3 stocks to buy while they’re on sale

The S&P500 headed into bear market territory this week. The benchmark has fallen 21% this year. Investors are concerned that the latest inflation data could prompt the Federal Reserve to raise interest rates even more than expected. Now may not be the most pleasant time to sit back and observe your portfolio’s performance, but don’t worry. The current situation is temporary. And while this hurts even the strongest companies right now, they will bounce back and even thrive in the long run.

This means that today is actually the perfect time to invest. You can select companies with great sales prospects. And this in all industries. Let’s take a look at three market leaders – in e-commerce, electric vehicles and robotic surgery – that fit the bill.

1. Amazon

Amazon (AMZN) has reported an increase in revenue and profits over the past few years – and those numbers have reached into the billions of dollars. But that positive momentum came to a halt earlier this year. Rising inflation and supply chain issues weighed on earnings. And Amazon reported lower operating cash flow and operating profit in the first quarter.

The e-commerce giant could continue to struggle as long as these issues persist. But there are three good news. First, Amazon strives to manage the costs it can control. And that means about two-thirds of the extra costs, the company said in its latest earnings call. At the same time, Amazon’s for-profit cloud computing business continues to grow rapidly. Amazon Web Services (AWS) posted double-digit gains in sales and operating income in the first quarter. This business is not as sensitive to the challenges that have plagued Amazon’s e-commerce business. And finally, while today’s misfortunes can hurt e-commerce today, rising inflation and supply chain issues won’t last forever.

Amazon shares have fallen about 37% since the start of the year. But revenues have not fallen as much.

AMZN data by YCharts

And Amazon is trading at 117 times forward earnings estimates, down from more than 175 in April. Sounds like a steal given Amazon’s long-term outlook.

2.Tesla

You’re here (TSLA) reached important milestones over the past year, even as chip shortages weighed on its production capacity. Last year, it reported record vehicle deliveries of more than 936,000. And in the first quarter, the company reported record revenue, vehicle deliveries and operating profit. Add to that an operating margin of over 19% and it was a pretty solid quarter.

Tesla also recently began shipping from two massive new factories in Austin, Texas, and Berlin, Germany. These facilities are expected to further increase delivery levels in the future.

What’s next for Tesla? The company is targeting an average annual growth in vehicle deliveries of 50% over a “multi-year” period.

Of course, some challenges can rock the boat in the short term. CEO Elon Musk said the company had a “very difficult quarter,” Electrek reported on June 12, citing leaked emails from Musk to employees. Musk spoke about the supply chain and production challenges in China.

At the same time, a rising interest rate environment is not the best news for automakers. Rising interest rates make it harder for individuals to get loans.

All of this means that Tesla shares may not soar overnight. But the company’s position in the market, its strong growth so far and its increased production capacity bode well for the future.

The moment therefore seems ideal to enter into the history of Tesla. The stock has fallen about 38% this year. And Tesla is trading for 52 times forward earnings estimates, up from more than 90 just three months ago.

3. Intuitive surgery

Intuitive surgeryit is (ISRG) short-term performance will have a lot to do with the coronavirus situation. Indeed, a new wave of hospitalizations could halt non-essential surgeries. And that kind of movement weighs on Intuitive’s revenue. Intuitive generates revenue not only by selling robotic surgical systems, but also by selling the accessories and instruments needed for each surgery. When a procedure is postponed or cancelled, Intuitive loses.

Concerns about the coronavirus situation have weighed on Intuitive recently. But here’s the good news: this is a temporary issue. A potential increase in hospitalizations could delay surgical revenues or even delay installations of new surgical robots for a while. But when the problem subsides, Intuitive’s image is bright.

The company has more than 79% of the robotic surgery market, according to BIS Research. Most surgeons train on Intuitive’s flagship Da Vinci robot – so they’re unlikely to want to switch to a new system. And Intuitive has steadily increased its installs and revenue. In the first quarter, the company reported an installed base of 6,920 systems.

What about valuation? Intuitive now trades at around 39x forward earnings, up from over 70x at the start of the year. Considering the long-term prospects of this company, it sounds like a good deal.

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