The market is enjoying a nice bounce off the mid-June lows as the S&P 500 nears the critical 4,000 level with a plethora of market-moving events on the horizon like a Fed meeting, earnings season, the July jobs report, and CPI.
Given the market’s bearish trend and these meaningful catalysts, it’s possible to see the market break out higher from these levels or collapse back to the previous lows. Regardless of what happens in the short-term, the market still has to contend with a decline in earnings due to the looming recession.
Amid this environment, investors should focus on identifying the best companies with earnings and business momentum that continue to thrive in a difficult environment. These ‘best of breed’ stocks are likely to lead us higher during the next bull market, but the preceding bear market is when we can scoop them up at attractive valuations. Here are 2 such stocks that investors should consider:
Veeva Systems (VEEV)
VEEV is at the intersection of several, bullish booming trends. These include enterprise software, cloud computing, healthcare, and pharmaceuticals.
The healthcare sector’s growth is fueled by demographics due to an aging population in developed countries all over the world, increased government spending, and the constant stream of innovations that lead to new treatments. Healthcare spending as a share of GDP has risen to 18% in 2020, from under 12% in 1990.
However, VEEV is actually a software and cloud computing company that comes with more growth and higher margins. Unlike many stocks in the software and cloud space, there are high barriers to entry which means limited competition. For investors, it translates into a deep and wide moat and leads to high rates of recurring revenue.
Given these positives, it’s not surprising that VEEV has an overall B rating, which translates to a Buy in our POWR Ratings system. It also has an A for Quality as it’s one of the leading stocks in a large total addressable market with only a handful of competitors.
VEEV also has a B for growth makes sense given its double-digit earnings and revenue growth and positioning at the intersection of two large and growing markets – healthcare and cloud computing. Click here to see more of VEEV’s POWR Ratings including grades for Value, Momentum, and Stability.
Expedia (EXPE)
EXPE is one of the largest online booking companies in the world. It operates through multiple segments including Expedia, Vrbo, Hotels.com, Orbitz, Travelocity, and Wotif. In addition, it offers a range of travel and non-travel verticals, including corporate travel management, airlines, travel agents, online retailers, and financial institutions.
Like many travel stocks, EXPE is seeing a huge surge in revenues and bookings due to people’s pent-up demand for travel. However, the stock price has languished due to the market’s concern of a slowdown and potential recession. Long-term investors can look past this and focus on the overall growth of the online booking sector.
Its combination of growth and value makes the stock quite attractive. EXPE has a forward P/E of 10.2 which is significantly cheaper than the S&P 500. More impressive is analysts’ forecast of $9 per share in earnings in 2023 and P/FCF of 4.
These are among the major reason why EXPE is rated a B which equates to a Buy rating. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree. B-rated stocks have posted an average annual performance of 21.1% which compares favorably to the S&P 500’s average annual 8.0% gain.
Click here to see EXPE’s complete POWR Ratings.
What makes them “MUST OWN“?
All 9 picks have strong fundamentals and are experiencing tremendous momentum. They also contain a winning blend of growth and value attributes that generates a catalyst for serious outperformance.
Even more important, each recently earned a Buy rating from our coveted POWR Ratings system where the A rated stocks have gained +31.10% a year.
Click below now to see these top performing stocks with exciting growth prospects:
EXPE shares rose $2.07 (+2.12%) in premarket trading Wednesday. Year-to-date, EXPE has declined -44.78%, versus a -16.35% rise in the benchmark S&P 500 index during the same period.
About the Author: Jaimini Desai
Jaimini Desai has been a financial writer and reporter for nearly a decade. His goal is to help readers identify risks and opportunities in the markets. He is the Chief Growth Strategist for StockNews.com and the editor of the POWR Growth and POWR Stocks Under $10 newsletters. Learn more about Jaimini’s background, along with links to his most recent articles.
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