As you know, the stock market is a difficult place these days. The Dow Jones Industrial Average slipped into a bear market after falling at least 20% from its most recent high. That means many of the stocks that are part of the index are also suffering.
Now, let's move on to the good news. Many of today's decliners are very solid companies that are extremely likely to not only rebound, but also to lift your portfolio over the long term. So you'll want to consider buying more of these players -- and at bargain prices -- in October. Let's take a look at three with major brand strength.
1. Disney
Walt Disney (DIS -1.01%) has fallen about 37% this year. That leaves it trading at about 18 times forward earnings estimates. It traded for more than 40 at the start of the year. This looks inexpensive if you just look at these numbers. But if you think about the strength of the Disney brand, it looks even cheaper.
Disney operates the world's most-visited theme parks. And these parks are huge contributors to revenue. The parks, experiences, and products unit brought in $7.3 billion in the fiscal third quarter, ended July 2. That's up 70% year over year. And this represents about a third of Disney's total $21.5 billion in revenue for the quarter.
Disney said during the earnings call that attendance at domestic parks on many days has surpassed pre-pandemic levels. And advance bookings at Disney hotels indicate demand will continue to remain strong.
Disney also owns streaming services -- Disney+ and Hulu -- and generates revenue through cable channels and content licensing. Disney's streaming services stand out as a key revenue driver. They now have more than 221 million total subscriptions. And Disney expects Disney+ to reach profitability by fiscal 2024.
So, there are plenty of catalysts to drive Disney share gains over time.
2. Procter & Gamble
Procter & Gamble (PG -0.03%) is another company with brand strength. P&G is the maker of many brands you're probably very familiar with, such as Bounty paper towels and Tide laundry detergent.
Brand strength has led to a track record of revenue and profit gains over time. The company also has maintained a steady level of return on invested capital.
PG Revenue (Annual) data by YCharts
P&G has the advantage of selling items people can't avoid buying -- even if times are tough. And often, shoppers see the value of buying a better-quality product so they will stick with a top P&G brand. For instance, you might only need one Bounty paper towel to pick up a spill versus several of a lower-priced brand.
P&G faces the challenge of rising inflation. Higher inflation lifts the costs of raw materials and transporting goods. The impact of that could be reflected in earnings in the coming weeks or months. But this is a short-term problem. It doesn't change the overall demand for P&G's products or earnings potential farther down the road.
It's also important to note that P&G is a Dividend King. That means it's lifted its dividend for at least the past 50 years. So, you can count on this consumer goods giant for earnings growth -- and passive income -- over the long term.
3. Nike
Nike (NKE -0.74%) has slipped when it comes to stock performance and earnings in recent times. The shares are down 46% so far this year. And Nike disappointed investors last week when it reported higher inventory levels and a lower gross margin.
But I see this as an opportunity to buy shares of a market leader with a brand that keeps fans coming back. Nike continues to be a favorite brand in the major markets of North America and China. And demand for its products keeps getting stronger.
For example, Nike's 2022 fiscal year (ended May 31) was the strongest ever for the Jordan brand. The brand has reached $5 billion in revenue -- and that's about 20 years after the retirement of basketball legend Michael Jordan. It's clear this brand has plenty of growth potential ahead.
Nike's progress in the booming area of e-commerce is also a big plus. The company's digital business has almost tripled revenue since 2019. That revenue level is now about $10 billion and makes up 24% of total Nike brand revenue. And excluding the impact of currency exchanges, Nike's overall sales rose 10% in the most recent quarter.
Nike's strategy to focus on digital and selling directly to customers clearly is working. These are elements that will contribute to earnings growth over time. And that's why buying more of the shares today -- while they're down -- is a great idea.
