2 best stocks to buy for the new year

WWith discussions about the Federal Reserve’s likely interest rate hikes in 2022 and the coronavirus pandemic still circulating, one of the key features investors should look for in investments as the New Year dawns is resilience. In other words, some good traits to look for are valuations that make sense in relation to a company’s growth trajectory and market opportunities, and sustainable business models with proven track records. While there is no way to avoid volatility, owning resilient businesses can at least help investors better overcome short-term challenges (mentally and emotionally) because they know their investments have what it takes. takes to last.

Two companies that fit this description are Meta-platforms (NASDAQ: FB) and Tractor supply company (NASDAQ: TSCO). Here’s a look at why these two stocks are good bets for 2022 and beyond.

Image source: Getty Images.

Meta-platforms

The case of Meta Platforms is simple. The valuation of technological action is very cheap compared to the recent growth of the company. Consider that the last 12 months revenue and Facebook parent company net income of $ 112 billion and $ 40 billion, respectively, are up from $ 71 billion and $ 18 billion in 2019. Even with such staggering recent growth, Meta Platforms is trading at just 24 times its current price. level of earnings.

As the company faces short-term growth challenges related to AppleWith the recent changes to advertising tracking and metering, it’s not as if the suppressed growth that Meta Platforms expects is small. Management has estimated fourth-quarter revenue to be between $ 31.5 billion and $ 34 billion. The midpoint of this benchmark represents revenue growth of 17%. In addition, analysts still model exceptional growth in earnings per share over the next five years. On average, analysts currently expect Meta Platforms’ earnings per share to compound at a growth rate of 21% per year during this period.

The network effect of the billions of monthly active users of Meta Platforms makes its business very sustainable. Not only has the company’s main Facebook platform steadily grown without a close challenger, but the company’s other social networks with more intense competition (namely Instagram) have shown that they can easily deploy features. that mimic successful competitors, helping them stay relevant.

Tractor supply company

Some city dwellers may never have even set foot in a tractor supply store. But investors shouldn’t overlook this investment just because they don’t know the retailer. Tractor Supply, which specializes in the rural lifestyle, has a strong retail niche and capitalizes well on several important growth catalysts including private label and exclusive brands, pet food and trade. electronic. Its balanced business contributed to revenue growth of 24% year-over-year over the past 12 months and contributed to earnings per share growth of 22%.

Tractor Supply is particularly proficient in e-commerce in a market where many of its customers live further apart than city dwellers. These communities present unique challenges in which Tractor Supply is able to develop expertise, and the business strategy works. Tractor Supply said in its latest earnings call that its e-commerce sales have grown at a rate of more than 40% year-over-year.

While the stock price-to-earnings ratio of 29 isn’t exactly cheap, the company’s positioning as a leading rural lifestyle retailer makes this company worth paying for. Given the specialization of Tractor Supply, it would be very difficult for a competitor to overthrow it. The company also pays a dividend and regularly repurchases shares, thus completing the creation of shareholder value.

Facebook and Tractor Supply together represent two strong ideas from very different industries that offer significant long-term growth potential to investors.

10 stocks we prefer at Meta Platforms, Inc.
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* Returns of the portfolio advisor as of December 16, 2021

Randi Zuckerberg, former director of market development and Facebook spokesperson and sister of Meta Platforms CEO Mark Zuckerberg, is a member of the board of directors of The Motley Fool. Daniel Sparks has no position in the stocks mentioned. Its clients may own shares of the companies mentioned. The Motley Fool owns and recommends Apple and Meta Platforms, Inc. The Motley Fool recommends Tractor Supply and recommends the following options: March 2023 long calls at $ 120 on Apple and March 2023 short calls at $ 130 on Apple. 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.


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