Is History Repeating Itself? 3 Growth Stocks to Buy for the Coming Bull Market
The thing about bear markets is they are so short-lived. Since 1928, the average bear market lasted just 15 months. A bull market, on the other hand, would go on for years. They last for three years on average.
Even better, since 1970, the typical bull market has raged for six years! The one that started in March 2009 after the Great Recession rampaged for 11 years. It was only stopped because of the pandemic and governments shutting down global economies. Even so, it was still the longest running bull market in history.
Investors are disappointed the current run-up in the Standards and Practices (S&P) 500 has yet to surpass its all-time high. That’s a necessary precursor to being officially declared a bull market. Yet that provides investors a great opportunity to buy in now.
What follows are three must-own growth stocks you’ll kick yourself for not buying for the next bull market.
Growth Stocks to Buy for the Coming Bull Market: Warner Bros Discovery (WBD)
Movie and TV studio giant Warner Bros Discovery (NASDAQ:WBD) is a sleeper stock many investors are missing. The result of a spin off from AT&T (NYSE:T) and merger with Discovery, this is a major entertainment company with substantial growth prospects.
Despite a string of abject failures at the box office with its DC Comics superhero movies. Warner Bros scored big with Barbie this summer. This was the hit of the year, raking in $1.4 billion globally on an estimated production budget of $145 million.
The studio has to cut a lot of the profits from the film with participants, but Barbie made up for the disasters like The Flash.
Investors, though, should also be excited by Warner Bros streaming business. While I question the decision to rebrand HBO Max to just Max, ruining a lot of brand equity built up over decades, the business is strengthening.
The direct-to-consumer business enjoyed breakeven EBITDA this past quarter, performing better than expected. There was certainly churn experienced from the overlapping subscriber base between Max and discovery+. Yet it was far less than anticipated and provides two platforms for the future. Warner Bros smartly changed from pursuing simple subscriber growth to one that maximizes average revenue per user (ARPU) growth. ARPU was up 4% year over year in the second quarter and 5% sequentially. There are nearly 96 million subscribers globally, a near 4-million increase from last year.
Warner Bros Discovery stock is bargain basement cheap. It trades at a fraction of its sales and book value, and at a deeply discounted nine times free cash flow.
Broadcom (AVGO)
Apple (NASDAQ:AAPL) is unveiling its 17th generation iPhone as I write this, amid concerns the smartphone market is in decline. Because model enhancements have become less dramatic, or as one analyst put it, “incrementally incremental,” consumers are upgrading their phones less often. It should still be a significant milestone for telecom chipmaker Broadcom (NASDAQ:AVGO).
Earlier this year, Apple announced a new multiyear, multibillion-dollar agreement with Broadcom to produce 5G radio frequency components for Apple products. Because telecoms are rolling out and building out their 5G infrastructure, it represents the most significant upgrade to the networks in more than a decade.
The increase in download speeds from 5G will spur customers to consume greater amounts of data, some of the most profitable business telecoms generate. Apple sees it growing worldwide.
Broadcom is also fully embracing widespread usage of artificial intelligence (AI). It forecasts revenue from AI could exceed $1 billion in the third quarter and account for 25% of total revenue next year. The chipmaker estimates the revenue opportunity from AI is about 15% of its chip business.
As a bonus, Broadcom investors receive a lucrative dividend yielding 2.1% annually. The chipmaker is constructing a legacy of dividend increases running 13 straight years so far. Throughout the last three years, Broadcom increased the payout by almost 15% a year.
LVMH Moet Hennessy Louis Vuitton (LVMUY)
Luxury goods house LVMH Moet Hennessy Louis Vuitton (OTCMKTS:LVMUY) is living the good life. Shares are up 30% in 2023 and are more than 140% higher throughout the last five years. In contrast, the S&P 500 is up 10% and 55%, respectively.
It’s no secret the rich are the ones hit last in any downturn. The market volatility witnessed this year didn’t cause the well-heeled to blink an eye. LVMH’s chairman and CEO Bernard Arnault ought to know. He is the world’s second richest person in the world behind Elon Musk, with a reported net worth of $173 billion as of September.
With the stock market rising and signaling the next bull market may be here, catering to their many whims ought to benefit LVMH handsomely. It owns 75 “houses” comprising 60 separate brands ranging from fashion and perfumes to watches, jewelry, and wine and spirits.
After peaking at around $200 per share in April, LVMH stock lost 20% of its value in the subsequent months. Arnault has been a big buyer of the stock. Beginning on Aug. 3 and continuing every few days since, the CEO bought large tranches of stock. Last week he purchased 8 million euros worth in one go. Earlier that week he bought 2 million euros worth.
Investing legend Peter Lynch once noted insiders can sell there stock for any number of reasons, they tend to buy them for only one: they think the stock is going up. Investors may want to take note and do likewise.
On the date of publication, Rich Duprey held a LONG position in T and WBD stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
