No one likes it when markets are down. But the good news is these times represent great times to put your money to work.
That's because many solid companies with long-term track records trade at a discount. They may have felt the pressures of higher inflation. Or investors might have just fled the particular stock or industry.
But, down the road, these companies have what it takes to grow -- from an earnings and share performance perspective. And that means, if you buy them now, you're likely to win big over the long haul. Let's check out five bargain-basement buys to get in on today.
1. Amazon
Rising inflation has weighed heavily on Amazon (AMZN -1.65%). That's because the e-commerce giant gets hit in two ways. It faces higher costs -- and its customers have less to spend. But these troubles are temporary, and Amazon has the strength to make it through and win over time.
Amazon is improving its cost structure, which includes cutting jobs and spending in certain areas. At the same time, Amazon last year increased its investment in the high-growth area of technology infrastructure. That supports its cloud computing services business, Amazon Web Services (AWS). This is key because AWS has driven Amazon's profit in recent years.
Why can Amazon shine over time? The company is a leader in two markets growing in the double digits: e-commerce and cloud computing. So, it should be among the first to benefit from this growth.
Today, Amazon shares trade around their lowest in relation to sales since 2015. This is a steal considering Amazon's long track record of revenue growth and its work today to prepare itself for the future.
2. Tesla
Tesla (TSLA 4.96%) reported record results in the fourth quarter -- from revenue to operating income to net income. The electric vehicle (EV) giant also said generally accepted accounting principles (GAAP) net income doubled to more than $12 billion for the full year.
The company achieved this even while facing headwinds like supply chain issues and negative currency impact. So, there's reason to be confident about Tesla in an improving economy. The EV giant credits its cost control and cost innovation for its success during tough times.
Though Tesla's average selling price for its vehicles is on the decline, the company's margins are strengthening. This should be a winning combination over time. Lower prices will attract EV buyers. And higher margins mean Tesla's earnings continue to benefit.
Tesla's EV deliveries and production figures have climbed in the double digits. And, over time, Tesla aims for average annual delivery increases of 50%.
Today, Tesla shares trade for 48 times forward earnings estimates -- looking very cheap compared to last year's level of more than 80.
3. Disney
Disney (DIS -1.01%) disappointed investors last year as operating losses at its streaming services deepened. The company had grown membership, but at a cost. As a result, Disney shares slid 43%.
But the entertainment giant surely is heading for better times. It called back longtime chief executive officer Bob Iger to pave the path to growth. Iger returned from retirement in late November and has announced several moves so far. These include spending cuts to reach cost savings of $5.5 billion.
At the same time, Disney's parks, experiences, and products business -- traditionally the biggest revenue driver -- continues to grow. The unit reported double-digit gains in revenue and operating income in the most recent quarter. Iger's plan includes moves that could boost this unit's revenue, too. For example, Disney is launching efforts to improve the guest experience, like making more lower-priced tickets available.
So Disney is on the way to getting its magic back. And that's why it looks like a buy today at 23 times forward earnings estimates -- compared to more than 35 last year.
4. Intuitive Surgical
Intuitive Surgical (ISRG -0.50%) is the world's biggest robotic surgery company -- and by far. The company holds nearly 80% of the market. And what's great is Intuitive isn't likely to give up much market share any time soon.
Here's why. Surgical robots are million-dollar investments, so hospitals don't switch in and out of them regularly. If a hospital is satisfied with a robot, it probably will stick with it. Also, most surgeons are trained on Intuitive's flagship da Vinci platform, which is another reason hospitals may favor Intuitive products.
All of this has helped Intuitive grow earnings over time. Of course, there have been headwinds like coronavirus disruptions and higher raw materials prices. But these are temporary challenges. Meanwhile, Intuitive has shown confidence in its own business by buying back shares. In fact, the company repurchased $1 billion of common stock in the most recent quarter.
Today, Intuitive is trading for 47 times forward earnings estimates, down from more than 60 a year ago. Considering Intuitive's moat and growth track record, we're looking at a very reasonable entry point today.
5. CRISPR Therapeutics
CRISPR Therapeutics (CRSP -3.45%) is heading for a big moment: the potential approval of its first product. CRISPR and partner Vertex Pharmaceuticals have submitted blood disorder candidate exa-cel to regulators in the U.S., Europe, and the U.K.
Exa-cel is designed as a one-time curative treatment -- for disorders that today have limited treatment options. So, if approved, it could be big. The companies developed exa-cel using CRISPR's gene-editing technology.
This technology -- which helps fix faulty genes involved in disease -- is set to bring CRISPR more and more revenue now and down the road. Vertex just signed a licensing agreement for the use of it in Vertex's type 1 diabetes program. Vertex will pay CRISPR $100 million up front. Then, CRISPR may earn as much as $230 million in milestone payments -- and could also pocket potential product royalties.
CRISPR has other candidates in the pipeline, including an immuno-oncology one that could be next to the finish line. It's in a phase 2 trial that may support a regulatory request.
Today, CRISPR shares are trading at around their lowest in three years -- a steal considering potential growth just ahead.
