No one truly likes market crashes. But they’re an unavoidable part of the investment environment. And they do have a bright side: They offer long-term investors an opportunity to get in on solid stocks at a good price. When you plan on investing for a number of years, you know that you’ll eventually win with companies that have strong growth or good earnings prospects.
These days, the idea of a market crash has made its way into the forefront. Major indexes climbed throughout the first quarter. But since the beginning of the month, they’ve slipped. For instance, the S&P 500 index gained about 12% through a peak on May 7. Then it fell 4% in about a week. The market hasn’t crashed yet, of course. But when it does, here are three stocks to consider.
Image source: Getty Images.
Amazon.com (NASDAQ: AMZN) is a leader in online retail. And it also brings in big revenue from Amazon Web Services (AWS), its cloud computing business. Amazon‘s annual revenue has been growing for more than a decade. And net income has climbed for more than five years — to reach more than $21 billion.
AWS is a big contributor to Amazon‘s profit. The business makes up about 60% of Amazon‘s total annual operating income. We can expect this performance to continue, as AWS is the market leader. And in the most recent quarter, AWS’s revenue growth year over year exceeded 30% for the first time in a year. Amazon‘s CFO said in the earnings call that companies decided to outsource technology infrastructure during the pandemic — and he sees that trend continuing. Of course, this is great news for AWS.
Amazon shares climbed 76% last year as investors rushed to buy stocks benefiting from consumers’ new stay-at-home lifestyle. As coronavirus cases decline, people have returned to work and normal activities. But I agree with reports — such as one by McKinsey & Co. — predicting that online shopping is around to stay. That means Amazon‘s revenue and profit growth are likely to continue well into the future.
Tesla (NASDAQ: (TSLA)) shares soared 743% last year. The stock has been benefiting from impressive growth in sales — and interest from star investors such as Ark Invest founder Cathie Wood. Tesla is the biggest holding in Ark Invest’s largest fund. Earlier this year, Ark predicted that Tesla shares may reach $3,000 in 2025.
The maker of electric vehicles may have what it takes to prove Ark right. The company delivered a half a million vehicles last year. And in the most recent quarter, Tesla reported more than $1 billion in non-GAAP net income for the first time ever. Tesla car deliveries rose 109% year over year to 184,800 vehicles delivered in the quarter.
Looking ahead, CEO Elon Musk tells investor to prepare for even more growth. In last month’s earnings call, Musk said demand is the strongest he’s ever seen. For example, usually the company sees a slowdown in demand in the first quarter. This time, Tesla saw an increase. In fact, Tesla‘s lowest-cost car, the Model 3, became the world’s best-selling midsize premier sedan. Musk now is aiming to make the slightly higher-priced Model Y the world’s best-selling vehicle overall. He thinks that will happen next year. If Musk meets that goal and overall Tesla deliveries and demand continue to rise, the share price should follow.
Disney‘s Main Street.” src=”https://g.foolcdn.com/image/?url=https%3A%2F%2Fg.foolcdn.com%2Feditorial%2Fimages%2F627349%2Fdad-and-son-at-disney-reopening.jpg&w=700″/>
Image source: Disney.
I like Disney (NYSE: DIS) for many reasons. But one big one is the strength of its brand. The recent pandemic proved that people will always come back to the world’s most popular theme parks. (The company now has reopened all of its parks except Disneyland Paris. The Paris park will reopen on June 17.) In the most recent quarter, Disney said park revenue surpassed the costs of opening them. And the company said bookings are looking strong for its Florida and California parks. This is key, because the parks, experiences, and products business segment made up the biggest share of Disney‘s revenue pre-pandemic.
At the same time, Disney‘s big growth story is on your TV screen. I’m talking about its streaming service, Disney+. The company launched Disney+ in late 2019, and it quickly exceeded the company’s highest expectations for subscriber levels. Now it’s well on track to make it to the range of 230 million to 260 million subscribers by fiscal 2024.
But these aren’t temporary bright spots for Disney. The combination of Disney‘s streaming growth along with the recovery of its parks should power revenue and profit in the quarters to come. Fans can’t stay away from the magic of Disney — and that means investors shouldn’t, either.
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Fintech Zoom’s board of directors. Adria Cimino owns shares of Amazon and Tesla. The Fintech Zoom owns shares of and recommends Amazon, Tesla, and Walt Disney. The Fintech Zoom recommends the following options: long January 2022 $1,920 calls on Amazon and short January 2022 $1,940 calls on Amazon. The Fintech Zoom has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.