Three of this year's hottest stocks have taken a pause in the action. These winners all have climbed in the double digits so far this year -- but they've slowed down over the past month, posting declines. This doesn't mean their growth story is over though. Far from it. Instead, this offers you an opportunity to get in on the shares and potentially benefit over the long term.
These players each are leaders in their industries and have shown earnings strength over time. I'm talking about electric vehicle (EV) maker Tesla (TSLA -1.11%), Google parent Alphabet (GOOG 9.96%) (GOOGL 10.22%), and cruise operator Carnival (CCL -0.66%) (CUK -0.88%). Let's take a closer look at each of these players to buy now.
Image source: Getty Images.
1. Tesla
Tesla shares have slipped in recent weeks as investors worry about the company's growth in the coming months. Higher costs, lower vehicle pricing, and foreign exchange impact have been weighing on the EV giant -- and in the third quarter resulted in a narrowing of margins and a slowdown in earnings.
But it's important to focus on the long term, and through this lens, the company's growth story remains intact. Today, economic factors represent a headwind, and at the same time, Tesla is heavily investing in future growth drivers such as artificial intelligence (AI). Tesla also is working to reduce costs, and recently made progress by lowering its cost of goods sold per vehicle.
And here's some excellent news: Economic situations evolve, so better times should be ahead -- and Tesla's investment in growth and cost improvements right now should pay off over time.
Tesla remains a leader in the EV world, has maintained profitability, and has grown its cash position to more than $26 billion. Trading at 70 times trailing 12-month earnings, the stock isn't dirt cheap -- but valuation is reasonable considering the company's market position and future prospects.
2. Alphabet
For years, people have worried about another search engine taking market share from Google, but that just hasn't happened. And considering Google's market strength -- with share of more than 91% -- and Alphabet's work to make search better and better, I don't expect a rival to dethrone this leader any time soon.
Alphabet generates revenue by selling Google Search and YouTube ads, cloud services, and hardware. Google Search makes up the lion's share of revenue, and even during today's tough economic times, Alphabet has been able to keep growth growing. At the same time, the company is heavily investing to incorporate generative AI in search -- for example, including images and video in replies to questions.
All of this should appeal to users, and therefore keep clients buying advertising to reach these users. Alphabet's cloud business is small in relation to giant Amazon, but it's growing progressively and has established a solid place in the market. More than 60% of the world's one thousand biggest companies use Alphabet's cloud services.
Right now, Alphabet stock, at 25 times trailing 12-month earnings, is a steal for the company as it looks today -- and for what this market giant may look like in the future.
3. Carnival
Carnival suffered during the pandemic's early days as it was forced to halt cruises. And to stay afloat, excuse the pun, Carnival took on more and more debt. Since that time, though, things have looked brighter and brighter for the world's biggest cruise operator.
The company has lowered debt from a peak earlier this year by nearly $4 billion. At the same time, Carnival is improving its cost structure by replacing older ships that heavily consume fuel with more economical ones and working to increase passenger onboard spending.
Demand has taken off for Carnival's cruises with significant gains in booking volumes and total customer deposits in recent quarters. And in the third quarter, the company reported record-high revenue. Importantly, Carnival also has reported gains in adjusted free cash flow and expects this to continue -- and help the company pay down debt.
In the most recent quarter, U.S. GAAP net income shifted into positive territory for the first time since cruises resumed operations. So, it's clear Carnival is heading for smoother seas ahead. And that's why, trading near its lowest ever in relation to sales, Carnival looks like a top buy on the dip right now.
