Stocks rose last week, as both the Dow Jones Industrial Average and the S&P 500 gained close to 2%. The uptick pushed the S&P further into positive territory this year, up 4%, while the Dow is still down 3% since the start of 2020.
A few widely followed stocks will announce operating results over the next few trading days, including Domino’s Pizza (NYSE: DPZ), Levi Strauss & Co. (NYSE: LEVI), and Costco Wholesale (NASDAQ: COST). Let’s look at the key trends that might send their stocks moving this week.
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Domino’s market share
Domino’s steadily won market share in the 10 years ending 2019, and sales this year have been further supercharged by the COVID-19 pandemic. But investors are still looking for some potential weak spots in Thursday’s earnings report.
Peers across the restaurant industry are pouring resources into home delivery as consumers avoid crowded dining rooms. Rival Papa John’s International has been making an aggressive push for market share too, with sales rising by more than 20% in recent months.
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We’ll find out this week whether Domino’s fended off those challenges and potentially accelerated domestic comp sales growth from its 16% expansion rate in the company’s second fiscal quarter, which coincided with the early months of the pandemic from mid-March to mid-June. The chain will also reveal whether its international segment, which hardly grew in the second quarter, kept its 106-quarter expansion streak alive in the third quarter.
Finally, look for CEO Ritch Allison to trumpet Domino’s industry-leading cash efficiency metrics, which should help it maintain a large store network even as many other national chains look to cut store locations.
Levi Strauss’ inventory
Gallery: 15 Stocks to Buy and Hold for Decades (The Motley Fool)
It’s been an up-and-down year for investors
2020 has been a year for the books. The stock market has set records for both its highest and lowest closes this year.
With cautious hope in the air concerning a COVID-19 vaccine, mixed investor consensus regarding the upcoming election’s potential impact on the stock market, and the general market volatility, it’s understandable if you’re uncertain which companies are most deserving of your hard-earned cash.
Here are 15 companies that fit the bill and could help you to retire rich.
5 Winning Stocks Under $49We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.
1. Eli Lilly
In business since 1876, Eli Lilly (NYSE: LLY) is a stalwart in the pharmaceutical industry. Despite the market’s plunge into depths of bear market territory in March, the stock dipped only slightly. Shares of the company are now up about 16% from January. The company pays a dividend yield of 1.9%.
Even though Eli Lilly noted a 2% decline in revenue in the second quarter of 2020 (which ended on June 30), it reported 6% volume growth. The company’s revenue in the first six months of the year was also up 6% from the first half of 2019. Eli Lilly has a broad portfolio of profitable products, with key revenue drivers including Type 2 diabetes medication Trulicity, fast-acting insulin Humalog, and chemotherapy drug Alimta. In Q2 2020, these products brought in revenues of $1.2 billion, $555 million, and $539 million, respectively.
The company is working on a few potential antibody treatments for COVID-19, including one candidate called LY-CoV555 with AbCellera and another called LY-CoV016 that it’s developing with Chinese company Junshi Biosciences. LY-CoV555 is currently being studied in a phase 2 clinical trial. The candidate is also being evaluated in a separate phase 3 study spearheaded by the National Institute of Allergy and Infectious Diseases (NIAID) to target coronavirus prevention in long-term care facilities. Eli Lilly has concluded phase 1 dosing of LY-CoV016, its prospective antibody treatment with Junshi, and expects to progress the candidate to additional clinical trials in the near future.
ALSO READ: 4 Reasons Eli Lilly Stock Can Keep on Climbing
2. Apple
No list of stocks that you can buy and hold for decades would be complete without mentioning tech behemoth Apple (NASDAQ: AAPL). The company just wrapped up its fifth stock split since the company’s initial public offering (IPO)style=”text-decoration: underline”>. Because of this, shares of Apple are vastly more affordable right now than a few months ago. The most recent split, which occurred on Aug. 28, was a 4-for-1 splitstyle=”text-decoration: underline”>.
Not surprisingly, Apple’s balance sheet is looking excellent despite the pandemic. The company reported $58.3 billion in revenue in the second quarter of fiscal 2020 (ending March 28) and $59.7 billion in the fiscal third quarter (ending June 27). Demand for its products has continued to soar, particularly in its services and wearables divisions. Apple boosted its earnings per share (EPS) by 18% in the third quarter. The company closed that fiscal period with a whopping $16.3 billion in cash.
3. Alphabet
Shares of tech conglomerate Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) are up about 13% from the beginning of the year and roughly 29% from this time last year.
Alphabet reported a 13% increase in revenue in the first quarter of 2020, driven by its cloud, YouTube, and search properties. Even though the company’s revenue was down very slightly in the second quarter of this year ($38.3 billion compared with $38.9 billion in Q2 2019), its core businesses continue to flourish, boosted by its ads and Google Cloud segments. Alphabet closed the second quarter with over $278 billion in assets and outstanding liabilities totaling a little more than $71 billion.
4. Amazon
Another household name, Amazon (NASDAQ: AMZN) saw its shares slide slightly in the March crash, but they’re now up 72% from the beginning of the year. The company reported showstopping second-quarter results on July 30. Net sales were up 40% in the quarter at $88.9 billion, and the company boosted its operating cash flow by 42%.
Amazon also reported that it expanded its grocery delivery capacity by more than 160% in Q2 2020 and put more than $9 billion into capital projects during that three-month period. The company expects between 24% and 33% net sales growth in the current quarter alone.
5 Winning Stocks Under $49We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.
5. Facebook
The fourth FAANG stockstyle=”text-decoration: underline”> to make it to the list of companies you can buy and hold for decades, Facebook (NASDAQ: FB) has continued to flourish with minimal impact from the pandemic. The stock has gained 45% over the trailing 12 months.
Facebook achieved an 11% surge in revenue in the second quarter of this year to the tune of $18.7 billion. The company reported a 12% year-over-year increase in daily active users in June and a 12% year-over-year increase in monthly active users by June 30. Facebook had nearly $58 billion in cash on its balance sheet at the end of the second quarter, with total liabilities of $29.2 billion.
ALSO READ: Why Facebook’s Doubling Down on E-Commerce
6. Thermo Fisher Scientific
Life science company Thermo Fisher Scientific (NYSE: TMO) has had a fantastic 2020. The stock has been one of the highest-performing healthcare stocks in the S&P 500 this year and is up about 29% since January.
The company reported revenue up 2% in the first quarter of the year and 10% in the second quarter. In Q2, it boosted its diluted EPS on the basis of generally accepted accounting principles (GAAPstyle=”text-decoration: underline”>) by 5%. Thermo Fisher develops and manufactures a range of products including safety supplies and lab equipment. The company has also been at the forefront of COVID-19 testing with its TaqPath reverse transcription polymerase chain reaction (RT-PCR) diagnostic kit. It reported that roughly $1.3 billion of its $6.92 billion revenue in Q2 stemmed from coronavirus-driven sales.
7. Colgate-Palmolive
With a family of household and consumer product brands including Hill’s Pet Nutrition, Softsoap, and Tom’s of Maine, it’s no wonder that Colgate-Palmolive (NYSE: CL) has kept well above water since the coronavirus pandemic began. The stock is still relatively cheap. Shares of the company have pretty much stayed in the ballpark of $70 to $79 since the end of May.
Colgate-Palmolive reported 5.5% sales growth in Q1 2020 and a lesser increase of 1% in the second quarter. The company holds a significant share of the global toothpaste and manual toothbrush markets, at 40% and 31%, respectively. When you consider that the toothpaste market alone is expected to achieve a valuation of $21.6 billion by 2025, these figures are impressive.
One of the most attractive aspects of this stock, however, is its dividend. Colgate-Palmolive pays a yield of about 2.3%. While you might not think that’s worth jumping for joy over, the stock’s track record of raising its dividend is the real prize. Colgate-Palmolive has raised its dividend each year for the last 57 years, which makes it a Dividend King, a title that few stocks achieve. In order to be a Dividend King, a company must increase its payout for at least 50 years in a row.
8. Costco
While some consumer stocks have taken a massive hit due to the pandemic, Costco‘s (NASDAQ: COST) wholesale club business model has enabled it to maintain its profitability — and its dividendstyle=”text-decoration: underline”>. The stock has gained 20% since the beginning of the year. Although its 1% dividend yield is far lower than the average stock in the S&P 500, the company’s balance sheet and cash flow are attractive buying points.
Costco runs nearly 800 warehouses globally, with the lion’s share of those located in the U.S. and Puerto Rico. In the third fiscal quarter ending on May 10, the company reported a 7.3% increase in its net sales to $36.5 billion. It reported cash and cash equivalents amounting to $10.8 billion at the close of fiscal Q3.
9. Procter & Gamble
Another leading multinational consumer goods company, Procter & Gamble (NYSE: PG) has seen its fair share of economic roller coasters since it’s been in business. Founded in 1837, the company now boasts a market valuation that surpasses $347 billion. The large-cap stock pays a dividend yield of 2.3%. The company is also a Dividend King, having raised its dividend for 64 consecutive years.
P&G’s varied portfolio of brands is hard to beat — Pampers, Downy, Tide, Bounty, and Charmin are just a few of its many household names. When the company released its financial results for fiscal 2020 on July 30, it reported organic sales growth of 6% and core EPS growth of 13%. Given the months of widespread lockdowns, it’s not surprising the company’s e-commerce sales grew by 40% in the fiscal year.
ALSO READ: Where Will Procter & Gamble Be in 5 Years?
10. Lowe’s
Lowe’s (NYSE: LOW) definitely wasn’t immune to the market’s dip in March, but shares have jumped back to normal and are now up 33% from January. A well-known Dividend King, the stock currently yields 1.5% for investors.
The company has seen massive growthstyle=”text-decoration: underline”> this year. A June survey of hundreds of homeowners conducted by Consumer Specialists found that 57% of respondents did home improvements in the period between March and May. This explosive increase in home-improvement projects has doubtless made a significant contribution to Lowe’s earnings growth this year. The company reported its U.S. sales were up 12.3% in the first quarter of this year. In the second quarter, Lowe’s reported 35.1% sales growth in the U.S., while sales on Lowes.com were up 135%. Lowe’s achieved diluted EPS growth of 75% in Q2 2020.
5 Winning Stocks Under $49We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.
11. Lockheed Martin
A leader in aerospace and defense technology, Lockheed Martin (NYSE: LMT) is another stock that you can buy and hold in your portfolio for decades to come. As the largest defense contractor bar none, the company has seen its balance sheet stay strong during the pandemic. It recently inked a $62 billion contractstyle=”text-decoration: underline”> to manufacture an indeterminate quantity of F-16 fighter jets for U.S. allies over the next decade. A single F-16 fighter jet can cost anywhere from $12 to $35 million.
In the most recent quarter, the company reported net sales totaling $16.2 billion, up 13% compared with Q2 2019. Lockheed Martin anticipates achieving annual sales between $63.5 billion and $65 billion this year. The company pays a dividend that currently yields about 2.5%.
12. Vertex Pharmaceuticals
Another major winner in the S&P 500 this year, Vertex Pharmaceuticals (NASDAQ: VRTX) is up about 20% since early January. It manufactures drugs for cystic fibrosis and is the dominant leader in that industry with close to 50% market share as of 2019. The company reported a 62% increase in its product revenue in the most recent quarter ending on June 30. Its four approved products –Trikafta, Symdeko/Symkevi, Orkambi, and Kalydeco — amassed Q2 earnings of $918 million, $172 million, $232 million, and $203 million, respectively.
13. Lam Research
Lam Research (NASDAQ: LRCX) makes semiconductor processing equipment. Shares of the company are down slightly from January but have risen by nearly 30% over the past 12 months. The stock currently trades around 20 times earnings, and it pays a yield of about 1.7%.
In the company’s most recent earnings report, which it released for the quarter concluding on June 28, Lam reported $2.8 billion in revenue with GAAP gross margin of 46%.
ALSO READ: Like Apple? Then You’ll Love These 4 Stocks
14. DocuSign
From providing enhanced convenience and an added layer of safety for confidential documents to the obvious environmental benefits, it’s no wonder that e-signature company DocuSign (NASDAQ: DOCU) flourished during lockdowns as employees around the world found themselves working remotely. Electronic signatures are the way of the future, and the clamor for remote-based jobs has only boosted that premise in the months since the pandemic began.
DocuSign reported its financial results for the second fiscal quarter of 2021 on Sept. 3. During the quarter, the company noted a 45% increase in its total revenue compared with the second fiscal quarter of 2020, as well as a 61% increase in billings. DocuSign’s revenue from subscriptions was also up 47% in the quarter.
15. Sysco
Last but not least is Sysco (NYSE: SYY). The food distribution company certainly took a hit by widespread restaurant closures due to the pandemic, with both sales and gross profits decreasing by double digits in fiscal 2020. In the company’s full-year fiscal 2020 earnings report, Chief Executive Officer and President Kevin Hourican stated, “With concerted effort, we have continued to manage through the COVID-19 pandemic by leveraging our salesforce to drive incremental business and actively prepare for the return of food-away-from-home demand.”
It will likely take some time for its operations to fully recover from the impact. But long-term investors can still find plenty of upside with this stock. The company makes the short list of Dividend Kings and has raised its payout every year for 50 consecutive years. The stock yields 2.9% at the time of this writing.
5 Winning Stocks Under $49We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.
Planning for the future
Now more than ever, it’s important to diversify your basket of stocks with companies that you can rely on to help grow your portfolio — not for just a few years, but for decades to come. While some of the companies on this list may be facing short-term headwinds from the pandemic, these established players in the stock market could provide strength and balance to your portfolio for the next 20, 30, 40, or even 50 years.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors.Rachel Warrenstyle=”text-decoration: underline”> has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Apple, DocuSign, Facebook, and Lam Research. The Motley Fool recommends Costco Wholesale, Lowe’s, and Vertex Pharmaceuticals and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. The Motley Fool has adisclosure policystyle=”text-decoration: underline”>.
17/17 SLIDES
Investors aren’t expecting much good news from Levi Strauss on Tuesday. The jeans maker was slammed by retail closures during COVID-19 shutdowns in its second fiscal quarter, with sales and profitability diving. Levi Strauss generated a net loss of $364 million in the three-month period that ended in late May, in part due to the writedown of lots of excess inventory.
There could be more charges ahead to adjust to new realities in the apparel industry. Investors also might see persistently weak revenue into 2021 that pressures the company’s earnings power. Look for hints of that softness in management’s comments about the upcoming holiday shopping season.
On the bright side, CEO Chip Bergh and his team are using the crisis to dramatically reshape Levi’s cost structure and position it better for e-commerce fulfillment. Those changes could help the business long after the COVID-19 threat disappears.
Costco’s September sales
It’s been only about a week since Costco announced earnings results, but investors are already set for another key update from the warehouse giant this week. Costco will publish its monthly sales report after the market closes on Wednesday, showing whether the retailer maintained its impressive growth momentum.
Adjusted comparable sales rose 14% in the quarter that ended on Aug. 30, which edged past Walmart‘s most recent results but trailed the Q2 performance of BJ’s Wholesale. Expectations are high that Costco can continue attracting plenty of traffic to its stores and its online platform, especially since its membership renewal rate in the U.S. and Canada remains near a record high at 91%.
Wednesday’s report won’t include subscriber metrics or fresh data about Costco’s earnings. But another month of double-digit sales growth will imply further profit gains that the retailer can use to pad its lead in the industry by cutting prices.
Demitri Kalogeropoulos owns shares of Costco Wholesale. The Motley Fool recommends Costco Wholesale and Domino’s Pizza. The Motley Fool has a disclosure policy.
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