As the financial markets gear up for what appears to be the next bull market -- a period characterized by rising stock prices and widespread optimism -- astute investors are on the lookout for stocks that appear ready to flourish.
In this evolving landscape, three standouts, Shopify (SHOP -1.38%), Home Depot (HD -0.87%), and Carnival Corp. (CCL -0.12%), deliver unique strengths and growth potential. Discover what might just make these companies no-brainer picks in the emerging bull market.
1. Shopify: Navigating the e-commerce surge
Shopify's revenue comes primarily from businesses subscribing to its platform for setting up and managing online stores. The company also makes money from add-on services, including payment processing and shipping, revenue that grows as merchants' sales increase. This diversified revenue strategy not only secures a steady income foundation, but also opens doors to revenue growth as its community of merchants flourishes.
The digital commerce juggernaut most recently delivered an impressive gross merchandise volume (GMV) of $56.2 billion in the third quarter. This metric, which quantifies the total sales value processed through the platform in that period, offers a sign of Shopify's widespread market influence and a barometer of the company's health.
Shopify also reported a 25% revenue increase in the same quarter, underscoring its growing customer base and continued market expansion. The company moved from an operating loss of $346 million last year to a quarterly gain of $122 million, highlighting Shopify's ability to shore up its operations in its quest for lasting profitability amid aggressive growth.
Shopify is a growth engine that shows it can navigate the profitability path in the bullish market ahead.
2. Home Depot: A resilient home improvement leader
Home Depot earns its revenue through the sale of home-improvement products and services, catering to DIY enthusiasts, contractors, and tradespeople. Offerings range from essential building materials to garden products and supplies.
This behemoth in the home improvement sector currently demonstrates a story of resilience and strategic prowess. Despite a slight 3% year-over-year decrease in sales to $37.7 billion in the third quarter, the company's financial health remains robust. This sales figure, though slightly down, still reflects the substantial size of Home Depot's operations and its ingrained position in the market.
Home Depot's net earnings of $3.8 billion in the same period fell within expectations for the company, according to CEO Ted Decker. Its operating margin rate, projected to fall between 14.2% and 14.1%, failed to budge from earlier predictions. This points to a company that still knows how to convert revenue into profits -- a crucial skill in any economic climate, especially a bullish one.
Home Depot represents a blend of stability and adaptability. The company's ability to maintain expectations of operational margins even in the face of sales headwinds speaks volumes about its operational success and experience.
Home Depot not only hints at a return to steady growth but also offers a semblance of security in the volatile market landscape of a bull run, and that's without getting into its current 2.3% dividend yield.
3. Carnival: Sailing toward profitable horizons
Carnival Corp's cruise line operations deliver most of its revenue. Sources include ticket sales for various cruise experiences and onboard purchases like food, entertainment, and excursions. Catering to diverse market segments with its multiple cruise brands, Carnival taps into a wide customer base.
Carnival Corp.'s story tells of remarkable turnaround and potential. The cruise line most recently reported record fourth-quarter revenue of $5.4 billion, indicating continued recovery from pandemic woes and an ability to capitalize on the pent-up demand in the travel sector.
Additionally, Carnival's net per diems suggest enhanced pricing power alongside consumer willingness to spend, beating even pre-pandemic performance. However, the company also reported an adjusted net loss of $90 million for the quarter, showing consistent profitability remains elusive.
In a bull market, Carnival Corp. also emerges as a compelling growth play. The high revenue and strong per diem rates indicate a company on the upswing, harnessing the recent travel boom. Yet the net loss serves as a reminder of the challenges still ahead.
Carnival, therefore, presents a potential high-reward investment, albeit one with considerations of the associated risks in the evolving travel industry.
Strategic picks in a rising market
In the dynamic arena of a bull market, Shopify, Home Depot, and Carnival Corp. emerge as strategic picks, each with its unique narrative. From Shopify's e-commerce dominance and Home Depot's operational resilience to Carnival's recovery-driven growth, these stocks offer a blend of potential, stability, and adaptability.
These companies appear to present smart moves for investors looking to make the most of the upcoming bull run, if not total no-brainers, as building a diverse portfolio featuring high-quality companies remains the best method of generating wealth over time.
