The stock market wasn't an easy place for investors earlier this year. All three major indexes slipped on concerns about the U.S. import tariff plan and its potential impact on growth. But these types of markets offer investors something valuable, and that's the opportunity to get in on quality stocks for reasonable or even cheap prices.
Though the indexes have rebounded, many stocks still are trading at interesting levels, so it's not too late to go bargain hunting. What should you look for?
It's a great idea to focus on companies with strong track records of growth over time and strategies that should help them win in the future, too. If you have $1,000 to invest or even less, you can grab a handful of shares of the following two stocks while they're on sale. Here's a closer look at each.
Image source: Getty Images.
1. Target
I'll start with the bad news: Target (TGT 0.20%) has struggled with various pressures in recent years. These have included a shift in spending away from discretionary purchases to theft in its stores, and all these elements have weighed on revenue growth.
However, it's important to look at the long-term picture. The company significantly lifted annual revenue over five years, and levels over the past couple of years show it's maintaining those gains.
TGT Revenue (Annual) data by YCharts.
Target's focus during the early pandemic days on building up its digital and delivery/pickup platforms boosted revenue then, but these platforms continue to offer growth today. For example, in the recent quarter, even as overall comparable sales remained sluggish, digital comparable sales climbed 4.7%, and same-day delivery services soared in the double digits.
A move Target made recently could further help revenue growth. During the latest earnings report, the retailer announced the creation of an "acceleration office" to help it make faster decisions and supercharge the execution of its strategy. The company also continues to open new stores and remodel older ones as these efforts have been linked to revenue growth. Target says that remodels have led to 2% to 4% gains in comparable sales in the year following the work and an additional increase of almost 3% the next year.
All of this means Target, which has fallen to 12x forward earnings estimates, looks particularly cheap today and offers long-term investors an excellent buying opportunity.
2. Carnival
Carnival (CCL 1.42%) (CUK 1.14%) is another company that struggled in recent years, building up a wall of debt during the early pandemic days as sailings were halted. But the company has made tremendous progress on paying down this debt over the past couple of years and is marching toward the early accomplishment of its recovery-plan goals.
This is due to smart measures to cut costs and make the company more efficient, not just in the short term but over time, too. For example, Carnival replaced older ships with more fuel-efficient ones -- an effort that will continue to keep costs under control over the long run. Carnival's efforts, along with travelers' general love for cruising, have helped the company reach several records in recent quarters.
In the latest period, Carnival reported record first-quarter revenue of $5.8 billion and record operating income that was nearly double that of the year-earlier period. It's also encouraging to see that booking volumes have been high quarter after quarter -- and in the most recent, bookings for 2026 and later reached record levels.
Carnival says it expects to reach its SEA Change financial targets -- a plan setting three-year financial and sustainability targets for the company -- a year earlier than planned as adjusted return on invested capital and a measure of adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) related to passenger capacity are reaching the highest level in almost 20 years.
Now I'll look at valuation. The stock is trading for 12x forward earnings estimates, down from nearly 20x late last year. At the same time, revenue and bookings are on the rise.
As an investor, you'll be getting greater growth and growth potential for a lower price, which looks to me like the company's shares are on sale. This makes now a fantastic time to add Carnival to your portfolio.
