These companies have all grown quite huge, with more growth potential ahead. Consider investing in them while their prices are reasonable.
We all would like to get richer, and it's hard to beat the power of the stock market for accomplishing that -- at least, over long periods. The simplest, and for most people, the best way to invest in stocks is via one or more low-fee, broad-market index funds. They can really be all you need. But if you want to aim for higher returns and can stomach more risk, consider adding some individual stocks to your mix.
Here then are three stocks to consider for your long-term portfolio. Each has been a solid performer, has plenty of potential for further growth, and has a reasonable, if not attractive, recent valuation.
1. PayPal
PayPal (PYPL 0.75%) is a juggernaut in the fintech(financial technology) realm. With a recent market value topping $70 billion, PayPal recently boasted 426 million active consumer and merchant accounts, $1.53 trillion in total payment volume, and 25 billion payment transactions (as of the end of 2023). Most of us are quite familiar with PayPal, which lets us pay for things electronically, but you may not realize that PayPal is also home to the popular Venmo payment app, as well as the Braintree, Paidy, Hyperwallet, and Zettle businesses, among others.
In the company's fourth quarter, it noted that its active accounts were down in number, slightly, by 2%. That's not great, but the fact that its number of payment transactions grew 13% year over year, while transactions per active account grew by 14%, is certainly good. As that stalled accounts number suggests, though, PayPal is struggling a bit at the moment and expects the current year to be a transition year. There's reason to be hopeful about it, because it has a new CEO (from Intuit).
PayPal's 2024 may not be phenomenal, but this is an attractive entry point for long-term believers because the stock price is quite cheap. Its price-to-sales (P/S) ratio was recently 2.45, well below its five-year average of 4.91, and its forward-looking, price-to-earnings (P/E) ratio of 12.9 was well below the five-year average of 22.8.
PayPal offers no dividend, but it has been rewarding shareholders by buying back a lot of stock, thereby making each remaining share more valuable. This stock has the potential to grow a lot in the coming years.
2. Nike
Nike (NKE -0.30%) is another very familiar name, and it's looking undervalued, too, with a recent P/S ratio of 2.8, below its five-year average of 4.0, and a forward P/E of 24.4, below its five-year average of 32.
Why is Nike so appealingly priced? Well, its stock was recently down some 27% from its 52-week high in part because the company's growth is slowing and it's facing significant competition. Given that it's a $140 billion-plus business, it's understandable that it can't grow like gangbusters. Still, there's a lot to like about Nike, and its future is quite promising.
Nike is pinning high expectations on a renewed focus on the wholesale channel versus the direct-to-consumer channel it had been chasing. CEO John Donahoe has said, "We recognize that our wholesale partners help us scale our innovation and newness in physical stores and connect our brands in the path of the consumer."
Why consider Nike's stock? Well, its brand is top-notch, ranked No. 9 in the world by Interbrand, with an estimated value of nearly $54 billion. And Nike now owns the popular Converse brand, too. Support for Nike isn't unanimous, but bulls such as a Bank of America analyst like its chances of getting a tailwind from this summer's Olympics, as well as from product innovations.
3. Meta Platforms
Meta Platforms (META 2.28%) is not a familiar name to many people, but it should be, because it's the parent company of Facebook. Meta's market value recently reached an astonishing $1 trillion, and it encompasses not only Facebook but some other names you might know, such as Instagram, Messenger, and WhatsApp.
Meta's appeal lies largely in its massive scope. It recently boasted having more than 3 billion"daily active people" across its family of apps. That's up 7% from the year before. Its first quarter of 2024 also featured ad impressions across its apps up 20% year over year, and the average price per ad rose 6% as well. Overall revenue popped 27% for the quarter, while net income surged 117%.
If all that isn't exciting enough, the stock is also reasonably valued, with a recent forward P/E of 22, near its five-year average of 21, though its P/S ratio of 8.2 is above the five-year average of 6.5. What gives? Well, some investors are worried about the company's plan to spend heavily developing artificial intelligence (AI) technology and about growth possibly slowing.
But bulls love its massive scale, which can be monetized in many ways. Consider, for example, that via Facebook and Instagram's ability to let its users fundraise for charities, it has raised some $8 billion! Also, its heavy investments in research may well pay off, driving even more growth.
So consider any or all of these stocks for your long-term portfolio. And if these don't interest you, know that there are gobs of great companies out there, many of which are trading at appealing valuations.
Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Bank of America is an advertising partner of The Ascent, a Motley Fool company. Selena Maranjian has positions in Bank of America, Meta Platforms, and PayPal. The Motley Fool has positions in and recommends Bank of America, Intuit, Meta Platforms, Nike, and PayPal. The Motley Fool recommends the following options: long January 2025 $47.50 calls on Nike and short June 2024 $67.50 calls on PayPal. The Motley Fool has a disclosure policy.
