Acquire These Market Frontrunners Before Positive News Drives Their Prices Up
Retirement investors might be contemplating if it’s the right time to invest, considering the current market and economic uncertainties. However, market fluctuations are typical. The crucial factor is not market timing but maintaining a long-term focus on robust companies.
It is estimated that someone who invested $100 in the S&P 500 in 1927 would have over $1 million in assets today if the Great Depression had not struck.
Even the most ill-timed investor can accumulate substantial wealth in the stock market. The key is to invest in expanding companies with promising prospects and let time handle the rest.
Following last year’s market decline, numerous high-quality stocks are available at a discount. Home Depot (NYSE: HD) and South Korea’s top e-commerce provider, Coupang (NYSE: CPNG), are two stocks worth considering. Here’s why these stocks make excellent long-term investments.
Home Depot: A Reliable Income Stock
Concerns about the home improvement market’s future impacted Home Depot’s stock last year, but the company has demonstrated greater resilience than anticipated.
The primary worry was high inflation leading to reduced spending on home projects. This affected the company’s momentum, with fourth-quarter sales growing a mere 0.3% compared to the previous year. However, consistent sales volume is what Home Depot requires at the moment. Economic fluctuations are inevitable, but what’s essential is Home Depot’s reliable bottom-line performance.
In the fourth quarter, the company avoided increased input costs that affected other retailers by reporting a 3% YoY increase in earnings per share. Recent investments to enhance store productivity and supply chain efficiency are paying off.
Simultaneously, the stock’s current low trading price offers significant potential for growth over the next five years and beyond. Stocks trade at 18.5 times this year’s earnings estimate compared to 22 times a year ago. This means investors can acquire a larger portion of the company’s earnings for less money.
Home Depot’s dividend yield has also increased with a lower stock price, from 1.56% to 2.67% when writing, compared to the S&P 500’s 1.56%. Dividends have been maintained for 36 years by the company, which recently increased them by 10% to $2.09 per share.
Coupang: A Bargain-Priced E-commerce Platform
Coupang is South Korea’s leading e-commerce platform with an attractive long-term growth opportunity. It is estimated that 37% of all retail spending in South Korea is online – almost twice the online penetration in the United States.
Over $5.3 billion has been generated by Coupang in the last quarter, more than doubling since Q4 2019. Although growth decelerated last year, Coupang reported a 5% increase in active customers, with established customer groups spending more with the company.
The stock’s decline last year resulted from a high valuation at the year’s start, followed by slowing growth. Despite yet to report a profit due to ongoing investment in building a sophisticated infrastructure to manage growing orders and shipments, Wall Street appears to undervalue the company’s potential.
Historically, the company traded over 6 times sales a few years ago but now trades at 1.37 times trailing revenue. Coupang’s stock trades at a discount compared to other leading e-commerce stocks like Amazon, Etsy, and eBay, which trade over 2 times trailing revenue. This suggests that Coupang is undervalued and poised for growth in the coming years.
Management has invested in creating the country’s most extensive fulfillment infrastructure and premier last-mile delivery network. With these substantial investments completed, profit margins are swiftly improving. The company concluded the year with a profit margin shy of breakeven, laying the groundwork for profitable growth in the upcoming years.
Coupang and Home Depot demonstrate solid long-term potential, so investors can consider adding these stocks to their portfolios. With an undervalued e-commerce platform and a reliable income stock, these companies offer a balanced approach to investing. As the market recovers and these businesses continue to thrive, there is a likelihood of substantial growth in the years to come.
