The S&P 500 has surged over 11% to start the year, driven by growth from the likes of Netflix (NFLX - Free Report) and other giants. Still, no matter how long the comeback lasts, it is always a good idea to search for strong companies that are poised to run impressive businesses for years to come. With that said, we have highlighted three blue-chip powers that look like buys at the moment.
1. Walmart (WMT - Free Report)
Walmart is coming off a stronger-than-projected Q4 of fiscal 2019. The retailer posted 40% full-year e-commerce growth and 3.6% full-year U.S. comps expansion, which highlighted its online grocery pickup business, digital initiatives, and other newer offerings. Looking ahead, Walmart projects that its e-commerce sales will climb around 35% as it adds 1,000 new grocery pickup locations in fiscal 2020 to end the year with 3,100. The company also expects to double its grocery delivery locations to 1,600.
Walmart, like competitors Kroger (KR - Free Report) , Costco (COST - Free Report) , and Target (TGT - Free Report) , has pushed into the future of retail to better compete against Amazon (AMZN - Free Report) . The company’s earnings are projected to slip this year, weighed down by its Flipkart investment, which could prove vital down the line as India’s economy grows. Meanwhile, our current Zacks Consensus Estimate calls for Walmart’s top-line to climb 2.7% this year, with fiscal 2021 revenues projected to come in 3.2% above our current-year estimate.
Walmart is a Zacks Rank #2 (Buy) at the moment that sports a “B” grade for Growth in our Style Scores system. WMT stock is trading at 20.6X forward 12-month Zacks Consensus EPS estimates, which marks a discount compared to its three-year high of 23.8X. And Walmart is a dividend payer that has raised its quarterly cash payout every year since first declaring one in March 1974.
2. Nike (NKE - Free Report)
Nike’s North American revenues surged 9% last quarter to help its fiscal second quarter 2019 revenues jump 10% to $9.37 billion. The sportswear behemoth has returned to growth in its key home market—unlike Under Armour UAA—with the help of its successful direct-to-consumer push. The Oregon-headquartered company has rolled out multiple e-commerce apps and its sportswear and athleisure offerings have helped it remain an industry standout against the likes of Adidas (ADDYY - Free Report) and Lululemon (LULU - Free Report) .
Last quarter, NKE’s digital revenues surged 41%, with mobile accounting for over 50% of its digital commerce revenue. CFO Andy Campion expects its digital division will comprise 30% of Nike’s total business by 2023, compared to roughly 15% last quarter. Nike’s fiscal 2019 revenue is projected to pop 7.5%, with 8% growth expected in fiscal 2020. Meanwhile, the company’s EPS figure is expected to jump 8.6% this year. Better yet, Nike’s adjusted 2020 earnings are projected to climb 18% above our current-year estimate.
Nike looks poised to expands its digital and DTC business, remain strong in North America, and continue to expand in China. Nike is currently a Zacks Rank #2 (Buy) and has seen its stock price climb 15% this year to hit new highs. Nike is also a dividend payer that boasts a beta of 0.7, which means it is less volatile than the market average.
3. Facebook (FB - Free Report)
Facebook’s 2018 setbacks are well known. Yet, in spite of all its user data worries, the social media firm’s global monthly active user total climbed 9% in Q4 to reach 2.32 billion. FB stock has also regained momentum recently, with shares up over 31% in 2019. Looking ahead, Mark Zuckerberg’s company expects Instagram to become more popular, as its Stories feature helps make Snapchat (SNAP - Free Report) less relevant.
Facebook has also invested in its Marketplace platform, augmented reality, and its dedicated video offering known as Facebook Watch. Facebook’s revenue growth is projected to slow down as the law of large numbers catches up the firm. Still, FB’s Q1 revenues are projected to jump 25% to reach $14.96 billion, with fiscal 2019’s top-line expected to expand by 23.3% to hit $68.89 billion. At the bottom end of the income statement, Facebook’s earnings estimate revision activity has trended significantly upward recently to help it earn a Zacks Rank #2 (Buy).
In the end, Facebook, like Google (GOOGL - Free Report) , will remain highly attractive to marketers as non-ad supported platforms such as Netflix and Amazon Prime make consumers more difficult to reach. FB stock is trading at just 22X forward Zacks earnings estimates, which marks a discount compared to its industry’s 25.8X average and its own three-year high of 44.3X. On top of its impressive valuation picture, Facebook stock sits 22% below its 52-week high, to give FB shares plenty of room to run.
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