Stocks rose last week, with both the Dow Jones Industrial Average(DJINDICES: ^DJI) and the S&P 500 (SNPINDEX: ^GSPC) achieving record highs thanks to progress on COVID-19 vaccine distribution and the passage of an aggressive economic stimulus package.
A few of the market’s favorite stocks will report operating results over the next few trading days, including Dow member Nike (NYSE: NKE). Let’s take a look at what investors can expect from that report, along with the earnings announcements on the way from FedEx (NYSE: FDX) and Five Below (NASDAQ: FIVE).
Nike should answer some big questions for investors on Thursday. The footwear and apparel giant returned to growth in the previous quarter, with the U.S. market expanding modestly while China surged. But there were caution flags in its last announcement. Inventory levels were inflated heading into the holiday season, and the short-term outlook was unpredictable thanks to customer traffic restrictions from further COVID-19 outbreaks.
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Nike’s report this week will kick off the second half of its fiscal 2021, which should include a sharp growth rebound compared to last year’s slump. But costs will also spike as marketing and advertising spending resumes. We’ll find out on Thursday whether CEO John Donahoe and his team are still feeling cautious about the later part of the fiscal year, or whether Nike is ready to restart aggressive spending on inventory and share repurchases.
FedEx’s spending plans
FedEx announces its fiscal third-quarter results on Thursday afternoon, and investors are eager to hear how the vaccine rollout, plus soaring e-commerce volumes, might be helping its business. The delivery giant’s last report was encouraging, with volume jumping as the pandemic continued to push more business online. Rival United Parcel Service also set a positive tone by announcing record earnings growth in its mid-February report.
Gallery: 10 Popular Robinhood Stocks That Are Better Than Bitcoin in 2021 (The Motley Fool)
Don’t put all your eggs in one basket
Bitcoin (CRYPTO: BTC) may be hitting daily all-time highs and drawing scores of new investors, but risk-conscious traders can still find plenty of lucrative investment opportunities in good old stocks. Many Robinhood stocks have also been leading the news lately, and the ongoing Reddit mania has resulted in large groups of investors jumping from stock to stock in search of the next new headline-making buy.
However, as a long-term investor evaluating potential stock buys to hold for the next three to five years or longer, it’s a good idea to take a good look at the most speculative names on your list and focus on companies that are quality, durable investments. If you want to invest in Robinhood stocks without buying too heavily into current market hype, here are 10 rock-solid buys to consider for your portfolio.
5 Winning Stocks Under $49 We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.
1. Pfizer
Pfizer (NYSE: PFE) has caught the attention of many new investors because of its coronavirus vaccine. The company created its vaccine with a Germany company called BioNTech. The product of this partnership is a COVID-19 vaccine that clinical data showed to be 95% effective, a substantial win in the ongoing fight against the deadly virus. Pfizer is currently distributing its vaccine around the globe, and has agreed to supply 300 million doses to the U.S. alone.
At the end of the full-year 2020, the company had already amassed more than $150 million in coronavirus vaccine sales. And last year, the company grew its overall revenue by 3%. This growth is directly attributable to Pfizer’s robust portfolio of top-selling medicines, which have kept its balance sheet relatively strong despite pandemic market volatility. The company will certainly see impressive balance sheet growth in the upcoming quarters due to its vaccine, but its thriving biopharma division and enviable product pipeline make Pfizer a compelling buy for long-term investors regardless.
Apple (NASDAQ: AAPL) has certainly kept up with its lauded track record of growth throughout the pandemic. The company closed the final quarter of its fiscal 2020 on a high note, delivering record growth in its Mac and services segments and positive overall growth of 1%. And for the first quarter of Apple’s fiscal 2021, management reported 21% revenue growth while its earnings per share (EPSstyle=”text-decoration: underline”>) surged by a mouthwatering 35%.
Apple’s products and services are more popular and in demand than ever. And while the company’s 0.6% dividend isn’t one to write home about, Apple’s history of growthstyle=”text-decoration: underline”> and ability to refresh its product line to draw new segments of customers and retain existing ones continue to reiterate its leadership in the tech space. This is great news for existing and potential investors who might be wondering how long Apple can keep up its streak of growth.
3. Netflix
Netflix (NASDAQ: NFLX) has a storied history of being a reliable growth stock, and the pandemic has been a huge catalyst for the company’s continued ability to reap massive gains for investors. Shares of the company are trading about 50% higher than one year ago, and Netflix has delivered exceptional growth figures each quarter since the pandemic began.
In 2020 alone, Netflix acquired nearly 40 million new paid subscribers. The company achieved double-digit revenue growth last year, increasing its top line 24% from 2019. Its operating profits also soared in 2020, by an impressive 76%.
As COVID-19 vaccines become more widely available and the general public starts to return to some sense of normalcy, Netflix may see its growth slow some. But in this day and age, the popularity of streaming services like Netflix is only increasing, and demand for high-quality streaming content won’t diminish simply because the pandemic declines. Netflix also controls a substantial share of the streaming market. This can translate to continued returns and meaningful portfolio growth for investors over the next five to 10 years.
4. Starbucks
Starbucks (NASDAQ: SBUX) struggled against pandemic headwinds in 2020. The pandemic forced it to shutter its stores earlier in the year, and the impact of these closures coupled with widespread lockdowns was palpable. The company reported that its global comparable-store sales in its fiscal 2020 fell 14% compared with the prior year.
But management has high hopes for the company’s recovery in 2021, and Starbucks’ financial report for the first quarter of its fiscal 2021 fueled a new wave of investor optimism. During the first quarter, the company’s comparable-store sales fell only 5%, an improvement from the 9% drop it had reported in the final quarter of fiscal 2020.
Starbucks also unveiled 278 net new store locations during the three-month period.
President and CEO Kevin Johnson stated, “I am very pleased with our start to fiscal 2021, with meaningful, sequential improvements in quarterly financial results despite ongoing business disruption from the pandemic. Investments in our partners, beverage innovation and digital customer relationships continued to fuel our recovery and position Starbucks for long-term, sustainable growth.”
Starbucks’ recovery will take time, but the company is clearly making strides toward regaining its prepandemic momentum. The stock also pays a dividend, which at 1.7% (based on current share prices) is right in line with the yield of the average stock trading on the S&P 500.
Coca-Cola (NYSE: KO) is a wise play for long-term investors for a few reasons. First and foremost there’s the company’s dividend, which yields 3.2% at the time of this writing. Coca-Cola has raised its dividend every year for 58 years in a row, which makes it one of a very selective group of stocks known as Dividend Kingsstyle=”text-decoration: underline”>.
Although shares of Coca-Cola are still trading slightly lower than they were before the market crashed last March, the company still managed to outpace analyst expectations in its financial report for the full-year 2020. The pandemic impacted the company’s revenue, causing its top line to drop 11% compared with 2019. Its global unit case volume also dropped 6% in 2020. But the final quarter of last year showed a move toward recovery, during which Coca-Cola’s operating income increased 8%. The company also boosted its free cash flow in the full year, reporting 3% growth from 2019.
The strength of Coca-Cola’s underlying businesses fuels its reliable dividend and is helping it to navigate the current economic crisis. Management has said that it is anticipating single-digit organic revenue growth in 2021 and “expects to deliver comparable EPS … percentage growth of high single digits to low double digits.”
5 Winning Stocks Under $49 We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.
6. Facebook
Only a handful of stocks have emerged from the pandemic market devoid of battle scars, but Facebook (NASDAQ: FB) has been one of the favored few. The company continued to achieve compelling growth last year, and saw its total revenue surge 22% from 2019. Facebook’s bottom-line growth in 2020 was even more newsworthy, representing a 58% increase compared with the prior year.
As of Dec. 31, Facebook reported nearly 3 billion monthly active users and 3.3 billion monthly active people on its platform. These figures amounted to year-over-year growth of 12% and 14%, respectively. Facebook also closed 2020 with roughly $62 billion in cash, cash equivalents, and marketable securities on its balance sheet, far greater than its total current liabilities of approximately $15 billion.
7. Microsoft
Microsoft (NASDAQ: MSFT) is a household-name stock that has reported continuous, meaningful growth across its business segments despite the market’s ongoing volatility. The underlying resilience of the company’s businesses, along with its diverse business structure, are just two reasons Microsoft continues to pave its own path in an environment of steep competition.
In the company’s fiscal 2020 (which ended on June 30), it reported 14% overall revenue growth, while its operating income grew 13%. In the first two quarters of Microsoft’s fiscal 2021 (ended Sept. 30 and Dec. 31), the company reported respective revenue growth of 12% and 17%. Microsoft’s bottom line also surged during these periods, by 30% and 33%, respectively.
Meanwhile, shares of Microsoft have risen 33% over the past year alone. The company also pays a dividend, which yields just under 1% for investors based on current share prices.
Some investors may be tired of hearing about how great Amazon (NASDAQ: AMZN) stock is, but the fact remains that it continues to be one of the top growth buys for long-term investors in today’s market. Shares of the company have jumped 50% over the trailing 12 months, and Amazon reported double-digit net sales growth in each quarter of 2020.
For the full-year 2020, Amazon reported that its net sales surged 38%, while its operating income jumped $8 billion compared with 2019. Amazon also continues to achieve meaningful growth outside of its retail segment. This growth spans a diverse assortment of business segments and products, from its streaming platform to Fire TV products to cloud computing platform Amazon Web Services. It’s the diversity of Amazon’s business that enables it to penetrate and expand in new and existing markets year after year, while remaining a viable growth stock to buy and hold for a lifetime.
9. PayPal
PayPalHoldings (NASDAQ: PYPL) is another remarkable growth play that has emerged from the pandemic stock market almost entirely unaffected. Investors have taken notice, and the stock has jumped nearly 150% over the past year.
The company finished 2020 with a bang, reporting 23% net revenue growth in the final quarter and 22% net revenue growth for the full year. PayPal also recorded 71% EPS growth in 2020 compared with 2019, while total payment volume on its platform surged 31% year over year.
Reflecting on PayPal’s performance in 2020, President and CEO Dan Schulman stated, “PayPal delivered record performance in 2020 as businesses of all sizes have digitized in the wake of the pandemic. In this historic year, we released more products than ever before and have dramatically scaled our acceptance worldwide, giving our 377 million consumer and merchant accounts even more reasons to use our platform.”
And analysts think that the company can grow its average annual earnings by around 40% over the upcoming five-year period, which could drive its share price up further. It’s definitely not too late to buy the stock for its future upside potential.
10. Zoom Video Communications
Last but not least is everyone’s favorite stay-at-home stock ZoomVideo Communications (NASDAQ: ZM). The stock’s astronomical popularity is partially a product of the pandemic era, but it’s reign in the world of tech is here to stay. From companies turning to full-time remote work to the age of heightened digitization that we live in, Zoom is ideally poised to meet the diverse demands of an increasingly virtual society.
Zoom reported 367% revenue growth in the third quarter of its fiscal 2021 (ended Nov. 30), while its net income jumped an astonishing 9,000% year over year (yes, you read that right). The company’s net cash from operations also spiked 565% in the third quarter compared with the year-ago period. And the company has roughly $2 billion in cash and cash equivalents on its balance sheet, which more than covers its total current liabilities of $1.4 billion.
5 Winning Stocks Under $49 We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.
The market could be poised for another crash
There’s no way to say for sure what will happen in the coming months, but concern about another market crashstyle=”text-decoration: underline”> still hasn’t subsided. The potential for another round of stimulus to be pumped into the economy, the recent downtick in new coronavirus cases, and increased vaccination efforts are all fueling continued market gains, but real volatility persists. By investing in high-caliber stocks that can fuel growth and safeguard your portfolio regardless of the economic climate, you can remain calm and confident in any market environment.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors.Rachel Warrenstyle=”text-decoration: underline”> has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon, Apple, Facebook, Microsoft, Netflix, PayPal Holdings, Starbucks, and Zoom Video Communications and recommends the following options: long January 2022 $1920 calls on Amazon, short January 2022 $1940 calls on Amazon, and long January 2022 $75 calls on PayPal Holdings. The Motley Fool has adisclosure policystyle=”text-decoration: underline”>.
12/12 SLIDES
FedEx’s results should be similarly strong, but investors will be focused on the company’s outlook. Management credited its aggressive capital spending in past years for laying the groundwork for its latest growth spike. As a result, the transportation specialist might predict major outlays ahead as it invests in its global delivery network.
Five Below’s store growth plans
Investors are eagerly awaiting the latest earnings update from Five Below, scheduled for Wednesday afternoon. The specialty retailer, which caters to young shoppers, already announced impressive holiday sales results. Its mid-January update revealed that sales jumped 10% at existing locations in November and December. That revenue spike rose to 21% after including the growth in its store footprint. “We are very pleased with our holiday sales performance,” CEO Joel Anderson said in a press release.
Anderson said at the time that the full quarter’s sales should rise by roughly 22%, which is right where Wall Street is expecting revenue to land this week. But Wednesday’s report will also include key metrics like profitability, inventory levels, and cash flow. Five Below only noted in January that gross margins were “in line” with management’s expectations.
Assuming no nasty surprises in these areas, Five Below is likely to enter a new fiscal year with cash resources and plenty of momentum it can build on as it expands its store footprint yet again in 2021.
Demitri Kalogeropoulos owns shares of Nike. The Motley Fool owns shares of and recommends FedEx and Nike. The Motley Fool recommends Five Below and recommends the following options: short January 2022 $120 calls on Five Below and long January 2022 $115 calls on Five Below. The Motley Fool has a disclosure policy.
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