Top-Performing Stocks: Why You Shouldn’t Be Afraid to Invest
When a stock experiences a significant surge, it’s natural to wonder if it’s still a good investment opportunity. However, a stock’s recent momentum doesn’t necessarily mean it’s reached its peak and is due for a decline. In fact, many quality companies can sustain periods of significant growth, offering investors potential for additional increases over the long term.
Consumer Goods Stocks Leading the Way
Three top-performing stocks in the consumer goods space, spanning travel and retail, stand out as particularly interesting investments. These companies have demonstrated impressive growth, with year-to-date gains of 21%, 31%, and 34%, respectively.
Carnival: A Recovery and Growth Story
Carnival, the world’s largest cruise operator, faced significant challenges during the pandemic, resulting in a buildup of debt and a decline in profit. However, the company has made a remarkable turnaround, implementing various cost-cutting measures and increasing onboard spending. As a result, Carnival reported record revenue and operating income in its recent quarter, with advanced bookings surpassing last year’s record levels. Despite its double-digit gain this year, the stock remains attractively priced at 20x trailing 12-month earnings.
Amazon: A Leader in High-Growth Markets
Amazon is a dominant player in two high-growth markets: e-commerce and cloud computing. The company is also emerging as a leader in artificial intelligence (AI), which is enhancing its e-commerce business and driving growth in its cloud segment, Amazon Web Services (AWS). With a revenue run rate reaching $110 billion in the recent quarter, Amazon’s stock looks reasonably priced at 38x forward earnings estimates.
Costco: A Membership-Based Business Model
Costco’s business model is often misunderstood, with many assuming its profit comes from selling merchandise. However, the company generates most of its profit from membership fees, which are high-margin and allow Costco to maintain low prices on merchandise. This loyalty-driven approach has resulted in steady renewal rates above 90% and has enabled the company to reward investors with special dividends. While its shares may not be cheap at 49x forward earnings estimates, Costco’s solid business model and loyal customer base make it a worthwhile investment.
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