Macroeconomic headwinds have burdened companies across multiple markets this year, with consumer-reliant businesses being some of the hardest hit. Investors have pulled back on some of the historically most successful companies despite delivering years of long-term growth. As a result, now is an excellent time to consider buying the dip on stocks that are likely to flourish in the coming years.
Apple (AAPL 0.62%) and Disney (DIS -0.34%) haven't had it easy in 2023, with their stocks tumbling 7% and 5%, respectively, since the start of July. However, these companies remain the biggest names in their respective industries and will likely provide significant stock growth to investors over the long haul.
So, here are two attractive growth stocks to buy on the dip.
1. Apple: Undeniable brand loyalty that keeps customers coming back
Apple posted four consecutive quarters of revenue declines in its fiscal 2023, with total sales dipping 3% year over year. The company suffered from marketwide decreases in consumer spending, which brought revenue tumbling across its product categories.
Despite market challenges, shoppers have continued to show a strong preference for Apple's products, which will likely pay off over the long term. Counterpoint Research states that U.S. smartphone shipments decreased by 19% in the third quarter of 2023, with Samsung and Alphabet experiencing sales declines of 26% and 37%, respectively. Yet, the same period saw Apple report a more moderate decline of 11%, allowing it to retain its 55% market share in smartphones.
Moreover, while consumers haven't been keen to upgrade their devices amid spikes in inflation, Apple has still profited significantly from the digital services it offers through its products. Subscription-based platforms such as Apple TV+, Music, iCloud, and more have diversified Apple's business and proven less vulnerable to economic headwinds. Services revenue rose 9% in 2023 as profit margins hit 72%, remaining a bright spot for the company.
Shares in Apple have soared 255% over the last five years, outperforming rivals Microsoft, Alphabet, and Amazon. The company has a history of being one of the most reliable growth stocks over the long term and is well positioned to deliver substantial gains once the tech market recovers. The recent dip in its shares has only made its stock more attractive, with now being an excellent time to invest in Apple.
2. Disney: A very long-term buy
It hasn't been easy to be a Disney investor in recent years. The Covid-19 pandemic shuttered large portions of its business as theater and theme park closures stole billions of dollars in revenue. Then, an economic downturn in 2022 made it costly to expand in the streaming market, triggering countless restructuring moves to get the company back on track. As a result, Disney's stock is down 34% over the last three years.
However, the entertainment giant is in profitability mode and making big changes to its business to see significant growth over the long term. A bright spot for Disney has been its theme parks, experiences, and products division, which reported a 13% rise in revenue in the third quarter of 2023. Meanwhile, park admission sales increased by 18%. As a result, the company is heavily investing in improving guest experiences by expanding its parks worldwide while also introducing higher ticket prices and monetizing various aspects of the business.
One of Disney's weakest points over the last year has been its direct-to-consumer segment, which includes revenue from its various streaming platforms. However, it appears to be gradually inching toward profitability. The segment posted operating losses of $512 million in Q3, nearly half the losses it reported in the year-ago quarter. The company plans to introduce another price hike to its subscribers as it works to find a balance between offering value and meeting its bottom line.
Disney will report its fourth-quarter 2023 results this week, with expectations that it will reinstate its dividend after removing it during pandemic lockdowns. The company promised to bring it back before the end of the calendar year, which is quickly approaching. The return of its dividend would be a huge win for Disney and its stock, illustrating management's optimism for its future growth.
The Walt Disney Company isn't out of the woods after recent challenges. However, it remains one of the world's most recognizable brands, with millions of loyal customers. Recent restructuring moves, such as changing its CFO and pivoting its business away from streaming, are favorable for its long-term future. Now could be an excellent time to buy its stock for a bargain price, with plans to hold over many years.
