It's too soon to say if the bear market of 2022 is over or not, but July was a good month for the stock market. After an absolute drubbing in the first half of the year, many beaten-down stocks rallied to kick off the summer. With company earnings rolling in and showing resilience in the face of economic problems, now looks like a good time to be a buyer for investors with a long-term mindset.

Three contributors are scooping up shares of an adtech, a fintech, and a top consumer brands company in August. Here's why they think The Trade Desk (TTD -7.16%), PayPal Holdings (PYPL -0.86%), and RH (RH -1.22%) are on their buy lists right now.

Digital advertising is the future

Anders Bylund (The Trade Desk): I'm keeping a close eye on The Trade Desk nowadays. Whenever The Fool's ironclad disclosure rules allow it, I intend to double down on my investment in this digital marketing services expert.

The stock has fallen 59% below last November's all-time peak prices. The price cuts had little to do with The Trade Desk's business results or future prospects, as the company has delivered nothing but positive earnings and revenue surprises in the last three years. Instead, investors saw this stock as a high-flying market darling that required a price correction in this inflationary and unpredictable economy.

The stock isn't exactly cheap, trading at 59 times free cash flows and 48 times forward earnings estimates. However, that's actually a bargain in the context of this company's skyrocketing sales. Many companies in the digital advertising sector are talking about low demand for their ad services, but The Trade Desk's revenue line didn't get that memo. Sales jumped 43% higher in the first quarter, compared to the 2021 result. On top of that robust top-line trend, The Trade Desk is an efficient cash machine that converts roughly 30% of every revenue dollar into free cash flows:

Chart showing The Trade Desk's revenue and free cash flow rising since early 2021.

TTD Revenue (TTM) data by YCharts

This company is going places in the long run, generating tons of cash profits along the way. So I'll gladly invest more cash in my The Trade Desk holdings at these lower prices -- whenever I might be allowed to do so.

Consumer activity is still strong, inflation or not

Nicholas Rossolillo (PayPal): PayPal has been a terrible stock to own for the last year or so. Even after some reprieve last month, shares are down over 70% from their all-time high reached in mid-2021.  

But recent earnings from top digital payment network companies Visa (V -1.22%) and Mastercard (MA -3.50%) indicate the global consumer is hanging in there in spite of inflation issues. With basic living expenses rising far too fast, households are cutting spend on everything but household basics in the consumer goods department. Travel, on the other hand, is going strong -- especially in the U.S.

That's great news for PayPal. Though its apps are often used on e-commerce sites, a category that has cooled off big-time, Venmo in particular is doing well as people increasingly rely on it to move money around. Venmo is also gaining ground as a payment option for merchants and small businesses, with many of those micro-businesses benefiting from consumer travel and experience trends. Its second-quarter 2022 earnings report was far from perfect, but revenue grew 9% year over year (or up 14% when excluding eBay (EBAY 0.32%), which parted ways with PayPal to develop its own digital payments platform).  

PayPal is also highly profitable. Free cash flow jumped 22% year over year in Q2 to $1.3 billion. The company also announced a $15 billion share repurchase program to be executed over time, representing a big return of excess cash to shareholders.  

As of this writing, PayPal trades for 22 times trailing-12-month free cash flow. This company's days of super-fast growth are likely in the rearview mirror, but I think it trades for an attractive price given its steady expansion and cash-generating potential.

Buying a luxury brand at a bargain multiple 

Billy Duberstein (RH): When the market is focused on the short term, investors should look long-term. That's why I've been adding to my stake in high-end furniture retailer RH, formerly known as Restoration Hardware.

RH has been bouncing around the mid-$200s, down from a 52-week high of $744 per share last year, and its price-to-earnings (PE) ratio has fallen to 9, as the housing and consumer spending boom went bust. On June 29, RH management pre-announced a lowering of its full-year estimates. The company now expects a revenue decline of 2% to 5%, but to maintain healthy adjusted (non-GAAP) operating margins between 21% to 22%.

Not only is RH's sector going through tough times, but RH CEO Gary Friedman is also repositioning the business, with an ambitious plan to become the premier luxury brand of the furniture business. The company is increasing quality, raising prices, and converting its legacy mall stores into massive design galleries, which look like museums.

The transition has caused RH to lose some of its low-end customer base, but the bet is that it will make more overall profit dollars by segmenting upwards. Given its resilient margins, that transition appears to be going well. 

As you can see, traditional luxury brands in other consumer categories tend to garner a much higher PE ratio:

Chart showing RH's PE ratio lower than those of several other luxury brands in 2022.

Data by YCharts.

2022 also marks a critical turning point in RH's transition, as the company will be opening its first European Design Gallery, The Gallery at the Historic Aynho Park, a "magical 17th-century, 73-acre estate in the English countryside that will introduce RH to the UK in a dramatic and unforgettable fashion."

In addition to international expansion, RH is also extending its brand to things besides furniture. This year will see the opening of RH Guesthouse hotels, an RH live fire restaurant and RH champagne and caviar bar concept, and RH-branded charter planes and yachts.

So not only are investors buying RH today at a low valuation based on its "old" self, but they are also buying the brand at a meaningful inflection point. If Friedman's strategy works, RH could see both a recovery in growth and a large rerating in its valuation to a "luxury" multiple, leading to massive potential upside.

While the economy is definitely looking precarious at the moment, the wealthy tend to spend even through economic downturns, as long as they don't turn into a massive recession. RH has a solid balance sheet and high margins, so it should be able to survive this and thrive on the other side. It's a contrarian bet to make in this down market for consumer discretionary names.