AMC Entertainment Holdings (AMC -2.01%) closed its theaters during the pandemic and lost billions. But that didn't stop it from becoming one of the best-performing stocks year to date. A group of investors on Reddit flocked to the shares, helping to drive them up more than 2,000%. At the same time, AMC issued more shares to raise much-needed cash.
But the situation remains grim. Investors aren't thrilled about the share dilution. AMC's debt stands at more than $5 billion -- its highest ever. The company reported a $4.5 billion loss last year. Looking ahead, a post-pandemic world should help AMC.
But the company's fortunes won't improve overnight. AMC faces the challenges of drawing movie-goers back to theaters and paying hundreds of millions in deferred rent payments. The shares look extremely expensive considering all of this. That's why I would forget about AMC and instead opt for the following two companies. They'll give you growth -- and won't keep you up at night.
Image source: Getty Images.
Nike
Nike (NKE 0.95%) shares soared 14% in one trading session last week after reporting double-digit quarterly and fiscal year revenue gains and predicting "significant" opportunity ahead. The pandemic weighed on the maker of athletic wear in two ways: It temporarily closed stores, and it put a halt on professional sporting events.
Still, Nike's growing digital business, its connection with fans, and its brand strength buoyed revenue and profit during the tough times. In 2017, Nike decided to focus on its digital platform and direct sales to consumers. So, the major elements for success were already in place by the time the pandemic emerged. As a result, Nike reported a 19% increase in revenue to more than $44 billion for the 2021 fiscal year ended May 31. And earnings per share soared 123% to $3.56.
But here's the even better news: This is just the beginning. Nike won't face the headwinds of closed stores and canceled sporting events in a post-pandemic world. And the company will also see growth from the connections it built with fans. For instance, during the crisis, it encouraged fans to use its training apps for workouts and tips -- and that often translated into sales.
"Today, we are better positioned to drive sustainable long-term growth than we were before the pandemic," CEO John J. Donahoe said during the earnings call. Nike predicts high single-digit to low double-digit revenue growth through fiscal 2025.
Nike has a solid long-term track record. The company generally has increased profit and revenue over time.
NKE Net Income (Annual) data by YCharts
And the latest earnings report and comments from management indicate this is likely to continue.
Abbott Laboratories
Abbott Laboratories' (ABT -0.59%) strength in coronavirus testing made it a stock to watch -- and buy -- during the worst of the pandemic. The stock climbed 26% last year as Abbott sold billions of dollars' worth of COVID-19 tests. At the same time, some of Abbott's other businesses -- in particular medical devices -- suffered. That's because hospitals postponed nonessential surgeries in order to focus on coronavirus patients.
The issue for Abbott investors now is that demand for COVID tests is on the decline. In fact, Abbott even lowered its earnings per share forecast to the range of $4.30 to $4.50 from earlier expectations of $5. This is adjusted diluted EPS from continuing operations.
We've got a different scenario: A slowdown in COVID testing, but recovery and growth in other areas. And that scenario is a great reason to buy Abbott shares. Here's why: Medical devices generally make up the largest part of Abbott's annual revenue. In 2019, this business accounted for 38% of overall revenue. So, a return to normal for medical device sales is excellent news.
The company's other segments -- nutrition, diagnostics, and established pharmaceuticals -- also should see positive trends in a post-pandemic world. For example, at certain moments during the pandemic, some laboratories reduced operations and didn't conduct non-essential tests. Those areas have already started to rebound.
Another good sign: Abbott's revised forecast still represents solid year-over-year growth. Adjusted diluted earnings per share from continuing operations in 2020 was $3.65. Abbott could post at least 18% earnings growth this year compared to 2020 if it meets the lower end of its forecast range.
Abbott is trading at about 36 times trailing 12-month earnings.
ABT PE Ratio data by YCharts. PE = price-to-earnings.
That's close to its lowest by this measure in a little over a year. And it represents an opportunity to get in on this stock that you'll want to hold onto for the long term.
