Don't Be Afraid of the Bear Market: Top Industry Stock Picks
December 19, 2022 (Investorideas.com Newswire) The stock market has been in a downtrend for over a year now. Despite the slight uptrend in the last two months, rebounds remain shaky. Indeed, assessing companies amidst external forces and pessimism can be challenging. But you don't have to be intimidated by the bear market. These are some industries with enticing growth prospects.
Hotels and Accommodations
Hotels, timeshares, and vacation rentals may appear as unlikely candidates. The rising fuel prices and pandemic restrictions may hamper their growth. Despite these, opportunities outweigh risks as revenge travel persists.
In a recent survey, over 82% of Millennials and Gen Zers said inflation hurt their travel budgets. But their travel plans will push through with some changes in their itineraries. Also, there is a substantial year-over-year (YoY) increase in holiday travel during winter.
Marriott International, Inc. (MAR) is the top pick, given its impressive execution of growth strategies. It also has a strategic business model that relies mainly on cost reimbursements and franchises. In addition, MAR has a stellar Balance with a Net Debt/EBITDA Ratio of 2.8x despite being capital-intensive. However, investors must wait for a better entry point before buying stocks due to potential overvaluation.
Human Capital Management Solutions
It's obvious why Human Capital Management (HCM) solutions should be on the list. They are more of a staple today as hybrid work setups and cashless transactions prevail. These developments improve hiring processes and human resource management. Payroll is automated, so adhering to tax filing requirements is easier.
Paychex, Inc. (PAYX) is the most optimal choice despite being a dwarf compared to Automatic Data Processing (ADP). The company has stable revenues and margins with an increasing market share. Its liquidity is impressive, given the adequate cash levels and well-covered borrowings. Meanwhile, its dividend yields amount to 2.57% versus the S&P 500 average of 1.82%.
Both ADP and PAYX are ideal investments, but the latter has a better stock price valuation. It is cheaper with more enticing growth prospects.
Online Booking Apps
With the rise of mobile wallets and credit cards, online transactions have become more popular. The soaring fuel prices and limited movements make food delivery and car booking apps cost-efficient. This industry may expand further once macroeconomic indicators become more manageable.
The top place belongs to Grab Holdings Limited (GRAB). Although it still incurs net losses, its performance keeps improving. Revenue growth and margin expansion are visible. Services are ubiquitous, making it an invincible giant in Southeast Asia.
Moreover, GRAB's cash comprises 24% of the total assets, making it a liquid company. Right now, it can be tricky to assess its stock price. The only indicator one can use is its EV/Revenue multiple of 7.4x. It appears high, but it may drop to 5.7-5.8x, as per the projected revenue.
Conclusion
Market volatility continues to hammer the stock market. A lot of risks are present, so price decreases may persist. Yet, you can find opportunities for massive gains aside from dividends. These are durable companies that can flourish amidst market changes.
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