When you're building a portfolio, it might seem like a daunting task to narrow your choices down to the very best stocks the market has to offer. There are thousands of publicly traded companies out there, and it's no mystery that not all businesses are created equal.
To help point you in the right direction, we asked three top Motley Fool contributors to discuss what they believe is the single best stock to own today. Read on to learn why they chose Under Armour (C Shares) (UA 2.19%), Disney (DIS 3.69%), and Apple (AAPL 2.45%).
A giant in the making
Steve Symington (Under Armour C Shares): Under Armour shareholders are still reeling from the athletic apparel and footwear specialist's disappointing fourth-quarter 2016 results. The stock is down more than 40% over the past six months, including a more than 20% single-day plunge in late January after that report revealed slowing growth in the company's core North American apparel business.
But I think the sell-off is overdone now. And Under Armour still has a long runway for growth both overseas and in other segments.
For example, Under Armour's footwear revenue climbed 36% year over year last quarter, to $228 million, or just 17% of total sales. And international revenue climbed 55.2% -- 60% at constant currency -- to $215.3 million, or 16.5% of total revenue.
By comparison -- and for a picture of what Under Armour could eventually become -- Nike footwear revenue was $5.3 billion last quarter, up 4.7% year over year, good for 63% of Nike's total sales. And international markets represented more than 55% of Nike's overall revenue in the same period.
That's not to say there won't be hiccups as Under Armour invests heavily to drive revenue growth and take market share in the coming years. But I have a hard time envisioning a scenario in which buying today won't pay off handsomely for patient, long-term investors.
That said, Under Armour's non-voting C shares (ticker UA) trade at a healthy 7.2% discount to their voting A share counterparts (ticker UAA). As I pointed out a few months ago, those rights don't carry much weight for most retail investors, considering Under Armour founder and CEO Kevin Plank holds around 63.5% of the company's total voting rights through his ownership of all outstanding B shares. So if you're looking to buy Under Armour today, I think those C shares are still your best bet.
There's still plenty of magic in this kingdom
Keith Noonan (Disney): With Disney shares trading at prices that aren't far removed from lifetime highs, suggesting that the stock is still one of the best buys on the market is a bold statement. However, even with the challenges facing its media networks due to cord-cutting, the company has never looked stronger.
Between theme parks, television channels, films, and consumer-products segments, Disney is well-diversified, and it creates synergies across its businesses that give the company great growth potential. Its stable of entertainment franchises is incredibly potent.
Its huge properties, including Star Wars and the Marvel Cinematic Universe, are evidencing tremendous draw, and its animation studios are consistently turning out massive hits. Plus, a slate of upcoming reimaginings of past classics look poised to deliver box-office magic for years to come. These great characters and stories help drive consumer-products sales and traffic at the company's parks, and Disney has a huge opportunity as its entertainment offerings become increasingly available to an expanding global middle class.
Returned income is another facet of Disney stock ownership that's worth noting. The company's yield might not look like much at roughly 1.4%, but the current cost of distributing its payout represents just 31% of trailing free cash flow -- suggesting that there's plenty of room to continue increasing the amount of income returned to shareholders.
With a forward P/E of roughly 19, Disney still looks to have significant upside potential, and I think it's one of the best stocks to own for the long term.
The house Steve Jobs built
Travis Hoium (Apple): It may seem like Apple's best days are behind it, but the company reported its best quarter ever in the first fiscal quarter of 2017, which coincides with the calendar fourth quarter of the year. Revenue hit $78.4 billion, and net income was a whopping $17.9 billion, or $3.36 per share. The $246.1 billion cash and marketable securities hoard is also a comforting backstop for the company.
What makes Apple the best stock to own today is that it's become such an indispensable part of hundreds of millions of people's lives. And people are willing to pay a premium to stick with Apple products.
The iPhone is the center of the ecosystem, and for those of us who have them, they're rarely more than a few feet away. But that product branches out to make Macs, iPads, Apple Watches, and other products more attractive for consumers. Content and purchases are available across the ecosystem, and once you're in, it's nearly impossible to get out. For the foreseeable future, it's hard to see anyone disrupting Apple's position in smartphones and other mobile devices.
Even after their 32% jump over the past year, Apple's shares trade at just 17 times earnings -- and that's before accounting for the $246.1 billion in cash on the balance sheet. Add in a 1.6% dividend yield and Apple's very sticky products, and I think you have the best, and safest, stock to own today.