Market downturns are a common occurrence that investors have to go through in order to grow their money over the long term. Warren Buffett’s career guide Berkshire Hathaway Showing that buying and holding great companies is much easier and less stressful than trying to time the market.
Amazon (Amazon -1.98%), walt disney (DIS -2.00%)and apple (AAPL -1.07%) are three great companies that are currently for sale. Here’s why three Motley Fool contributors love these stocks.
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E-commerce is a $4.9 trillion market
John Ballard (Amazon): Shares of Amazon, which hit an all-time high of $3,773 in 2021, have fallen 43% from their highs amid concerns about the health of the economy and slowing Amazon sales growth. Sales grew just 7% year over year in the first quarter, well below the 20%-plus growth Amazon has regularly reported over the past decade. However, with global e-commerce projected to reach $7.4 trillion in 2025 from $4.9 trillion in 2021, Amazon won’t remain doomed forever.
In a sign that Amazon is still in a strong competitive position, Prime members are spending more on Amazon than they did before the pandemic. Even Amazon’s brick-and-mortar stores saw sales jump 16% year over year in the first quarter.
Amazon also continues to perform strongly Growth from non-retail services. Advertising services grew 25% year-over-year in the first quarter and is now a $32 billion annual business, or 7% of Amazon’s total business. This reflects growing demand from third-party brands looking to put their wares in front of Amazon’s vast customer base of more than 200 million Prime members.
On a price-to-sales (P/S) basis, the stock is as cheap as it has been in more than five years. Several prominent investment managers increased their holdings in the last quarter, including Third Point’s Daniel Loeb and Greenlea Lane Capital’s Josh Tarasoff. Copying smart investors at times like these isn’t a bad idea.
AMZN PS Ratio data by YCharts
no entertainment competition
Jennifer Sybill (Walt Disney): Disney has had a rough few years. While many parts of the world are reopening, the pandemic is not over. In addition to park closures, there are movie theater closures, capacity constraints and film production delays. Few parts of the company’s vast and extensive business remain unaffected.
Fortunately, its streaming business has been well-received. In just over two years, Disney+’s user base has grown to nearly 138 million, with more than 205 million combined users across all streaming networks.Get close to industry leaders NetflixClose to 220 million.
Investors were pleased with the addition of 7.9 million Disney+ subscribers in the second quarter of fiscal 2022, which ended April 2, as the company implements its plans to add subscribers globally. It is on track to reach its target of 230 million to 260 million users by 2024 as it continues to roll out in new regions.
In the second quarter, it also made progress on many other fronts. Revenue rose 23% year over year to more than $19 billion. Revenues in the parks and experiences division more than doubled as people returned, so much so that per capita spending at domestic parks rose 40 percent compared to 2019. The company is investing in new rides to attract tourists and stay ahead of its game.
It also invests in new content for streaming and strategically allocates resources to make the most of its various channels, including television, theatrical productions and streaming channels. Its unrivaled library and creative team give it the advantage of generating a lot of high-quality content to populate these channels over the years.
Disney stock has fallen more than 30% this year, investors can take the opportunity to buy blue chip Stock at a discounted price.
Apple has built a large and loyal customer base
Parkf Tatworthian (apple): Apple is a company I expect to be around for a long time. The company has demonstrated its ability to create innovative products and services that attract and retain consumers over the long term. What’s more, the decades of trust it has built allow it to sell its products at premium prices that generate solid profit margins. The broad market sell-off has knocked Apple’s stock price down 20% from its highs, allowing long-term investors to buy this fine business at a lower price.
In fact, Apple is responsible for many top-notch products, including the iPod, iPhone, iPad, Apple Watch, and AirPods.When planning for long-term investments, it demonstrates repeated success in creating products and services Consumers pay high prices is a desirable feature.
Apple’s revenue will reach $365 billion in 2021, up from $171 billion in 2013, reflecting the strength of customer demand. From this increase, Apple simultaneously increased operating income from $49 billion to $109 billion. Operating margin in 2021 is 29.8%. Apple products are often priced higher than competitors, but consumers are willing to pay a premium. The brand loyalty Apple has built will benefit long-term investors as rivals try to infringe on Apple’s business over the years.
AAPL price and free cash flow data by YCharts
The sell-off has Apple shares trading at 23 times free cash flow and 24 times earnings; each is down significantly from its highs earlier this year. Investors looking for run-down stocks that they can buy and hold forever can add Apple to their portfolio.
