3 Stocks You Can Still Buy at New Highs

Priceline, Las Vegas Sands, and Home Depot are trading near new highs for the year; however, it´s not too late to buy these stocks.

Feb 28, 2014 at 9:15AM

The market is on fire lately, and many investors are finding stocks too pricey at these levels. However, investing is about future return potential versus risk, not past performance. Companies like priceline.com (NASDAQ:PCLN), Las Vegas Sands (NYSE:LVS), and Home Depot (NYSE:HD) have plenty of room to run, even if they're trading near their highs of the year.

Pcln Image

Source: priceline.com.

Priceline keeps gaining altitude
Priceline is the global leader in online travel services, an industry offering enormous potential for growth as travelers from all over the planet continue going online for bookings and reservations because of price convenience and personal comfort.

The company is truly firing on all cylinders, both from a financial and operational point of view: Gross bookings increased by 39% to $9.1 billion during the fourth quarter of 2013, and this translated into a sales increase of 29.4% to a record $1.5 billion during the period. In addition, Priceline continues building its worldwide supply, with more than 425,000 hotels and other accommodations in 195 countries, an increase of 54% versus 2012.

Margins tend to rise over time as the company spreads its fixed costs in a growing revenue base, so earnings are increasing even more rapidly than sales. Non-GAAP net income during the quarter came in at $8.85 per share, representing an increase of 30.7% versus the $6.77 per share the company earned in the fourth quarter of 2012.

After making new historical highs above $1,375 per share, Priceline trades at a forward P/E ratio of 21. This is an above-average valuation, but the company can certainly justify its valuation premium based on its extraordinary potential for growth in the long term.

Sands Image

Source: Las Vegas Sands.

Las Vegas Sands is a smart bet
Las Vegas Sands is having some troubles in Singapore, where revenues declined by 8% during the last quarter of 2013. However, the company's biggest market, Macau, is performing remarkably well, as Sands China delivered a 28% increase in sales to $2.53 billion during the period.

All in all, Las Vegas Sands reported a sales increase of 18.8% to $3.66 billion during the fourth quarter of 2013, and adjusted earnings per share jumped by 33.3% year over year, so investors have no reason to worry when it comes to growth and profitability at the company level.

Las Vegas Sands' position in Macau is a key strategic asset for the company. Macau is the only region in China where gambling is legalized, and it still offers enormous room to benefit from the rise of the Chinese middle class and increased discretionary spending for years to come.

Las Vegas Sands is trading near $85 per share, which is a multiyear high for the company. However, the stock pays a dividend yield of 2.4%, and it trades at a forward P/E ratio below 20, so valuation should be no impediment to investing in this profitable high-growth casino.


Source: Home Depot.

Home Depot is building growing dividends
Home Depot made new historical highs near $82.70 per share after reporting better than expected earnings on Wednesday.

Total comparable-store sales for fiscal 2013 grew 6.8%, and comparable sales in the U.S. increased at an even higher 7.5% during the year. This was the company's strongest performance in 14 years on the back of solid execution and favorable tailwinds from the housing market recovery.

With a total of 2,263 stores and annual sales above $78.8 billion, the company is the largest home-improvement retailer on the planet. This means economies of scale and brand value in a capital-intensive industry with significant barriers to entry.

Besides, judging by economic variables like housing starts, the industry should have plenty of room for recovery in the years ahead.

Husing Starts

Source: YCharts.

In a sign of confidence about the future, management has recently increased dividends by a whopping 21% to $0.47 per share. This brings the dividend yield to 2.3%, so Home Depot doesn't look overvalued at all considering the company's remarkable performance and leadership position in a promising business.

Bottom line
A rising stock price does not mean a stock is necessarily too expensive -- sometimes the fundamentals provide a fair justification for price increases. Priceline, Las Vegas Sands, and Home Depot have delivered big returns for investors lately, but that could be just the prologue for more gains in the years to come.

Three companies to own forever
As every savvy investor knows, Warren Buffett didn't make billions by betting on half-baked stocks. He isolated his best few ideas, bet big, and rode them to riches, hardly ever selling. You deserve the same. That's why our CEO, legendary investor Tom Gardner, has allowed us to reveal The Motley Fool's 3 Stocks to Own Forever. These picks are free today! Just click here now to uncover the three companies we love. 

Andrés Cardenal owns shares of priceline.com. The Motley Fool recommends Home Depot and priceline.com. The Motley Fool owns shares of priceline.com. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information