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Two major stocks with strong fundamentals offering a solid set up

Dino
Kurbegovic
3 months ago
4 mins read

Buy low and sell high – an overused adage on Wall Street but one that made patient investors rich. Getting a good business at a reasonable price is not impossible to do, some investors like Warren Buffett became legends following these principles. 

The stock market has been volatile lately with the current quarter being one of the worst since the Pandemic lows of 2020. Some household names with reasonable valuations have been beaten down to levels that could present great entry positions for long-term investors. 

The following two have great brands and moats which should potentially allow them to thrive in the future. 

1. Starbucks (NASDAQ: SBUX) 

Valuation metrics are key in the world of stock investing and looking at price-to-earnings (P/E), price-to-sales, and price-to-free cash flow for SBUX they’re below their five-year median ranges. In the past 10 years, the P/E ratio for SBUX was 50 while today the median P/E stands at 31.5.

The P/E could be explained away by the fact that SBUX is growing more conservatively than before. However, the pandemic woes that surrounded the business are finally behind them. Pricing power and inflation need to be taken into account, yet the plans to open up 2,000 new stores in 2022 must not be disregarded.

The stock performance has seen better days with a constant downtrend from August 2020. Currently, it is hovering around the 50-day Simple Moving Average looking to break above. Keeping an eye on a possible entry position could pay dividends soon.  

SBUX 20-50-200 SMA lines chart. Source. Finviz.com data. See more stocks here.

Wall Street analysts offering 12 months price targets give a moderate buy to the stock with an average price of $114.05 a potential increase of 25.37% from the current price of $90.97.

Source: TipRanks

2. Walt Disney Co. (NYSE: DIS)

Disney stock has been on a rollercoaster from the beginning of the Covid pandemic when Disney theme parks and cruises had to be closed down. The stock was beaten into submission to rise later on as a Phoenix from one of its movies. 

With a strong intellectual property portfolio, world-renown theme parks and cruises as well as lined up partnerships, like the recent one with T-mobile, this stock seems to have a lot of potential. 

The performance of the stock lately hasn’t been stellar jumping between 50 and 200 SMAs trading in a sideways channel with large variations. Any break below the low resistance line may signal more short-term pain for the stock.  

DIS 20-50-200 SMA lines chart. Source. Finviz.com data. See more stocks here.

Analysts are not yet ready to throw in the towel on this stock giving it a strong buy rating. The average price of $190.89 would offer a whopping increase of 39.17% in the next 12 months from the current $137.16 price. 

Source: TipRanks

Down but not out   

Though both of these stocks have been punished lately due to various factors, lined up plans for expansion and cooperation can give long-term investors a reason to cheer. Additionally, the brand power both of these companies possess is rarely matched by competitors. 

Keeping an eye on these two can help potential investors gauge an opportune time to invest or do more research to see if the companies are a good fit for their portfolios. 

When there is fear and great stocks are punished, reading a quote or two about investing could help alleviate worries. 

Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk. 

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Dino Kurbegovic
Author

Dino is an investor and technology enthusiast with years of experience in managing complex projects. At Finbold he covers stories on stocks, investing, micro and macroeconomic trends. Also, he’s also building a micro solar power plants in his hometown.

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