Will it, or won't it? Will the S&P 500 find a way to continue rallying? Or will the wrong headlines push stocks back into a bear market? The bulls seemingly have the advantage right now, but given the frailty of the recent gains, we just don't know.
What we do know is that a handful of growth stocks are performing well regardless, fueled by results that aren't greatly affected by the economy. You might want to take a look at these tickers for your own portfolio. Here's a rundown of three names to start your search with today.
1. PDD Holdings
You might be more familiar with PDD Holdings (PDD 2.80%) than you realize. Although technically headquartered in Ireland, its foundational roots are in China, as the e-commerce company formerly known as Pinduoduo. It's also parent to the increasingly popular online shopping platform Temu, which is doing business in the United States and other parts of the Western Hemisphere.
It's clearly no Amazon (AMZN 3.43%) or Alibaba. That doesn't make it a subpar investment; what PDD lacks in size and history, it more than makes up for in potential growth, which is what growth investors ultimately want. This year's top line is on pace to rise 55% year over year, while next year's expected sales increase of nearly 29% is impressive as well.
The keys to its continued success are a combination of smart execution and cleverly priced products. Any U.S. consumer who has seen Temu's website can tell it's not a carbon copy of Amazon. Its products are mostly bargain-priced for a reason -- knockoffs are common, and quality is often lacking.
The same is true of its products in other parts of the world. Customers' expectations are low enough for the business model to work. As for execution, this is where PDD Holdings is a surprising standout.
The company started out as a means of connecting China's consumers with the country's more-remote produce farmers. As it turns out, however, its tech and its website's reach of millions of customers also make for a top-notch e-commerce platform.
Now, this technology is being deployed all over the world for the benefit of smaller businesses that might otherwise get lost in a sea of competition using shopping sites like Alibaba or Amazon.
The irony is that PDD says Temu already serves about 100 million customers, pushing it toward the size of the e-commerce industry's biggest players. Given this milestone, the stock's recent rally -- up nearly 40% so far this year -- isn't terribly surprising and bodes well for its outlook ahead.
2. Amazon
Amazon shares are also beating the broad market -- up some 70% in 2023 -- but it's not because of e-commerce. That business accounts for most of Amazon's sales, but it isn't the company's big moneymaker.
Although cloud computing makes up only about 16% of Amazon's top line, it drives an incredible 75% of operating income. With Mordor Intelligence forecasting annualized growth of 16% through 2028 for global cloud computing, the company's bottom line could improve much faster in the foreseeable future than most investors anticipate.
The e-commerce business is a different story. Amazon wasn't fully prepared for the impact of COVID-19, but it hired rapidly to meet the swell of new online shoppers. Its speedy expansion, though, ended up costing Amazon much more than it might if it had the time to proceed more thoughtfully.
Then last year's rapid inflation only exacerbated these problems. Its North American e-commerce business lost more than $2.8 billion in 2022, versus 2021's operating income of nearly $7.3 billion. Its international e-commerce lost $7.8 billion in 2022, largely for the same reason.
The trouble ultimately made Amazon stronger by forcing it to cut costs. Now, its international e-commerce business in inching toward profitability, while the continued growth of the advertising business has helped drive record-breaking operating profits of $8.4 billion for its North American e-commerce business through the first three quarters of 2023.
If these cost controls and current sales trends remain in place, shareholders could see the e-commerce operation make a profit contribution unlike ever before.
3. Booking Holdings
Lastly, add online travel agent Booking Holdings (BKNG 0.53%) -- up 54% so far this year -- to your list of market-beating stocks that could shrug off any bear market that's ahead.
The "revenge travel" thing is winding down; anyone who needed a trip to shake off the long quarantine from the pandemic has likely taken it. Economic lethargy and persistently higher prices for practically everything aren't helping, either.
But many investors might be overlooking the fact that demand for leisure travel is actually resilient in almost any economy. The American Automobile Association estimates this year's Thanksgiving travel will almost be back to 2019's pre-pandemic levels, for instance, while domestic air travel will eclipse 2019's passenger tally. Airlines themselves expect it, following record-breaking levels of travel in summer and over Labor Day weekend.
And despite economic headwinds in China, online travel agent Trip.com just reported third-quarter revenue that topped its pre-COVID third-quarter top line. Hotel bookings within China grew 90% year over year, reaching 70% more than the company reported for the comparable quarter of 2019. Total bookings were also up 100% year over year.
Consumers are finding a way to pay for travel even if the economy is lousy. So the analyst community is still expecting Booking Holdings' revenue to grow 16% for the current quarter, with another 11% forecast for 2024. That could be enough to keep the stock's rally going even if the broad market's bullishness is upended.
