Considering the economic situation at the moment created by the reaction to the COVID-19 pandemic, many Americans consider themselves lucky that they still have jobs, while others are dipping into emergency funds to just get by in the hopes that their jobs will eventually return. Then there is that subset of people who have jobs, have an emergency fund set aside, and have funds available that they don't expect to need for three to five years. For that group, now is a pretty good time to think about buying stocks that will work to make them rich, because the market is trading at a discount and already beginning to see a rebound.
These three stocks have delivered until now despite the recent market downturn and will continue to offer great opportunities for those ready to invest.
1. Nike: At the top of its game
Nike is the leader in the shoe and sports apparel industry and continues to innovate, raking in sales with its celebrity-endorsed and technologically advanced products. With $39 billion in annual sales, it has a good lead over its competitors, it's almost uncatchable, and it's still growing.
Image source: Nike.
In the company's recently completed third quarter, revenue increased 5% despite the closure of stores in China, its biggest growth market. And during the current fourth quarter, with retail outlets around the globe currently closed, the Chinese stores have reopened, giving Nike a chance to partially balance out losses.
Nike has been in the process of developing a strong direct-to-consumer business that it's been nurturing to support the company's operations. Once retail operations get back up to speed, Nike is ready to renew that transformation. In the meantime, its robust digital initiatives that include several mobile apps in addition to its e-commerce platform are bringing in needed revenue to help it maintain operations.
Nike stock is down about 14% year to date, which makes it a good time to buy. Even at the current price, its forward price-to-earnings ratio is 36, so it's not quite on sale, but with great future prospects for continued growth, the price has already bounced back from earlier coronavirus-induced lows and should keep climbing.
2. TJX: A retailer for any environment
The TJX Companies, a discount retail operator of several store brands, including Marshalls, T.J. Maxx, and HomeGoods stores as well as other off-price retailers, has been maintaining solid growth levels and comps increases in the U.S. as well as making inroads into several international markets.
Image source: Getty images.
In the company's fourth quarter at the end of 2019 there was a 10% increase in sales and a 6% increase in comps. CEO Ernie Herrman frequently reassures shareholders that with 21,000 vendors supplying goods, there's an abundance of merchandise for TJX's stores to sell. The strong supplier relationships in 100 countries give the off-price retailer incredible flexibility and options. Now more than ever, TJX is likely to have a huge assortment of goods to acquire at a discount from assorted retailers who are burdened with excess inventories they need to offload in the face of COVID-19 lockdowns.
TJX has performed well in many types of environments, including recessions, as customers look for more competitive pricing and potential bargains.
TJX stock is down around 19.7% year to date, making this a good time to take a position.
3. Starbucks: Everyone loves a good cup of coffee
While you can get a coffee at pretty much any corner cafe, Starbucks brand of specialty coffee products is so far ahead of other shops in terms of sales and technology that no rival can offer what it can for customers or investors. This gives it a leg up on any competition and a strong place from which to operate for many years to come.
Image source: Starbucks.
Part of that is the relentless innovation that has brought the company consistently higher customer engagement and sales. In Starbucks' just-released second-quarter results, the company reported a drop in revenue attributed to COVID-19 shelter-in-place orders, but it also had an increase in the average ticket price, or the amount ordered per ticket. While the coffee king said it expects further revenue decline in the third quarter, it projects that the decline will slow in the fourth quarter before regulating to more of the norm.
Starbucks stock is already recovering from COVID-19 lows and is currently down 12.7% year to date.
Creating wealth
Each one of these companies has a proven track record of innovation and generating increased revenue. Here's how these three companies have delivered shareholder value over time as compared to the S&P 500:
|
Metric |
1-year return |
5-year return |
10-year return |
|---|---|---|---|
|
Nike (NKE 14.39%) |
1.5% |
76% |
359% |
|
TJX (TJX +1.32%) |
(9%) |
52% |
323% |
|
Starbucks (SBUX +1.26%) |
(1%) |
55% |
491% |
|
S&P 500 (^GSPC +1.16%) |
(0.4%) |
38% |
145% |
Source: Chart calculations by the author.
All of these companies have the potential to keep producing these kinds of results and add value to your portfolio.
