Investors are facing a difficult beginning to August due to a mix of poor economic indicators and an unexpected increase in interest rates in Japan causing concerns. carry trade pushed the S&P 500 The index decreased by 6% within the initial three days of the month.
Investors have become nervous that a recession might be imminent, and believe that the Federal Reserve delayed reducing interest rates.
Nevertheless, not all stocks were affected by the sell-off. Let’s examine three stocks that are experiencing significant growth and are recommended for purchase at this time.
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1. MarketFree
It is difficult to find a stock that has shown more reliable performance than this one. MercadoLibre ( MELI -1.10% ) The leading e-commerce company in Latin America consistently achieves robust growth despite facing challenges such as the pandemic, the subsequent decline in e-commerce activity, and the economic difficulties in Argentina.
Throughout its journey, it has faced challenges from major competitors such as Amazon and Sea Limited , and diversified into additional ventures such as Mercado Pago, its financial technology division; MercadoEnvios, a shipping and delivery service; a lending operation, and marketing.
This has contributed to the increase in revenue and profit, and investors reacted positively to the company’s financial results for the second quarter, causing the stock to rise by 11% on August 2 despite a market downturn. MercadoLibre’s stock remained stable the next day when other stocks were falling after the events in Japan. Nikkei The index dropped by 12%.
By concentrating on Latin America, MercadoLibre is shielded from the fluctuations of the U.S. economy, making it an attractive choice for investors seeking to expand their investments beyond the U.S.
The company’s performance is impressive. Its stock has increased by almost 2,000% in the past ten years, and it recently achieved a 42% revenue growth in the second quarter. This marks the fifth consecutive year of quarterly revenue growth of 35% or higher.
2. Deckers
One of the most commonly ignored stocks of companies that provide non-essential goods and services for consumers currently available in the market Deckers ( DECK 0.12% ) , the shoe company that possesses labels such as Ugg, Teva, and Hoka.
In the past few years, the stock has experienced significant growth, largely due to the popularity of Hoka, a running shoe brand recognized for its thick midsoles. Hoka has gained traction among runners, individuals seeking comfort, and even fashion enthusiasts. The brand has garnered a following among nurses and other professionals who spend long hours on their feet, contributing to its remarkable success and continuous expansion.
Deckers’ revenue grew by 22% in the latest fiscal first quarter to reach $825 million, with Hoka contributing to this growth by increasing 30% to $545.2 million.
Deckers’ profit margins experienced a significant increase in the quarter, as the gross margin rose from 51.3% to 56.9%. This improvement was attributed to the higher pricing of Hokas, leading to a substantial growth in operating income from $70.7 million to $132.8 million.
Taking into account the recent lack of strength shown by prominent figures in the industry Nike and Adidas In addition to being a smaller company compared to Deckers, Hoka has a significant potential for growth ahead if it continues to be well-liked. The stock has increased by 500% in the past five years, with the possibility of further increases.
3. Real Estate Investment Trust (REIT) named Realty Income
Despite the decline of tech stocks and the S&P 500 index from their highest point in July, there is one stock that has been consistently increasing in value.
Realty Income ( O -0.55% ) , a A real estate investment trust (REIT) is a company that owns, operates, or finances income-producing real estate. (REIT) specializing in triple-net retail properties, has seen an increase of approximately 15% during that period.
Realty Income is a prime example of a secure investment. The company possesses retail properties that are independent and its tenants mainly consist of Businesses that are not affected by economic recessions. like Walgreens Moreover, 7-Eleven’s real estate model, known as triple-net, ensures that the tenant is responsible for covering expenses such as property taxes, maintenance, and insurance. This setup also serves to safeguard the asset manager from potential financial liabilities.
Dividend investors find Realty Income attractive as the stock currently provides a dividend yield of 5.2%.
The dividend is expected to support the stock’s upward momentum as interest rates are forecasted to decrease, prompting investors to shift from fixed income to dividend stocks due to the declining bond yields. Additionally, the company’s monthly dividend payout adds to the attractiveness for income-oriented investors.
Ultimately, being a Real Estate Investment Trust (REIT), Realty Income stands to gain from decreased interest rates, which will facilitate the company in obtaining financing for acquiring new properties. This could also potentially enable the company to reduce the interest expenses on its current debts.
In general, Realty Income seems to be well-positioned and is likely to benefit investors seeking a stable dividend stock to navigate through the present market instability.
