Investing in brands that people use regularly is a simple and effective way to grow your retirement savings. To give you some ideas, three Motley Fool contributors think now is a great time to buy shares of Starbucks (NASDAQ: SBUX), Airbnb (NASDAQ:ABNB)And Walt Disney (NYSE: DIS)Let’s find out more about these opportunities.
Buy the dip at Starbucks
John Ballard (Starbucks) : Buying shares of industry-leading companies when they are on sale can pay off in the long run, and the stock market offers a great opportunity to invest in the world’s largest coffee chain at a discount. Starbucks shares are down 17% year to date, but long-term growth in the coffee market will ultimately benefit this exceptional brand.
The stock has underperformed this year due to weakness comparable store sales. Starbucks reported a year-over-year decline in its global component sales during the fiscal second quarter ending in March. This decline was most pronounced in China, where product sales fell 11%.
Growing competition, as more coffee brands compete on price, is primarily responsible for the weak sales. However, instead of competing on price and hurting profits, Starbucks is focusing on its premium brand positioning to differentiate itself from the rest of the pack. This will benefit the company in the long run.
According to Statista, the out-of-home coffee market is expected to grow 17% to $437 billion by 2028. One of Starbucks’ biggest assets is its customer loyalty program, which had 32.8 million 90-day active members in the most recent quarter, a 6% increase from the previous year.
Wall Street analysts expect the company’s earnings per share to grow by 11.8% over the next few years. With the stock trading at a reasonable 22 times this year’s earnings estimates, investors can expect the stock price to keep up with the company’s earnings growth in the years to come.
A new travel leader
Jennifer Saibil (Airbnb): Airbnb has become a mainstream alternative to hotels and, in many ways, has disrupted the entire travel industry. This gives it a certain “stickiness,” and unlike many buzzy disruptors that have come and gone without a trace, Airbnb is joining the ranks of travel leaders.
Sales growth has slowed from the triple-digit percentages it posted in 2022 and part of 2023 as it rebounded from the worst of the pandemic, but Airbnb is demonstrating continued relevance and resilience by maintaining double-digit revenue growth. Sales increased 18% year over year in the first quarter of 2024, although the comparison to the first quarter of 2023 was tough. The company has also been consistently profitable, with both net income and free cash flow growing. Net income was $264 million with a 12% margin in the first quarter and generated $1.9 billion in free cash flow.
Airbnb operates an asset-light model, meaning it benefits from low-cost growth. Listings were up 15% year over year in the first quarter, and while it has marketing spend to attract new hosts to join its platform, many of its listings come from current hosts who have created a lucrative business by hosting multiple rentals through Airbnb.
It is very difficult for traditional hotel companies to compete with Airbnb’s model. For example, it was uniquely positioned to take advantage of the recent total solar eclipse, which was best observed in several U.S. cities where there aren’t many hotels. It offers rentals in parts of the world that are otherwise difficult to visit, and it makes life easier and cheaper for visitors who want to rent for several weeks at a time or even live in Airbnb rentals.
She always finds new areas to invest in. Recently, it has focused on its mobile application. It is launching experiences that “integrate” into the application and has just rolled out collaboration tools allowing groups to book together. There are many ways to maintain growth for the foreseeable future.
Airbnb will soon report its second-quarter results, and the stock is already climbing on high expectations. Expect it to jump with a strong earnings report.
A great brand at a solid price
Jérémy Bowman (Disney): It’s hard to imagine a stronger consumer brand than Disney. The name has been synonymous with family entertainment for a century, including animated films, television, theme parks, live shows and consumer products like toys.
Disney benefits from an unparalleled consumer products flywheel that allows it to monetize the same piece of intellectual property over and over again, and its ownership of ESPN gives it a leadership position in sports entertainment.
Lately, that hasn’t been enough to make the stock a winner, but that could change soon. Disney fell in its earnings report in May after saying it expected streaming profits to be weaker in the current quarter, but that’s exactly the kind of behavior that can lead to reversals on the results of the following quarter.
While investors seem to be demanding more consistent earnings growth from the streaming division, they’re missing the bigger picture at Disney. The company reported its first-ever profit in its direct-to-consumer division in the fiscal second quarter and is forecasting full-year adjusted earnings per share growth of 25%. Earnings should continue to grow from here.
Disney has also consistently beaten Wall Street estimates, meaning the stock is likely even cheaper than the 19 price-to-earnings (P/E) ratio it’s trading at based on 2025 estimates.
As Disney’s streaming segment finally reaches profitability, earnings growth could also accelerate from here as the decline in its linear network division becomes less significant. That means investors could expect at least a few years of strong profit growth from the entertainment giant.
Disney will likely face some challenges in July as the Olympics sap viewers from ESPN and its other channels, but if you look longer term, it seems like a good time to buy because the price is right and l Momentum is likely to build from here. .
Should you invest $1,000 in Starbucks right now?
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Jennifer Saibil holds positions in Airbnb and Walt Disney. Jeremy Bowman holds positions in Airbnb, Starbucks and Walt Disney. John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Airbnb, Starbucks, and Walt Disney. The Motley Fool has a disclosure policy.
Top 3 Stocks to Buy in July was originally published by The Motley Fool
