Springtime is here, and it's probably a good time to consider doing some spring cleaning within your portfolio. Start by tossing out some of those investments that you're just not feeling good about these days. Then, you can use the proceeds to buy something new, or to pick up more shares of some of your favorite stocks that you already own.
Disney (DIS 0.16%), Dick's Sporting Goods (DKS -0.07%), and Roku (ROKU -3.05%) are my three favorite stocks right now, and I think they're poised to spring higher this spring.
Image source: Getty Images.
Disney
The House of Mouse is now just over a year removed from its all-time high, when its shares briefly cracked $200, but the media giant is in far better shape than it was in last March. When the stock peaked early last year, Disneyland in California still hadn't reopened from its initial pandemic closure. Now, the company's domestic theme parks are generating record revenue and operating income. The country's four highest-grossing movies of 2021 were all released after the stock hit its all-time high, and they all featured characters from Disney's Marvel franchise. And while subscriber growth may be slowing at Disney+, the premium streaming service's audience has nonetheless grown from 94.9 million to 129.8 million subscribers over the past year.
Disney stock is now 26% below its high-water mark. It may not seem cheap by obvious valuation metrics -- trading for 35 times this fiscal year's projected earnings and 27 times next year's target -- but the leader in family entertainment and sports programming is making big investments in streaming, content, and attractions that should pay off over time.
Dick's Sporting Goods
A big-box retailer of sporting goods may not seem like a winner in an era when e-commerce continues to siphon sales away from physical storefronts, but humor me. Lace up your running shoes, and let's take a quick jog through Dick's Sporting Goods.
The pandemic has made us hungry for sports. Two summers ago, we were loading up on gear so we could stay active while fitness centers were closed and organized sports were suspended. Now, we're flocking to Dick's Sporting Goods because we're interacting with one another again for fun, competitive diversions.
We're buying a lot of sporting goods from Dick's these days. In its fiscal fourth quarter, which ended Jan. 29, net sales hit $3.35 billion. That was a modest 7% year-over-year increase, but a 29% surge from where it was two years ago -- just before the COVID-19 crisis made its presence felt in the U.S. Adjusted earnings for its fiscal Q4 soared 50%.
If you're looking for a traditional value stock, Dick's Sporting Goods is your kind of game. It's trading for less than 8 times trailing earnings. The year ahead could prove challenging after two years during which it grew by satisfying consumers' pent-up demand, but the shares are still trading at a single-digit earnings multiple based on the retailer's guidance. With a decent 1.8% dividend yield and a strong leadership position in its market, this company is a smart play on our need to play.
Roku
Disney and Dick's Sporting Goods were both trading exactly 26% below last year's all-time high as of Tuesday's close. If you think that's bad, check out Roku. Shares of the streaming video giant may have soared 28% over the past week since bottoming out last Tuesday, but they're still a whopping 74% below last summer's peak.
Roku continues to be a leader in the living room, with nearly double the market share of its largest competitor. It's the streaming hub of choice for folks who either buy its attractively priced dongles or one of the 38% of smart TVs shipped in this country that come with Roku as their default operating system.
The company's growth is slowing. Revenue rose just 33% in the fourth quarter, and guidance calls for deceleration to 25% year-over-year growth for the current quarter, which ends next week. We're still talking about double-digit growth for a platform that isn't going away. It ended 2021 with 60.1 million active Roku accounts, 17% more than it had a year earlier. Average revenue per user keeps inching higher sequentially, an encouraging sign that marketers are using Roku more and more to reach viewers. Some supply chain constraints weighed on the company's hardware business, but this is now a platform story. It's my favorite play among streaming service stocks, a booming niche that will spawn many market-beaters for your portfolio.
