Stocks aren't like children -- it's OK to talk publicly about which investments are your favorites. I own shares of more than 60 different companies, but Disney (DIS -0.83%), Costco (COST -0.11%), and FuboTV (FUBO 1.46%) are my three favorite stocks right now. And once you understand why, you might feel the same way.
Disney
Fans worldwide continue to pay premium prices for the Disney experience. Trips to its theme parks are far from cheap. Set sail aboard any of the cruise ships in its growing fleet and you'll likely pay more than you would for a comparable cabin with one of the other mainstream cruise lines. The largest individual channel cost component of any basic cable bill is ESPN. And last month, Disney opened a Star Wars-themed lodging experience at Disney World for which couples will pay nearly $5,000 for a two-night stay.
Image source: Disney.
Investors love companies that can charge more for their products than their competitors without sending their customers fleeing, and Disney has earned its ability to do that by being the undisputed king of content. Its Marvel empire was responsible for the four highest-grossing movies in the country last year. It operates the world's most-visited theme parks.
Now that we're more than two years removed from the start of the COVID-19 pandemic, it's fair to start talking about stocks that qualify as smart reopening plays. It's hard to imagine putting a company other than Disney at the top of such a list. It dominates at the box office and the theme park turnstile. There's no bigger brand in sports broadcasting than ESPN. Disney+ has been around for less than three years, and it's already closing in on 130 million paying subscribers. All recovery roads lead to Disney, yet the stock is trading more than a third below the all-time high it set last year.
Costco
This week's share price implosion for the world's leading premium video-streaming service has reshuffled the rankings in my portfolio, and for the first time ever, Costco is my largest holding. The warehouse club operator is a classic all-weather play. When times are good, folks will go shopping. When the going gets tough, consumers keep flocking to the discount retailer because it gives them more bang for their buck.
Through the pandemic, Costco has posted seven consecutive quarters of double-digit top-line growth. Its warehouse club model -- with folks paying for annual memberships that provide access to its stores -- might seem at first glance problematic in a recessionary environment -- but those who join realize that they'll more than recoup their membership outlay in savings in just a few trips.
Costco works. It pays its employees well. It pays its shareholders well, too -- and it hiked its quarterly dividend again just last week. The stock isn't cheap by most valuation metrics, but it's natural that investors would pay a premium for a piece of a business that provides this sort of steady growth and niche leadership. Costco has been a leader through the COVID-19 crisis, and analysts expect its earnings to double within the next five years.
FuboTV
This stock is the most controversial of my three current faves. FuboTV's share price has plummeted 92% since it peaked in late 2020. As a live TV streaming service with an emphasis on sports, it has gotten hit by both the months-long sell-off that has been punishing gambling stocks and the more recent drawdown in streaming service stocks.
Its sell-off, though, seems overdone. FuboTV's service has continued to surge in popularity even as the share price has slumped. Revenue has more than doubled over the past four quarters -- a faster clip than it was managing two years ago. It began this year with 1.1 million paying subscribers, and it expects to end it with 1.5 million accounts.
Management made a pair of gambling-related acquisitions when the stock was peaking -- a smart move at the time, since among the more than 100 live TV channels it offers, over three dozen are dedicated to sports programming. However, regulatory hurdles have gotten in the way of its plan to expand the predictive games it introduced last year, as well as its loftier goal of running its own sportsbook. It also has yet to turn a profit, and analysts don't see that changing anytime soon as it continues to invest in growth. However, pouring resources into building for the future is the right call at this stage for this out-of-favor company.
