There are stock ideas that are risky to invest in, there are some solid others that could generate strong returns for years on end. When an investor finds a solid, winning stock, they buy it and hang on to it through thick and thin, even in the guise of short-term setbacks.
FSM News highlights three stocks that fit the bill of a winning business and are worth to keep for the long run.
Alphabet: Digital browsing will drive growth
In Alphabet Inc.’s recent fourth-quarter and full-year earnings release, the market wasn’t impressed or kind towards the results. The fickle market sold off GOOG shares to the tune of 2% due to the company missing analysts’ forecasts.
Nonetheless, Alphabet continues to deliver enviable growth rates for a company of its scale overall, still making it a good buy.
In addition, the tech titan confirmed that mobile search is one of the sectors with the highest growth. The biggest change in internet browsing over the past five years has been from desktop to mobile, and that shift benefits Alphabet, since Google controls roughly 95% of the mobile-search market.
With its core business of advertising, Alphabet continues to grow. Earlier this year, an unexpected report coming from an analyst at Morgan Stanley found that 85% of every new dollar in online advertising was going to just two giant companies: Facebook, and Alphabet Inc. As the shift to online advertising continues, expect that Alphabet will continue to deliver robust revenue growth rates.
Overall, Alphabet is still a winning stock for the long-term. The company is the biggest digital advertiser and search engine in the world, and will only continue to increase search and advertising profit as internet usage grows, while drive for digital advertising will lift Alphabet’s bottom line.
In the last session, the GOOG stock added 0.17%, or $1.41 to $808.38, and remains bullish even in afterhours trading.
Starbucks: China’s middle-class consumers becomes new future
Since its late January earnings release for its first quarter, shares for Starbucks Corp. fell approximately 8%. The decline in the coffee giant’s stock is attributed to its traffic in its North American stores, which came out flat in the quarter. This was a trend that began in 2016 and could continue through 2017.
Additionally, management said it forecasts the same and is expecting revenue growth between 8% and 10%, lower from its original full-year guidance of 10% or greater at the end of the previous quarter.
However, that setback in its most mature market remains minor; the company’s best days could be well ahead of it, even as current CEO Howard Schultz vacates his position for the second time.
The global coffeehouse company’s growth opportunity in Asia is huge. Within ten years, the middle-class in China alone is expected to be double the size of the US, and the management recently stated that China would become a Starbuck’s largest market. At the beginning of the year, the company had almost 16,000 stores in the Americas, compared to less than 6,800 stores in China and the Asia Pacific region, 2,500 of which were located in China.
Overall, while growth could slow down further in the company’s more mature markets, the global growth story is just starting. That would drive decades of growth and it spells a good buy for investors.
SBUX shares finished Wednesday’s trading hours dipping 0.04% to $55.22, further sliding 0.22% to 55.10 in afterhours.
Under Armour: Brand remains strong
The recent six months have not been kind to shareholders of sports apparel-maker Under Armour Inc. after a series of events. UA shares crashed in October following the management’s slashing of long-term growth targets. Additionally, the stock also plummeted after Under Armour delivered sales growth of a measly 12% in the fourth quarter recently, which is deemed by many as a crucial period.
It does not end there; not only was the meager growth far shy of the management’s guidance, but the company’s CFO filed an unexpected resignation. After the string of bad news in just a span of six months, UA shares took a big hit.
But a closer examination at the previous quarter implies that there is still hope for its growth story.
While total sales growth was poor, the prime culprit was slowing sales in North America. That's plausible, as the retail environment stateside was rather tough for many retailers over the holiday season. The recent bankruptcies of other sports companies such as The Sports Authority, Eastern Mountain Sports, City Sports, and Bob's Stores did not help.
But Under Armour's report did have some bright spots. Direct-to-consumer sales grew by 23% and account for roughly 40% of total sales. Footwear sales rose by a solid 36% year-over-year. Best among the bright spots was that international revenue climbed by a massive 55% and now makes up 16% of total sales. These numbers hint that Under Armour’s brand is still strong.
UA shares are up by 2.87%, or 51 cents to $18.30 at Wednesday’s close. The stock dipped 0.16% to $18.27 in afterhours trading.
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