4 Stocks Worth Buying Again
Demitri is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
I'm willing to bet that you’ve got a few winners in your portfolio at the moment. And that maybe you’re looking at some unrealized gains, wondering whether it’s time to start realizing them. After a run like the market’s had lately, that’s a familiar perch for many investors. And it’s a great problem to have.
But I’ll leave the “taking a profit never hurt anyone” argument for another time. There's no shortage of advice out there telling people to cash out their gains. For today, I want to take the opposite tack: that now is as good a time as ever to add to your positions in successful companies like the ones below.
In no particular order, here are five of this year's winners that I think still have plenty room left to run:
Ebay (NASDAQ: EBAY) - Never mind the company's modern new look; Ebay is up to its old, profitable ways. This online marketplace provider booked a 23% surge in revenue last quarter, powered by strong results at its wildly popular PayPal service. Ebay's growth is more robust than in those heady, triple-digit-PE bubble days that the company is leaving behind. But investors can snatch up shares at just 18 times earnings now, even after the 65% run up so far this year. That makes this high-flyer easily worth another bid in my book.
Costco (NASDAQ: COST) - This warehouse retailer, on the other hand, is more expensive on a P/E basis than it has been for years thanks to a 25% rise in the shares lately. But that's not a good reason to disqualify it as an option for new investment. As this chart illustrates, the company's revenue has grown much faster than its earnings multiple has. That tells me that the company's valuation hasn't gotten away from the business fundamentals at all.
With comparable sales growth last quarter of over 5%, and plans to open an additional 6 warehouses in 2012, Costco looks set to continue this sales momentum well into the future. So if you didn't buy into this stock in bulk the first time, its not too late.
Diageo (NYSE: DEO) - Shares of this alcoholic beverage company look frothy at a glance -- up over 27% this year and now valued at over 20 times trailing earnings. But Diageo, owner of 8 of the world's top 20 spirits brands along with the big league beer brand, Guinness, has the profits to back it up.
The company hit gold recently with strong sales of its super premium brands in the U.S. And Diageo also saw huge growth in its more affordable brands targeted to rising middle class incomes in emerging markets. That's a testament to the company's broad global reach that hits the whole spectrum of market price points. And it's the type business dominance that's worth paying a premium for.
Disney (NYSE: DIS) - It isn't often that you see a 90 year old company gain 40% in market cap in ten months. But that's just what this entertainment powerhouse managed so far in 2012. Disney is undeniably firing on all cylinders, with more revenue pouring in from the movie studios segment thanks to the blowout success of The Avengers. Those profits joined increasing ESPN ad buys, and greater guest spending at theme parks and resorts to power a 31% growth in earnings for the last quarter.
And that's just the start. Disney can look forward to a boost in holiday season merchandising that's keyed off of the new Avengers brand. And major investments in theme parks -- including in Avatar Land at Animal Kingdom and in Magic Kingdom -- should begin paying off with still better attendance figures and guest spending counts. Already a staple in many portfolios, Disney is still a great place for new money.
If these quality businesses haven't made it into your portfolio yet, there's no reason that their success should discourage you from buying into any of them. And if you already own winners like these, maybe it's time to add to your position.
SigmaSwan owns shares of Walt Disney and Costco Wholesale. The Motley Fool owns shares of Costco Wholesale and Walt Disney. Motley Fool newsletter services recommend Costco Wholesale, Diageo plc (ADR), eBay, and Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.