There's never really a wrong time to own a quality stock. Let's face it, though -- some stocks just perform better in a bullish environment. Indeed, plenty of stocks are seemingly built to thrive on the economic strength that drives bull markets.
Here's a closer look at three names that could prove particularly fruitful now that the economy is picking up steam and a new bull market is underway.
Home Depot
The hardware and home improvement space is doubly tricky to figure out right now. With money tight, consumers are prioritizing the purchase of things like groceries and gasoline at the expense of more discretionary goods and services. This dynamic is also adversely impacting demand for homebuilding despite the country's housing shortage.
That's why Home Depot (HD 0.94%) suffered a 3% overall sales dip during the quarter ended in October; same-store sales in the United States slipped 3.5%. The quarter that ended last month isn't expected to have been any better either.
Take a step back and look at the bigger picture, though. Both of these headwinds are cyclical. In fact, the down cycle may be closer to turning around than you realize. Recent changes in homebuilders' confidence levels provide evidence.
No builder denies last year was a rough one for the business, as projects were stymied by rising interest rates. However, the NAHB/Wells Fargo Housing Market Index (HMI) jumped big-time between November and January to highs last seen in the middle of last year, in step with easing mortgage loan rates.
National Association of Home Builders Chairman Alicia Huey observed that "single-family starts are expected to grow in 2024, adding much needed inventory to the market."Given that about half of Home Depot's business comes from professional contractors, even a modest homebuilding tailwind is a big deal for the company.
Consumers are feeling better about their economic situations as well. January's consumer confidence reading from The Conference Board improved to a reading last seen at the end of 2021. The United States' retail sales continue to grow, too, another suggestion that people are getting more comfortable.
This spending is sure to benefit home improvement names sooner rather than later, with home spruce-ups that were postponed last year finally making their way onto homeowners' to-do lists.
Carnival
When demand for maritime cruises went hog wild in 2022, nobody was terribly surprised. The COVID-19 pandemic had kept the world trapped at home for a year and a half. Once leisure travel finally became possible again, stir-crazy people pounced on the opportunity. The phenomenon even earned a name: "revenge travel."
Cruise line Carnival Corporation (CCL -0.66%) was a clear beneficiary of this trend. However, things are seemingly cooling off now, with some experts suggesting last year's travel frenzy is just too tough of an act to follow -- or even match -- this year. And maybe it will be. So far, though, the data says travel demand is still growing.
Take The International Air Transport Association 2024 outlook as an example. Based on trends already in place at the end of last year, the organization expects air travel revenue to grow to the tune of 7.6%. The total number of unique passenger trips is expected to reach 4.7 billion, eclipsing 2019's pre-pandemic figure of 4.5 billion.
And people aren't just boarding planes to get from point A to point B. Hotel consultancy HVS says the United States' average hotel occupancy rate improved from 2022's 62.7% to 63% in 2023, with per-room revenue growing at a comparable pace. HVS further expects occupancy rates to swell to 63.4% this year, pushing per-room rates higher again.
Even Carnival itself is still seeing incredible demand growth. Last quarter's revenue reached a record fourth-quarter top line of $5.4 billion, while at the same time deposits made toward future sailings also hit a Q4 record of $6.4 billion. The company reports that nearly two-thirds of this year's capacity is already booked up.
Carnival's biggest problem right now? A lack of ships to fully meet demand -- demand that will almost certainly continue to grow as long as the bull market and its underlying economic strength persist.
Nike
Finally, add sneaker company Nike (NKE 0.19%) to your list of bull market buys that could help you become a millionaire. Things haven't been easy for the popular athletic apparel brand of late. Last quarter's sales were basically flat on a year-over-year basis, held back by weakness from its all-important North American market.
The company also dialed back its revenue outlook for the full fiscal year set to end in May. Nike's now looking for top-line growth of only about 1%, with CFO Matthew Friend explaining that this is as a result of a number of factors, including increased macro headwinds, particularly in Greater China, as well as a stronger U.S. dollar.
It would also be naïve to ignore the advent of rival brands of athletic footwear like On Holdings and Deckers-owned Hoka. Now all of a sudden Nike stock's weakness since its late-2021 peak isn't so shocking.
There's an important detail lost in all the recent, noisy headlines, though. That is, this is still Nike -- a leading name in athletic apparel, and the dominant name in athletic footwear. It's an established name everyone knows, and a brand nearly everyone respects even if they're not regular buyers of its products.
Brand consultancy Interbrand rates Nike the ninth-best global brand of 2023, in fact, based on a variety of factors including "the role that these valuable brands play in shaping culture and the world at large." It's certainly difficult to argue that Nike isn't a permanent fixture of the world's cultural landscape.
And this matters. While its challenges are expected to persist for a few more quarters, Nike's still got a powerful brand name behind it. It's also got plenty of scale. Both are reasons to expect big things from the new innovation and streamlining initiatives it just put into place at the beginning of 2024.
Look for this work to start making a difference as soon as the latter half of this year, when the new bull market should be well solidified and the economy could be really humming. Don't be surprised, however, to see the stock start making sustained gains even before then.
