It's no secret that the stock market had a rough 2022. The S&P 500 index of 500 of America's biggest companies dropped more than 18%, and the Nasdaq Stock Market, home to more than 2,500 companies (including tech giants such as Apple and Microsoft), fell more than 32%. As of the time of this writing, the markets haven't recovered significantly.
Lots of companies have seen their stock prices fall even more than the overall market, putting many into bargain territory. Still, there are some particularly attractive companies that would be well worth considering for your portfolio -- if they fell more. Here are three.
1. Costco
Costco (COST +0.26%) shares were recently down about 6.5% over the past year. The stock is one many would love to own, but it's not yet trading at an enticing level. Its price-to-earnings (P/E) ratio, its forward-looking P/E ratio, and its price-to-sales ratio were all recently fairly close to their five-year average -- not well below it, as one would prefer to see.
NASDAQ: COST
Key Data Points
Costco is a retailing powerhouse, with more than 840 locations worldwide. (That includes 583 in the U.S. and Puerto Rico, 107 in Canada, 40 in Mexico, 31 in Japan, and more in other countries.) It has grown while keeping its profit margins on the low side, retaining employees via solid benefits (such as above-average pay, health coverage, and bonuses), and rewarding shareholders, too. Its shares have more than quintupled in value over the past decade, averaging 18% growth per year.
It's reasonable to expect the company to keep growing for the foreseeable future. Some anticipate an increase in its annual fees, which have been $60 for a basic membership and $120 for an executive one. That alone will boost revenue. While shares aren't cheap, you might ease into the stock via incremental purchases over time -- or just add it to your watch list.
2. Intuitive Surgical
Intuitive Surgical (ISRG 2.19%) isn't a household name for most people, but those paying attention to great stock performers have probably heard of it. Shares have more than quadrupled over the past decade, averaging 16.4% annually.
The company specializes in robotic surgical equipment, with its key product, the da Vinci system, featuring a robot that typically costs well above $1 million. More than 6,700 of them have been installed in hospitals in 69 countries, and more than 10 million procedures have been performed on them. Better still, the company enjoys lots of dependable recurring revenue as it sells service contracts, accessories, and supplies for the equipment.
NASDAQ: ISRG
Key Data Points
The company has seen its shares drop nearly 21% over the past year, but that hasn't been enough to make the shares seem undervalued. Its recent price-to-sales ratio of 15.5 is indeed a bit below its five-year average of 17.6, but its P/E and forward P/E ratios are both fairly close to their five-year averages. Consider keeping an eye on this great grower. You might buy into it incrementally, or wait for a better price.
3. Apple
Shares of Apple were recently down 23% over the past year, but that hasn't made them screaming bargains. Indeed, Apple's price-to-sales ratio and forward-looking price-to-earnings ratio were recently only near their five-year average, while the stock's price-to-earnings ratio of 22 was only a bit below the five-year average of 24. Shares have more than septupled in value over the past decade, averaging nearly 23% per year.
NASDAQ: AAPL
Key Data Points
It's not hard to imagine Apple continuing to grow robustly in the years to come. One of its core skills is innovation, and it looks like it will be adding virtual reality and augmented reality offerings to its ecosystem in the next few years. Some worry about slowing iPhone sales, but there's much more to Apple than iPhones. Its services, for example, including Apple TV+, Apple Music, Apple Arcade, Apple Card, and more, are growing briskly overall -- reaching 900 million subscribers in 2022.
Think twice before rushing to fill your arms with buckets of Apple stock, but you might ease into the stock or just wait for a better price. If you plan to hold any of these stocks for many years, you might justify buying shares now, as they will likely be considerably more valuable a decade hence. The most desirable stocks often trade at premium levels.
