No one can guarantee a certain stock will rise. But there are some companies that have what it takes to make us very optimistic about their future share performances.
These companies have track records of revenue and profit, prospects for future growth, and loyal customers. We can consider their shares sort of like insurance for our portfolios. That's because, over time, the growth of these companies should lead to strong stock performance.
There are two consumer-goods companies that easily fall into this category. One has managed to grow its audience and revenue throughout the pandemic, while the other has seen its stock rise so much in recent years that it's planning on a stock split. Let's check out the two popular names that can protect your portfolio over the long run.
Image source: Getty Images.
Nike
Nike (NKE -0.28%) announced its plan to focus on digital and direct-to-consumer sales back in 2017. That move helped it navigate the worst days of the pandemic. Through its apps, it connected with fans, and digital sales soared.
Today, digital continues to grow at Nike. In the most recent quarter, Nike brand digital sales climbed 19%. And digital made up 26% of total Nike brand revenue.
In recent months and today, the pandemic and other external factors -- like inflation and unrest in Ukraine -- are weighing on retailers. But Nike's brand strength and digital innovation are helping it stay ahead. It partners with some of the world's top athletes, such as tennis star Rafael Nadal. And fans turn to Nike for clothing and shoes like those worn by these champions.
As for innovation, that applies to the product itself and the way Nike gets it to fans. Livestreamed Nike product launches have led to a quadrupling of the company's audience in just one year. In the most recent quarter, the company even saw gross margin increase by 100 basis points to 46.6%.
Nike has grown annual revenue over time. Net income has also increased -- with dips only during the worst of the pandemic and when Nike invested in its digital and direct-to-consumer plan.
NKE Revenue (Annual) data by YCharts.
Considering Nike's digital momentum and gains during the toughest of times for retailers, its growth after the pandemic may be unstoppable.
Amazon
Amazon (AMZN 0.81%) shares soared past $3,600 last year, and the retail giant's stock has climbed more than 1,500% over the past decade. And for good reason.
Amazon is a leader in both e-commerce and, through Amazon Web Services (AWS), cloud computing. Thanks to these two booming businesses, Amazon has reported billions of dollars in profit and revenue over the past few years. And both metrics have generally been on the rise.
Why will this continue? Amazon has developed a solid position in online retail through its Prime subscription service, which topped 200 million subscribers worldwide in 2020. And in the most recent quarter, Prime added millions more.
Membership includes many free same-day or one-day delivery options -- an incentive to do a lot of your shopping on Amazon. As for AWS, sales and operating income have climbed from year to year.
| Year | AWS Sales | AWS Operating Income |
|---|---|---|
| 2021 | $62.2 billion | $18.5 billion |
| 2020 | $45.3 billion | $13.5 billion |
| 2019 | $35 billion | $9.2 billion |
| 2018 | $25.6 billion | $7.2 billion |
Data source: Amazon earnings reports.
AWS continues to expand its areas of operation. It plans on adding eight more regions where it will cluster data centers.
Amazon shares have stagnated over the past year. Some investors worry that it may be difficult to make great gains considering today's price.
The upcoming stock split may eliminate that concern. That, and Amazon's track record of growth, make me confident that this stock will continue to deliver over time.
