- Despite a competitive market and an unusual business model, Costco has perfected charging customers to enter its stores.
- Microsoft creates products that are always in demand.
- Stocks in the banking sector are highly cyclical but consistent over time.
If you’ve noticed that your portfolio isn’t as diverse as you originally intended, you’re not alone, but there are 3 unstoppable investments you need. The stock market has been unpredictable in the past few years, and it’s easy to get caught up in buying flashy but high-risk stocks.
If you’re in this situation, don’t worry — there are ways to invest your money that will make more sense in the long run. Here are three investments that have been proven to be successful and would be an excellent addition to anyone’s portfolio.
According to most opinions, Costco Wholesale (NASDAQ:COST) should not be doing so well. It doesn’t provide anything different from what other rivals such as Target (NYSE:TGT), Kroger (NYSE:KR), and Walmart (NYSE:WMT) do. Furthermore, the retailers don’t charge consumers a membership fee to visit their stores.
Costco has a good handle on club-based retailing. The company boasts 64.4 million paying members as of May, up by almost 4 million year-over-year. Revenue from member fees rose from $901 million to $984 million during the same quarter, accompanied by a 16% growth in sales throughout the previous year. This business’s top line has risen on a year-over-year basis in every single quarter for more than a decade now. Analysts expect comparable sales to rise further this year and next, accompanied by even more robust profit growth.
There are plenty of future possibilities, too. Over 122 million American homes and hundreds of thousands of small and large businesses have not yet joined this discount shopping club. Costco has only 577 stores in its primary market, the US and Canada. In contrast, there are almost 4,700 Walmarts, nearly 2,800 Krogers, and 1,937 Target shops. These retailers are in markets that may potentially support one more store, like a Costco.
Attentive investors are probably well aware that Microsoft (NASDAQ:MSFT) fell short of last quarter’s earnings and revenue forecasts. They may also be aware that the software giant recently asked staff to reduce travel and training expenditures. Unfortunately, the message is anything but encouraging for potential investors.
However, focus on the bigger picture. Microsoft is still seeking a better second half of 2022 than analysts are projecting. Wall Street forecasts sales growth of 11.4% for the current year. They expect per-share profits to rise from $9.21 to $10.34. The company’s intelligent cloud unit expects its top line to grow by at least 20% and hit $20.5 billion this current quarter. For perspective, productivity and business processes revenue only grew 7% last quarter when discounting currency value changes. Productivity is solid even with brewing economic turbulence in the background.
Furthermore, Microsoft’s revenue is becoming more recurring or self-sustaining. That is to say, access to software platforms like Office or Azure is increasingly “rented” for a low monthly fee rather than bought once. This software-as-a-service business model generates consistent quarterly sales. For this reason alone it is clearly one fo the 3 unstoppable investments you need.
Finally, add JPMorgan Chase (NYSE:JPM) to your list of unstoppable stocks that would fit virtually any portfolio well.
It’s a difficult time to be enthused about bank ownership right now. Despite recent rate hikes by the Fed, interest rates are still near historic lows, strangling lending margins on activity profit margins. Moreover, investors are concerned that the domestic and international economies are edging toward recession. Not only will this lessen demand for new loans, but it might also jeopardize banks’ existing loan portfolios in a down economy. A poor economic climate can also drag on the investment banking and brokerage sector. Thus, resulting in another headwind for one of JPMorgan’s operations.
If you’re aware that banks are exceptionally responsive to economic fluctuations, investing in JPMorgan during a lull in the market is a bright idea. That way, you’ll be in a position for the next upturn.
The stock is down nearly 30% from its early 2022 high, even though more sellers are concluding that they have overshot their mark. You may still buy in at around 11 times this year’s anticipated per-share earnings of $11.20, or less than 10 times next year’s projected profits of $12.57 per share. Perhaps most importantly, you’d be entering the market while the dividend yield is at an above-average 3.33%. Investors should note that the dividend has grown yearly since 2011, following its 2009 cut due to the subprime mortgage crisis.
Only the future will reveal how this big bank can maintain its payout and at what rate. Fortunately, there’s some space to move around. This year’s predicted earnings per share of $11.20 is lower than last year’s great profit of $15.36. However, the firm could still manage the current annualized dividend payments of $4 per share.
Buy them and forget them. These 3 unstoppable investments are built to last, even if forced to weather the occasional economic storm.