IIt is certainly possible for investors to become so obsessed with the relative price of a stock that they lose sight of the prospects of the underlying company. On the other hand, a strong company is an even better investment when you can hook into its stock at a below-average price.
Against that background, here’s a closer look at three companies with excellent long-term growth prospects, as well as stocks that are now too cheap for future retirees to ignore.
1. General dollar
It seems hard to imagine a retailer beating walmart at its own game. The world’s biggest big-box name faces a unique problem: it can’t build stores everywhere.
Walk in General dollar (NYSE:DG), which succeeds by doing what Walmart won’t or can’t: establish smaller stores in small communities where it’s not worth building a giant store. According to the most recent review of its reach, about three-quarters of Dollar General’s more than 18,000 stores are in cities with fewer than 20,000 people – markets that Walmart might not find large enough to warrant the expansion. establishment of a showcase.
Yet somehow, this collection of smaller stores and small markets still means that 75% of the country’s population lives within five miles of a Dollar General. In an environment where time is scarce and gas prices can stay perpetually high, driving several miles and then browsing through a sprawling Walmart store to buy just a few items becomes less appealing.
This idea is confirmed in the tax data of Dollar General. While same-store sales fell 2.8% last year due to the muted impact of the pandemic, this is a contraction of 2.8% from the huge improvement in 16.3% of same-store revenue in 2020. Additionally, same-store sales growth reached 4.2% in the first quarter of this year, prompting the discounter to raise its revenue growth forecast. revenues for 2022 at a range between 10% and 10.5%. Its same-store sales outlook fell from 2.5% to a range between 3% and 3.5%.
Inflation or not, these smaller, more convenient stores are a hit with consumers. That’s why the company plans to open more than 1,000 this year alone, many of which expand Dollar General’s reach outside of the United States. You can buy the stock when it is priced at less than 20 times projected earnings this year and less than 18 times expected net income next year.
It may be an iconic name, but Ford Motor Company (NYSE:F) is also considered a has-been by a group of investors. Combustion engines are a thing of the past. Electric vehicles (EVs) are the future, which favors names like Nio and of course, You’re here.
Before you put Ford aside for good, though, you might want to take a closer look at how well it’s suited to the inevitable future of mobility. Ford is aiming for 40-50% of its sales to be electric vehicles by 2030, and with $30 billion in funding earmarked for this effort, that goal doesn’t seem out of reach.
There will certainly be enough EV business to go around, even if Tesla maintains its current lead in the market. The US Energy Information Administration estimates that there will be 672 million electric vehicles on the world’s roads by 2050, up from just over 10 million today.
The company is also off to a good start on this front. April sales of Ford-branded electric vehicles rose 139% year-over-year on strong demand for the Mustang Mach-E – which replaced Tesla’s Model 3 as consumer reports preferred EV this year – and its electric vehicle sales growth accelerated to 222% in May, further boosted by demand for the all-electric F-150 Lightning which saw its first consumer deliveries last month. They still make up a relatively small share of Ford’s total revenue, but they seem to be the electric vehicles that many consumers have been waiting for.
Ford shares are priced at just 7.1 times expected earnings this year and 6.4 times estimated net income next year.
3. Goldman Sachs
Finally, add investment banking Goldman Sachs (NYSE:GS) to your list of cheap stocks that could help you retire even earlier than planned. Priced at less than nine times 2022 forecast earnings, there is plenty of room for this ticker’s valuation to rise.
Yes, those profits in question are expected to be about a third lower than net income in 2021, when the company’s investment banking business was booming. Consulting firm EY reports that last year’s IPO market hit a record 2,388 deals to raise a record $453 billion for companies seeking public funding. And those numbers don’t include the record $5.8 trillion mergers and acquisitions, according to Refinitiv, that were completed last year.
Both are incredibly hard acts to track, so the market doesn’t even come close to following suit. In fact, Goldman’s projected net income for 2023 is expected to be only a hair’s breadth above its projected earnings per share of $38.25 for 2021. Rising interest rates to fight inflation may even stifle growth. economy and this expected earnings growth, perhaps without actually taming inflation while it does (which also doesn’t exactly work in favor of the investment banking industry).
Take a step back and look at the big picture. Although the name Goldman Sachs no longer turns heads like it once did, it is still considered by most to be Wall Street royalty thanks to its ability to weather even the toughest of times. Long-term investors should also be aware that COO John Waldron recently made a point of explaining how Goldman is seeking to diversify its operations to less depend on highly cyclical capital market activity. There is no reason to believe that the incumbent company will not be able to achieve this goal.
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James Brumley has no position in any of the stocks mentioned. The Motley Fool holds positions and recommends Goldman Sachs, Nio Inc. and Tesla. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.