3 actions that could prepare you for life
2020 has been a pivotal year for new growth stocks and exciting IPOs. But while many of them are great companies that will deliver huge payouts to intrepid investors, some of the best investments are still proven industry leaders.
These top stocks have a well-established track record and the ability to continue to outperform over the long term. Nike (NYSE: NKE), Pay Pal (NASDAQ: PYPL), and Costco (NASDAQ: COT) are great companies to add to your portfolio.
The king of sportswear
Nike has been the leader in athletic footwear for decades, but with the rise of athleisure style and fashion, it has also become the leading clothing company in the United States. Sales fell 38% year-over-year during the early stages of the pandemic in 2020, but recovered quickly as the company saw 9% growth in its fiscal second quarter ( completed November 30).
But there is more growth to come for the sportswear giant. Nike sees itself as a digitally-driven company, and CEO John Donahoe, who took the helm last year, has a background in technology, having previously been CEO of eBay. He now has a powerful digital program that he leverages to build community among Nike customers, change the way consumers interact with the brand, and drive sales in the process.
Nike made headlines in 2019 when it announced it would end its partnership with Amazon to focus on its direct-to-consumer (DTC) business, and this forward-thinking move turned out to be the right one as DTC continues to play an important role in the growth of the business. Nike DTC sales grew 32% in the second fiscal quarter, and digital sales increased 84%.
Donahoe summed it up when he said, “Fueled by compelling innovative products and global brand momentum, we continue to expand our leadership. Our strategy is working and we are delighted with what lies ahead. “
Nike stock has doubled in the past three years and pays a 0.8% dividend to generate a small income, while shareholders let the magic of capitalization do its work.
The leader in financial technology
Financial technology is a booming industry, and the domain was created by PayPal, the original digital payment service. For obvious reasons, the pandemic has been a huge tailwind for PayPal. In the third quarter ended September 30, total payment volume grew 36% year-over-year and revenue increased 25%, the strongest quarter in an already impressive history.
But the digital switchover is only in its early stages, and the company expects to see similar revenue and volume growth in the fourth quarter, not to mention the 70 million new active accounts the company will likely add to the during the year 2020. PayPal will release fourth quarter results on February 3.
At the end of the third quarter, PayPal had 361 million active accounts, compared to its competitor Square30 million monthly active accounts for its peer-to-peer payment service Cash App.
PayPal, however, faces stiff competition from traditional credit companies such as Visa and MasterCard to new fintechs like Square and To affirm. But he’s still leading the way, developing new partnerships and features, like buy now, pay funding later.
Its stock has gained nearly 200% over the past three years, and shareholders can expect more from the father of fintech.
A popular membership model
Groceries are one of the most important regular expenses for Americans, and average weekly grocery expenses increased during the pandemic from $ 163 to $ 190, according to a Loan tree investigation.
One of the beneficiaries of the extra spending was Costco, which saw sales increase 17% in its first fiscal quarter (ended November 22), even faster than at the height of COVID-19 lockdowns. . And the king of warehouse clubs did not miss the digital channel as its e-commerce revenues also jumped 86% in the first quarter.
Costco operates with a paid membership model, and the demand for memberships and the low prices that come with them are strong. Renewal rates are consistently around 90%, and dues alone hit $ 861 million in the last quarter. Members are also increasingly subscribing to executive memberships, which cost double the standard $ 60 membership fee.
The company posted these exceptional results despite several setbacks related to the pandemic. Costco operates several ancillary businesses, including travel and optical services, which are still not fully functional. He was also unable to obtain all of his supplies, including exercise equipment and some electronic devices.
Costco pays a quarterly dividend that pays 0.8% at the time of writing, but it also has a habit of paying special dividends, the most recent being last December at $ 10 per share. While Costco stock was the smallest among this industry-leading trio, stocks have still jumped over 80% in the past three years, and there is much more growth to come.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Questioning an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.