Many investors may be hesitant to buy stocks again after dismal market performance in 2022. But when so many high-quality stocks are still up for sale, ignoring stocks entirely is usually the wrong move. So, today we will consider three promising stocks. Amazon (AMZN 1.96%), Costco (price 1.32%)and rent a runway (rent 1.40%) –And explain why they are “easy” to buy for long-term investors who can ignore the short-term noise.
There are two reasons why Amazon has become a top growth stock during the COVID-19 pandemic. Consumers bought more products online as brick and mortar stores closed, and the use of Amazon Web Services (AWS) cloud-based services surged as businesses coped. The use of digital media and applications increased throughout the crisis. As such, the company’s revenue increased by 38% in 2020 and by 22% in 2021.
But when Amazon releases its next earnings report on Feb. 2, analysts expect revenue to grow by just 9% in 2022. This slowdown is expected due to a post-pandemic slowdown in online sales, inflationary headwinds to discretionary purchases, and slowing demand for cloud-based services as the macroeconomic environment deteriorates.
It may seem strange to recommend Amazon purchases in the face of so many headwinds, but it’s already down nearly 50% from all-time highs, and sales are set to less than double next year. and looks historically cheap. If you believe Amazon will recover from this cyclical downturn, continue to secure more Prime subscribers, and remain the world’s top e-commerce and cloud company (and the fastest growing ad platform one), it’s a great opportunity. be greedy with that stock.
Costco remained a popular safe haven during the pandemic as consumers flocked to warehouse stores to stock up on groceries and household essentials. It retained shoppers with its sticky membership plan, which had a 90.4% of sales, and continued to open new stores like others. weak retailer retreated.
Costco generates most of its profits from high-margin membership fees, so it can afford to sell products at lower prices to attract more shoppers. allowed retailers to continue to grow in the post-pandemic market.
Costco’s revenue grew 17% in fiscal 2021 (through August 2021) and 14% in fiscal 2022. and miscellaneous goods. Analysts expect revenue and earnings to grow 7% and 10%, respectively, in fiscal 2023. Costco’s stock isn’t cheap at 35 times its earnings this year, but evergreen business model Support its premium rating.
3. Rent a runway
Rent the Runway allows customers to rent high-end designer apparel on an a la carte basis or through a three-tiered monthly subscription. In October 2021 he went public at $21 a share, but is currently trading at around $4. After initially impressing investors with its “closet-in-the-cloud” strategy of disrupting traditional clothing rental companies and capitalizing on the mainstream appeal of high-end designer his apparel, inflation headwinds shook the apparel market. Shaken and lost its luster.
But the actual numbers aren’t that bad. In fiscal year 2020 (ending January 2021), his revenue fell 39%, but he increased 29% in fiscal year 2021 as the market stabilized as the pandemic crushed market demand for luxury clothing rentals. . Analysts expect revenue to grow another 47% in 2022 as higher post-pandemic demand for high-end apparel rentals offsets slowing total subscriber growth. Based on these estimates, it’s trading at less than 1x expected sales next year.
At this point, Main concern The company’s problems are continued profit shortfalls, the impact of rising prices on logistics costs, and reduced liquidity. But if he can solve these problems by laying off nearly a quarter of his workforce and curtailing spending, it could generate big profits for multibaggers in the near future.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Leo San I have a position at Amazon.com. The Motley Fool recommends Amazon.com and Costco Wholesale. The Motley Fool has Disclosure policy.