THE bull market raged throughout the first half of 2024; S&P 500 The index is up 16% year-to-date and hitting new highs. But there are still plenty of stocks that could see a near-term upside.
These three Motley Fool contributors see more upside for Carnival (NYSE: CCL), Roku (NASDAQ: ROKU)And Amazon (NASDAQ: AMZN)Here’s why they think these top stocks are timely buys in July.
This travel action is about to reach new heights
Jennifer Saibil (Carnival): Carnival is coming off a rebound year in which it absolutely crushed the market, gaining 130%. You would think it would have to perform very well to maintain that level, and so far, so good.
The market seems to have had enough, and Carnival shares are trading down 6% this year. But as they continue to beat expectations, they shouldn’t stay down for long.
Management provided an excellent update for the third fiscal quarter of 2024 (ended May 31), with many metrics reaching new highs, including customer deposits and booking levels.
Second-quarter revenue reached a record $5.8 billion and operating income was five times higher than last year. The group reported a positive net income of $92 million, $500 million more than last year. Management has revised upwards its forecast for the full year.
Some worry that Carnival’s incredible rebound is a short-term reaction to the cruise closures, but demand remains strong and customers are booking through 2025. In a classic example of supply and demand, Carnival has been able to charge high prices due to high interest rates and low inventories for extended periods. That’s helping it move toward higher profitability and wipe out more of its debt, which remains high. But it seems quite likely that it will be able to pay it down over the next few years and return to a strong financial position.
Management is taking a number of steps to improve the business, and not just from a financial perspective. It is investing in the passenger experience with better connectivity and celebrity performance. It has upgraded its scheduling software and is strategically streamlining its fleet to use its resources efficiently.
These are the types of stocks that should generate increased demand, increased sales, and sustainable profits. With Carnival stock still down year-to-date, investors can look forward to a rebound in the second half of the year.
This oversold stock looks set to make a comeback
Jeremy Bowman (Roku): As the S&P 500 continues to climb to all-time highs, the streaming sector is lagging behind. Entertainment giants like Walt Disney And Discovery of Warner Bros. Roku shares are still down substantially from their previous highs, and Roku shares are down nearly 90% from their peak at the height of the pandemic.
The industry has been in a brutal correction after a pandemic boom, but there are signs that the correction may be coming to an end. Disney just reported its first profitable quarter in streaming, and a merger between Paramount Global and Skydance could also help ease some of the competitive pressure in the sector. At the same time, digital advertising has started to recover after a sharp decline during the pandemic.
All of these developments are good news for Roku. Shares of the streaming leader have fallen as its path to profitability under generally accepted accounting principles (GAAP) looked uncertain and revenue growth slowed after a spike during the pandemic, but the company’s underlying metrics remain strong.
Streaming hours increased 23% year over year in the first quarter to 30.8 billion, and the number of streaming households increased 14% to 81.6 million, showing the company continues to rapidly gain new customers. Revenue also increased 19% year over year to $881.5 million, and the company reported its third consecutive quarter of adjusted profitability in terms of earnings before interest, taxes, depreciation and amortization.
Roku has struggled as its media partners cut back on ad spending amid industry challenges, but that should start to change as streaming platforms take steps to become profitable and launch new products, like the flagship streaming network ESPN, which is set to launch next fall.
As Roku grows its user base and revenue, and the stock price remains low, the buying case strengthens. As business conditions improve, financial results and the stock price should respond accordingly.
Investors should stick with this winner
John Ballard (Amazon): Amazon stock has doubled the S&P 500’s 24% return over the past 12 months by rising 51%. The stock just hit a new high, which could be a harbinger of what’s to come in the second half of 2024.
Improving profitability has been a major focus for Amazon over the past year. The company has been working to expand its competitive advantage in e-commerce by expanding its product selection while cutting costs. That has helped improve sales momentum in its online retail stores, but more importantly, the cost-cutting has helped its operating profit triple from the same quarter last year, to $15 billion.
It’s no surprise to see Wall Street analysts being bullish on Amazon. For example, Wells Fargo The bank expects to report better-than-expected financial results in its upcoming earnings report. It raised its price target on the stock to $239 from $234, implying a 21% upside from the current share price of $197.
According to Wall Street consensus estimates, Amazon’s earnings per share will grow 23% annually over the next few years. If that estimate holds, that would be enough to potentially double the stock price over the next four years.
Should You Invest $1,000 in Carnival Corp. Right Now?
Before you buy Carnival Corp. stock, consider the following:
THE Motley Fool, Securities Advisor The team of analysts has just identified what they believe to be the 10 best stocks Investors should buy now…and Carnival Corp. wasn’t one of them. The 10 stocks we picked could deliver monstrous returns in the years to come.
Consider when Nvidia I made this list on April 15, 2005… if you had $1,000 invested at the time of our recommendation, you would have $771,034!*
Securities Advisor provides investors with an easy-to-follow blueprint for success, including portfolio building advice, regular analyst updates and two new stock picks each month. Securities Advisor the service has more than quadrupled the return of the S&P 500 since 2002*.
*Stock Advisor returns as of July 2, 2024
Wells Fargo is an advertising partner of The Ascent, a Motley Fool company. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Roku, Walt Disney, and Warner Bros. Discovery. The Motley Fool recommends Carnival Corp. The Motley Fool has a disclosure policy.
3 Growth Stocks to Buy in the Second Half of 2024 was originally published by The Motley Fool