If you're hoping to make a fortune, young fast-growth companies are often the ticket. But some come with a big dose of risk. And that means you have to watch them very closely. For the more cautious investor, there's another path to riches. It involves investing in stocks with a solid track record of profit, revenue, and stock price gains.
Here, I'll talk about three that fit the bill: an online retail giant, a healthcare company leading in COVID-19 diagnostics, and an apparel retailer inspired by yoga. These companies are so strong they even managed to perform well throughout the pandemic. Who are these stock market stars? Read on.
Amazon.com's (AMZN 0.25%) annual profit has been climbing since 2015. And annual revenue has been rising for the past decade. Share price followed.
The company benefited last year as consumers opted for online shopping. Its offering of essentials, discretionary items, and even entertainment through its Prime subscription program meant there was something for everyone. As a result, annual sales and profit climbed 38% and 84%, respectively. Amazon Web Services represents a key part of the picture. The cloud computing business generated more than $45 billion in revenue -- and accounted for about 60% of the company's operating income last year.
Those are steady, tried and true sources of revenue. But Amazon hasn't stopped there. The company recently launched Amazon Pharmacy in the U.S. Shoppers can buy their medication online -- and Prime members even get free two-day delivery. Amazon also is expanding its Amazon Fresh grocery stores. Bloomberg reports Amazon just opened the 11th store and aims for at least 28 more. So, with Amazon, you get steady and secure businesses and growth into new areas. That's a winning combination.
Abbott Laboratories (ABT 0.71%) became a leader in COVID-19 testing as the U.S. Food and Drug Administration authorized several of its diagnostics last year. The company reported $2.4 billion in coronavirus diagnostics sales in the fourth quarter.
But Abbott doesn't rely on coronavirus testing or even general diagnostics alone. The company has three other businesses: medical devices, nutrition, and pharmaceuticals. Only medical devices didn't deliver sales growth last year. But for a logical reason: The delay of medical procedures due to the pandemic hurt that business.
Abbott is optimistic about the months to come though. The company predicts a 35% increase in earnings per share to $5 for the full year 2021. Abbott's likely to meet the goal. First, the government is expanding COVID-19 testing. Abbott surely will benefit. And second, as the pandemic eases, hospitals will catch up on delayed procedures -- and that translates into more medical device sales for Abbott.
Over the past five years, Abbott's grown profit and sales. And that's driven a 188% share price gain over the period. This track record and Abbott's forecast are clues the company has what it takes to continue growth over the long term.
lululemon athletica (LULU 1.04%) shares are down about 12% so far this year. But this looks like a buying opportunity to me. Here's why: Even though lululemon has grown annual revenue for a decade and annual profit since 2018, the best is yet to come.
The maker of yoga-inspired clothing actually saw sales slump for a short period of time during the pandemic. After a sales decline in the first quarter, lululemon returned to growth in the following two. And the company said it expects fourth-quarter revenue and earnings to be at the high end of its forecast.
How did lululemon excel? Thanks to its brand strength and its digital platform. The company stayed connected with fans during the crisis through its online community. There, fans find yoga tips and workouts. And fans followed through by shopping online. Online sales grew 157% and 93% in the past two quarters, respectively.
How will lululemon excel in the future? Through its "Power of Three" plan. The company aims to double revenue of the men's line, double digital revenue, and quadruple international revenue -- all by 2023. Considering past performance and lululemon's strength through the pandemic, I'm optimistic the company can meet its goals. So, I wouldn't be surprised if in the years to come this stock equals riches for investors who hold on for the long term.