The stock market is on a growth path, with the Nasdaq Composite index up 24% since Jan. 1. The market is benefiting from gradually easing inflation after countless stocks experienced steep declines amid an economic downturn last year. As many companies begin to recover, now is an excellent time to diversify your portfolio by investing in businesses most likely to profit from the improving cost of living.
Industries such as e-commerce, cloud computing, and consumer tech have massive potential as inflation eases, and both shoppers and businesses can spend more freely. So, with that in mind, here's why Amazon (AMZN -3.20%), PayPal (PYPL -2.70%), and Apple (AAPL -0.28%) are no-brainer buys right now.
1. Amazon
As the king of e-commerce with its leading 38% market share, Amazon's stock could surge alongside an improving economy. The company has immense dominance in the sector, proven by Walmart's second-largest market share of 6.3%.
Amazon has much to gain as online retail sales rise, and its business is already showing signs of recovery. The company's e-commerce business suffered from macroeconomic challenges last year, with its North America and international segments reporting $10.6 billion in operating losses in fiscal 2022. However, in the first quarter of 2023 Amazon's North America segment returned to profitability, hitting $898 million in operating income, while its international earnings also marginally improved.
In addition to e-commerce growth, Amazon's cloud business, Amazon Web Services (AWS), will likely benefit from easing inflation and a current boom in artificial intelligence. AWS has experienced slowing growth as rising interest rates have led to a pullback in cloud spending. However, Amazon's recently announced plan to invest $13 billion in expanding AWS in India is a promising step in the right direction.
Amazon's potential is reflected in its average 12-month price target of $138, which projects stock growth of 15% and makes its stock an attractive buy right now.
2. PayPal
In the world of online payment software, PayPal has a massive lead. The company's market share was 45% as of last September, with the second-largest share being Stripe with 19%.
However, the company has fallen out of favor with Wall Street in recent years. Investors have grown weary after PayPal parted ways with eBay in 2018, the market has grown more competitive, and tech giants like Apple have launched custom payment systems. As a result, PayPal shares are down 25% over the last five years.
Despite recent challenges, the company's position at the top of the market has provided consistent financial growth. Since 2019, PayPal's annual revenue has risen by 78%, while its operating income has climbed by 62%. As a result, the company's stock tumble has made it a bargain. Its forward price-to-earnings ratio has decreased by almost 40% in that last year and sits at an attractive 12.
As inflation improves, PayPal's considerable market share and partnerships with e-commerce leaders like Amazon and Walmart make it well positioned to offer major stock gains.
3. Apple
Apple is one of the easiest stocks to recommend, thanks to its history of reliable growth. The tech giant's stock has risen 1,000% over the last decade as it has attained a leading market share in multiple areas of consumer tech.Apple now boasts the largest smartphone market share after surpassing Samsung last year.
The achievement has boosted the company's position across the industry, gaining leading market shares in tablets, headphones, and smartwatches. Apple devices exist in an interconnected ecosystem that promotes ease of use and keeps consumers returning to its products. The strategy means iPhone users are significantly more likely to choose Apple products such as a MacBook or Apple Watch over competing equivalents.
The company's immense brand loyalty strengthens its outlook, considering Apple is expected to venture into the virtual/augmented reality market next month with the release of a new headset. The company's history of success when entering new industries suggests it could soon be atop the quickly expanding $31 billion market.
As a result, now is an excellent time to consider investing in Apple's stock ahead of its upcoming product launch.
