earnings estimates and makes a top investment right now.
Should you invest $1,000 in Alphabet right now?
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Apple, and Chewy. The Motley Fool recommends Carnival Corp. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
