The S&P 500 has been flirting with bear market territory for the last several weeks, causing investors to suffer. Although the market has resumed its upward climb from its June lows, numerous stocks are still trading at considerable losses below their 12-month highs.
Despite the fact that many businesses have reached bargain levels, due to its drop, a lot of firms are currently trading at reduced prices. Two consumer-related equities may be especially appealing right now: Booking Holdings (BKNG -0.44%) and Qualcomm (QCOM -3.55%). Let’s take a deeper look.
Booking Holdings
Priceline.com is a multinational corporation that owns numerous travel-related web properties, including Priceline, KAYAK, Agoda, and current namesake Booking.com. The bear market has reduced the company’s stock price to less than $2,000 per share, down nearly 30% from its peak.
Despite this declining stock price, the firm’s financials are becoming increasingly healthy. The company’s revenue for the first two quarters of 2022 was roughly $7 billion, which is greater than the $6.7 billion it reported in the first half of 2019 before the pandemic.
Its $157 million net profit for the first six months of this year is a tiny fraction of the $1.7 billion made in 2019. Over the three-year stretch, operating costs increased by 19%, and losses on its assets in a number of equity securities cut earnings by more than $700 million.
Booking didn’t give specific revenue expectations, but it did say on its Q2 2022 earnings call that it expects to report “record” revenue in the third quarter. Even so, if travel sales continue at the same pace as they have been, Booking will have a forward P/E of 20 – which might make it a bargain if growth exceeds 2019 levels.
Qualcomm
Qualcomm is typically seen as a technology stock, owing to its technological preeminence in smartphone microprocessors. Nonetheless, it still relies largely on the consumer for revenue, which adds further pressure on the company’s earnings.
Qualcomm’s own expectations appear to have been influenced by consumer trends. For the next fiscal fourth quarter of 2022, Qualcomm predicted revenue of $11 billion to $11.8 billion, representing year-over-year growth of 23%. That would compare to fiscal Q3, when handset sales grew 59% year over year.
However, a 23 percent increase in sales indicates that this market is resilient. Grand View Research expects the 5G chipset market to grow at a compound annual rate (CAGR) of 69% throughout 2025. Given this prediction, it appears likely that the anticipated slowing will not continue as the 5G upgrade cycle continues.
The company’s expected development may explain the stock’s relative stability over the past year, despite a 6% decline in the S&P 500’s total return. A P/E of 13 indicates that the market does not appear to fully recognize this potential. Investors should consider purchasing Qualcomm at these prices.
Comments are closed.