When a stock has soared, you may think twice before buying it. You might worry the player will soon run out of fuel — and you’ll either record a small gain, or worse, lose on this investment. But recent momentum doesn’t necessarily indicate that a stock has delivered its best and now should be avoided. Many quality companies go through periods of significant gains that last a while, and then even after this momentum slows, these stocks still offer investors potential for additional increases over the long term.
Some of today’s top performers fall into this category, presenting you with fantastic long-term prospects. You’ll find them across industries, but today three in the consumer goods space, spanning the areas of travel and retail, represent particularly interesting investments. I’m talking about Carnival (NYSE: CCL) (NYSE: CUK), Amazon (NASDAQ: AMZN), and Costco (NASDAQ: COST). They’ve climbed 21%, 31%, and 34%, respectively, this year. Let’s check out these stocks I’d buy now with no hesitation.
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Carnival had it rough during the early days of the pandemic as cruising operations temporarily shut down. This resulted in the world’s biggest cruise operator building up a wall of debt to — excuse the pun — stay afloat. Profit shifted to a loss, and the stock price sank.
But in recent times, Carnival has sailed into smoother waters. In fact, the company is proving itself to be an excellent recovery and growth story. Carnival made a broad range of efforts to turn things around, from cutting fuel costs to taking steps to increase travelers’ onboard spending — and at the same time, the company worked on paying down debt, with a special focus on variable rate borrowings.
Efforts have paid off. In the recent quarter, Carnival reported record revenue and operating income. And the company’s advanced booked position leaped ahead of last year’s record levels — this is at higher prices, showing the strength of demand for Carnival’s cruises.
Today, even after its double-digit gain this year, the stock trades for a bargain 20x trailing 12-month earnings, compared to levels above 40x prior to the pandemic.
Amazon is a leader in two high-growth markets: e-commerce and cloud computing. And today the company also is emerging as a leader in the hot area of artificial intelligence (AI). Amazon’s e-commerce business is benefiting from the company’s investment in AI as it uses these tools to become more efficient and better serve customers — this should reduce cost to serve and keep customers coming back.