The stock market is nearing all-time highs again, with the S&P 500 index just barely below where it traded earlier this year and its average price-to-earnings ratio (P/E) soaring back close to 30. This is, without debate, an expensive index earnings ratio compared to history. It is tough to find bargain stocks to invest in, as investors are drawn to fast-growing artificial intelligence (AI), cloud, and technology stocks that trade at premium prices.
I have two stocks that break the mold today. Both Nintendo (NTDOY 1.76%) and Portillo's (PTLO -0.13%) have fantastic long-term upside from today's prices. Here's why they are my two favorite stocks to buy right now.
A restaurant brand with national expansion plans
Portillo's has been a mainstay in Chicago for decades, selling Chicago-style street food such as hot dogs and Italian beef sandwiches. After going public in 2021, the company has now embarked on a national expansion plan to bring its restaurants to other regions of the United States. Right now, this includes Arizona, Texas, and Florida. Management is sticking to a Sun Belt strategy to maximize openings in areas with ongoing population growth.
At the end of last quarter, Portillo's had 94 restaurants oprating around the country and plans to open 12 more this calendar year. This 10%+ annual unit growth can help Portillo's reach its long-term target of mid-teens annual revenue growth, which translates to around 15% per year.
One problem Portillo's has dealt with -- and the main reason why the stock is in the dumps -- is its weak same-store sales growth. Same-store sales growth measures revenue growth in existing restaurants and can help investors analyze whether a restaurant is keeping up with inflation on its labor and food costs.
In 2024, Portillo's posted negative same-store sales growth every quarter, which is not a good development. However, the company is in a bit of a unique situation when it comes to restaurant openings compared to most brands. When a Portillo's opens up in a location with a lot of ex-Chicagoans, it can gain huge unit volumes immediately, making it tough in the years following to post consistent same-store sales growth and muddying the financial figures for shareholders.
A better metric to track is average unit volume (AUV), which measures annual revenue per restaurant. Portillo's AUV was $8.7 million last quarter, similar to Chick-fil-A. This makes it a leading restaurant operator by this metric in the fast-casual chain space. Now, in 2025, Portillo's is beginning to see improvement in its same-store sales growth, posting 1.8% growth in the first quarter. Combine improving same-store sales and new locations opening up with large unit volumes, and I think 15% annual revenue growth for Portillo's is doable as it expands around the country.
Today, you can buy Portillo's stock at a P/E ratio of 27. I believe the company can grow its earnings at a faster clip than revenue as it gains more operating leverage with greater national scale, making this P/E cheap for this durable growth stock. Buy Portillo's and wait patiently as the restaurant brand expands around the United States.
Image source: Getty Images.
Nintendo's blockbuster new gaming system
Nintendo is a much larger and well-known brand compared to Portillo's, but its stock does not get much attention in financial media. It should, as it is one of the best entertainment brands in the world. The company just launched its new video game hardware, the Nintendo Switch 2, which sold 3.5 million units worldwide in four days, the fastest-selling console in history.
The Nintendo Switch 2 should see huge unit sales in the years to come, as its predecessor sold 150 million total units over its life. This new version has better online playing capabilities and third-party game support. Its stronger hardware specifications also make it a superior gaming experience, if reviews are any indication. Plus, it sells at a higher price of $500 vs. $300 for the original Nintendo Switch, which will support more revenue growth for the company.
Nintendo's true profit generator is not gaming hardware, but its blockbuster games like Mario Kart. In conjunction with the Switch 2 release, Nintendo released a new Mario Kart title that it bundles with hardware sales. Mario Kart is the best-selling franchise from Nintendo, and No. 2 is the Animal Crossing franchise. According to a recent social media post from Nintendo, it looks like the company is hinting at an upcoming release from Animal Crossing, which combined with Mario Kart should drive huge sales growth for games purchases on the Nintendo Switch 2 over the next five years.
Revenue for Nintendo peaked at just over $16 billion when the original Switch was coming into mass popularity during the COVID-19 pandemic. The Nintendo Switch 2 sells for more than the original Switch, while games such as Mario Kart World now have higher price points compared to previous versions.
Total unit sales for the Nintendo Switch 2 are outpacing the early figures for the original Switch as well. Higher price points and more unit volume mean Nintendo should shortly surpass $20 billion in annual revenue within the next few years, especially once we lap the December holiday season.
Even though Nintendo's stock price has risen, investors are still underrating the potential of the Switch 2 console. Buy Nintendo and hold on tight for the long term -- this is a fantastic business to own today.
