The S&P 500 is roaring higher and earlier this year confirmed that we are in investors' favorite investment period: a bull market. This environment of expansion and optimism often boosts growth companies as well as companies that depend on the consumer. And we've seen plenty of them soar in recent times, leading the index's gains.
In some cases, you may hold off on investing in certain players that have climbed a lot in recent weeks or months. The risk is they may have become too expensive and could be ready for stagnation or declines. But in other cases, the recent increase may be just a taste of the company's long-term performance potential. That means investing right now is a great idea. Here are two soaring stocks that fit the bill, and that means I'd buy them today with no hesitation.
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1. Target
Target's (NYSE: TGT) earnings and share price suffered over the past two years as rising inflation weighed on the consumer's buying power. But the retailer relied on its strengths such as the importance of its stores in the fulfillment process and the popularity and high margins of its owned brands, just to mention two examples -- and Target launched an efficiency plan too.
Above all, Target has continued to focus on its long-term development, opening new stores and revamping others to keep customers loving the shopping experience.
The result? Target's most recent earnings report showed tremendous progress, with the company announcing full-year wins in many metrics. Cash from operations more than doubled year over year to $8.6 billion, the operating income margin rate of 5.3% was almost two percentage points higher than the previous year, and GAAP and adjusted earnings per share of $8.94 both were about 50% higher than in 2022. Target also realized cost savings of more than $500 million.
All of this shows Target is heading for better days, and its stores should continue to drive growth. As chief executive officer Brian Cornell pointed out in the recent earnings call, the majority of U.S. shopping still happens in stores on any given day. Now Target trades for only 17 times forward earnings estimates, even after advancing 17% this year -- so this looks like a great time to get in on this top stock set to benefit as the U.S. consumer recovers and thrives over the long term.
2. Amazon
Amazon(NASDAQ: AMZN) also went through a rough patch in recent years as higher inflation hurt the consumer and made the company's operations more expensive too. But Amazon revamped its cost structure, an effort that has already been bearing fruit and should continue to boost earnings down the road.
In the most recent quarter, the e-commerce giant reported net sales that climbed in the double digits, and operating income more than quadrupled. This is thanks to the company's growth in e-commerce, of course, but also thanks to its cloud computing business, Amazon Web Services (AWS). In fact, historically, AWS has driven profit at Amazon, and this trend looks set to continue. AWS generated $7.1 billion in operating income in the quarter, representing 54% of total Amazon operating income.
Amazon also is benefiting from its investment in the high-growth area of artificial intelligence (AI). The company uses AI to streamline operations, saving time and money and keeping customers happy as it delivers packages faster. And AWS sells a wide variety of AI services to customers, from chips and coding companions to a fully managed service that allows clients to tailor top large language models to their needs.
Amazon, after rising 15% so far this year, trades for 41 times forward earnings estimates, down from more than 56 just a few months ago. And that's a bargain for a company that has what it takes to benefit during a bull market and over the long haul.
Should you invest $1,000 in Target right now?
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Adria Cimino has positions in Amazon and Target. The Motley Fool has positions in and recommends Amazon and Target. The Motley Fool has a disclosure policy.
