It's time for New Year's resolutions. Some are easier to keep than others. But I've got one you can take care of right away and then benefit from over the long term. What's this great resolution? To invest in a handful of stocks today that could help you grow wealth over time.
And you don't have to already be wealthy to do it. Last year's declines left many top companies trading at bargain basement prices. Now's the time to get in on these stories. Let's not forget stocks that have outperformed the general market and have reason to move higher. So, are you ready to take action on this resolution and start off the year right? Here are five top stocks to add to your buy list.
1. Nike
Nike (NKE -2.08%) shares are trading for 37 times forward-earnings estimates. That's down from more than 48 about a year ago. Why is this such a bargain? A look at Nike's relationship with fans answers that question.
The leading maker of athletic shoes and gear said the most recent quarter was its biggest ever for member demand. Members who are repeat buyers are spending more -- and more often. And this group of members is growing in the high double digits. Nike's brand strength is the key. The company remains a No. 1 brand in major markets, such as North America and China.
Nike's earnings show fans are doing more than just window shopping when they see a Nike store. The company's total revenue, Nike Direct sales, and Nike brand digital sales each climbed in the double digits in the most recent quarter. And diluted earnings per share rose 2% in spite of headwinds such as higher costs.
Nike shares lost 29% last year. Considering the company's earnings and brand strength, they're ripe for a rebound.
2. Disney
A lot of action may happen at Disney (DIS -0.56%) over the next two years. And I'm not talking about in one of the parks or on the big screen. I'm talking about behind the scenes. The entertainment giant recently brought back longtime CEO Bob Iger to kick-start growth.
Iger looks like a great candidate for the job. He led the company to share-price gains and earnings growth throughout his tenure.
Today, Disney is struggling with higher costs, and it aims to make its Disney+ streaming service profitable in the 2024 fiscal year. Iger is on board for two years to set things on the right path and will choose a successor.
Even amid today's tough economic climate, demand remains high at Disney's parks. This is key because the parks, experiences, and products business has historically been the biggest contributor to overall revenue. In the fiscal year ended Oct. 1, this unit's revenue climbed 73%.
With Disney at a key transition point, the stock looks like a steal today. At 20 times forward-earnings estimates, it's at half of what it traded for a year ago.
3. Axsome Therapeutics
Now here's an example of a stock that's beaten the market for a good reason. Axsome Therapeutics (AXSM 1.53%) soared more than 100% last year.
But this biotech company could gain more over time. That's because Axsome recently commercialized its first two products, and more may soon be on the way. One of the products -- antidepressant Auvelity -- may even reach blockbuster status later this decade. All of this could fuel share gains down the road.
As for future products, its pipeline is late stage. All candidates are in phase-2 trials or further along. A candidate can fail at any stage of development. But at least some of the early-stage safety and efficacy risks are behind Axsome. And potential products are closer to the finish line. This could translate into revenue growth sooner instead of later.
All of this means it's not too late to get in on this biotech stock. In fact, it's likely in the early chapters of growth right now.
4. Johnson & Johnson
Johnson & Johnson (JNJ 4.56%) is another company that outperformed the market last year. This pharmaceutical giant is heading for an important transition -- one you'll want to be part of. J&J is spinning off its consumer health business this year into a separate company called Kenvue.
Why is this a big deal? We know J&J thanks to the company's consumer health products. After all, many of us have J&J's Band-Aid brand bandages and Tylenol in our medicine cabinets. But consumer health hasn't brought J&J much growth lately.
J&J's two other businesses -- pharmaceuticals and medtech -- contribute the most to revenue. And their growth rate is higher than that of consumer health. So it makes sense for J&J to focus its efforts on these businesses.
Even considering last year's gain, J&J still trades for less than 20 times forward-earnings estimates. And the company is a Dividend King. So it has a long track record of dividend growth. This makes it an excellent long-term buy for any investor right now.
5. Home Depot
Home Depot (HD -0.67%) is the perfect example of a healthy company that fell last year along with the market but not due to bad news or weak earnings. In fact, the world's biggest home-improvement retailer reported quarter after quarter of earnings growth.
In the most recent quarter, the company offered us a particularly positive sign. Home Depot's professional customers say their backlogs remain strong. That means these pros likely will continue to need Home Depot's products in the coming months. And that should translate into ongoing earnings growth.
Home Depot has grown revenue and profit in the triple digits over the past decade. It reported sales of more than $38 billion and earnings of $4.3 billion in the most recent quarter. And the company is investing in its digital platform and stores to keep both its do-it-yourself and pro customers coming back.
Today, the stock is trading for less than 20 times forward-earnings estimates. This is a bargain considering Home Depot's track record, strength over the past year, and future prospects. So you'll want to make buying it one of your top New Year's resolutions.
