Many investors have been loudly heralding a new bull market for the S&P 500. However, the major index has yet to meet one key criterion to convince everyone that a new bull market has arrived: It hasn't reached a new high.
Even with the recent choppiness, the S&P 500 is only 7% or so away from setting a new all-time level. A bull market is (still) coming. Here are three spectacular stocks to buy sooner rather than later.
1. Amazon
Some might argue that Amazon (AMZN 3.43%) is already in its own bull market. The stock has skyrocketed more than 60% year to date. It should have plenty more room to run.
Amazon is poised to become an even more dominant player in the logistics market thanks to its recent deal with Shopify. U.S. merchants on Shopify's platform will be able to offer the "Buy With Prime" option to their customers at checkout and use Amazon's fulfillment network.
Artificial intelligence (AI) presents an even greater opportunity for Amazon. The most important fuel for AI apps is data. As Amazon CEO Andy Jassy noted in the company's second-quarter earnings call last month, the Amazon Web Services (AWS) cloud platform "not only has the broadest array of storage, database, analytics, and data management services for customers, it has more customers and data stored than anybody else."
Meanwhile, Amazon's management is laser-focused on improving profitability and free cash flow. Its efforts have already shown up in the company's quarterly numbers. Look for strong earnings growth to boost the stock over the near term, while the Shopify deal and AI drive Amazon's mid-term and long-term growth.
2. Mastercard
Mastercard (MA 0.07%) is another large-cap stock that's delivering solid gains for investors this year. Unlike Amazon, though, the payments processing giant continues to set new all-time highs.
The one thing that stands out most about Mastercard is its business moat. Mastercard and Visa together dominate the credit card payment market in what many call a duopoly. However, Visa has a much larger market share, which gives Mastercard a greater growth opportunity.
Mastercard especially has tremendous long-term growth opportunities in emerging markets. As the middle classes in these regions expand, they'll spend more -- and likely use credit cards more.
Don't overlook the potential for Mastercard's profits to improve at a faster pace thanks to AI. The company already uses AI in several ways, notably including fraud prevention. It also helps other businesses harness the power of AI with its Brighterion unit.
3. Vertex Pharmaceuticals
While Amazon and Mastercard are rebounding in 2023 from slumps last year, it's a different story altogether for Vertex Pharmaceuticals (VRTX -0.06%). The big biotech stock soared nearly 32% in 2022 and is up more than 20% so far this year.
Vertex has two obvious catalysts on the way. The U.S. Food and Drug Administration (FDA) is scheduled to make a decision on approving exa-cel in treating sickle cell disease by Dec. 8, 2023. The agency's approval decision for exa-cel in treating transfusion-dependent beta-thalassemia should be announced by March 30, 2024.
Exa-cel isn't the only potential blockbuster drug for Vertex that could be on the way. The company plans to report results from a late-stage study of non-opioid pain drug VX-548 as soon as late 2023. Vertex also expects to announce data from a late-stage study of its vanzacaftor triple-drug combo in treating cystic fibrosis early next year. Both therapies could be headed toward near-term commercialization if those results are positive.
Vertex's pipeline features other promising programs as well. You might think the stock would be ridiculously expensive considering its potential, but it's not. The biotech's price-to-earnings-to-growth (PEG) ratio is a super-low 0.49. Any PEG ratio below 1.0 is considered to be attractive.
