Finding the perfect Father's Day gift can be tough. After all, what's the right thing to give to a role model who has provided so much? There's no single, perfect Father's Day present, but there's something to be said for gifts that can increase in value and leave dad with the chance for more financial freedom and flexibility.
With that in mind, we asked a panel of Motley Fool contributors to identify a stock that's trading at bargain prices this Father's Day. They came up with Zuora (ZUO 0.30%), Amazon.com(ZUO 0.30%), and Bitcoin(ZUO 0.30%) Read on to see why they think these investment opportunities could deliver great returns.
Keith Noonan: Take a moment to add up the number of subscription-based services you're currently enrolled in. Now, compare your current count to the number of subscriptions that you had 10 or 20 years ago.
The subscription economy has already undergone incredible growth, and it looks like business models built around recurring revenue streams will continue to see increased adoption. If you're looking for a stock that's poised to benefit from influential trends on that front, Zuora (ZUO 0.30%) fits the bill.
Zuora provides a software platform that makes it easy for companies to implement and expand subscription-based business models, and the company looks perfectly positioned to facilitate and benefit from the growth of the overall subscription economy. The stock looks attractively valued as well.
Zuora trades down roughly 55% from the lifetime high that it hit in 2018, and it looks like the subscription-software specialist's valuation could rebound and go on to set new highs. The COVID-19 pandemic meant that many companies postponed new, subscription-based business initiatives, but the long-term outlook for the space remains very promising.
Despite headwinds, Zuora managed to grow its revenue 9% year over year in the first quarter. The company's non-GAAP (adjusted) operating loss also narrowed to $2.8 million in the quarter, down from $7.5 million in the prior-year period. The basic takeaway is that Zuora managed to continue growing sales amid challenging operating conditions and also managed to significantly cut down on expenses in the period.
Zuora's land-and-expand business model puts it in a good position to continue attracting new clients to its platform, and the overall subscription-services market looks primed for growth. With the company valued at roughly $2 billion and trading at approximately six times this year's expected sales, the stock still has huge room for growth. Zuora is somewhat risky, but it's the kind of investment candidate that looks attractively valued this Father's Day, and it could deliver huge wins over the long term.
Joe Tenebruso: Dads deserve the best. When I search for the best investments, I look for businesses with the most powerful competitive advantages and largest growth opportunities. And out of all the companies I cover, none have a better combination of these wealth-building attributes than Amazon.com (AMZN -1.44%).
Amazon dominates e-commerce in the U.S. and many other countries. Incredibly, more than $0.40 out of every dollar of online retail sales earned by U.S.-based companies flow into Amazon's coffers, according to eMarketer. An unmatched selection of goods, low prices, excellent customer service, and ultra-fast shipping times should help the e-commerce juggernaut maintain its commanding lead in this massive and still rapidly expanding market for many years to come.
Amazon also controls a leading position in the booming cloud-computing infrastructure market. Amazon Web Services (AWS) has a 32% share of the $130 billion global cloud market, according to Statista. That's more than its next two competitors -- Microsoft's (NASDAQ: MSFT) Azure and Alphabet's (GOOGL -0.72%) (NASDAQ: GOOG) Google Cloud -- combined.
Yet, despite its dominant competitive position, Amazon's shares currently trade for a discount compared to its rivals. Amazon's price-to-earnings-to-growth (PEG) ratio currently checks in at 1.4 compared to 1.5 for Alphabet and 2.6 for Microsoft. The PEG ratio takes into account a company's expected profit growth. This is where Amazon shines. Analysts project that Amazon will grow its earnings per share (EPS) by a staggering 38% annually over the next five years compared to 21% for Alphabet and 17% for Microsoft.
Buying shares of elite businesses at bargain prices is a proven way to build lasting wealth in the stock market. This Father's Day, consider taking advantage of the opportunity to do so with Amazon.com.
Jamal Carnette: I know it's not technically a stock, but consider giving the gift of Bitcoin (BTC -1.26%). It's understandable if you're looking at the recent crypto sell-off with a sense of trepidation, but remember to view volatility in relation to your entire portfolio.
Bitcoin has a low correlation to the S&P 500, which means a position in the asset can lower overall portfolio volatility despite being volatile itself. Remember, most early-stage investments are highly volatile (and it's always better to get in on the ground floor). Once ownership deepens, volatility will subside.
Despite the recent sell-off, the fundamental story remains intact. Bitcoin is increasingly going from simply a store of value to a transactional currency. Tesla aside, the number of businesses looking to transact in the currency continues to increase with fintech payment processors like PayPal and Square leading efforts to further adoption.
Adoption aside, there's still an excellent case to be made for bitcoin as a store-of-value investment. Last week the U.S. Bureau of Labor Statistics reported inflation was up 5% year over year in May, the largest increase in nearly 13 years. Bitcoin will benefit from the dollar's erosion due to the scarcity value of its limited coin supply.
Bitcoin is not for the faint of heart. But for dads who believe in long-term investing, have a high-risk tolerance, and significant stock exposure, the asset class is a way to take advantage of the next-gen economy while further diversifying your portfolio.