Why Amazon, Microsoft, and Disney Are No-Brainer Buys Right Now
There are some stocks you can add to your portfolio without a second thought about their long-term potential, thanks to the reliable growth of their businesses over the years. Amazon (NASDAQ: AMZN), Microsoft (NASDAQ: MSFT), and Walt Disney (NYSE: DIS) suffered steep stock declines amid macroeconomic headwinds in 2022. However, each of these companies’ stocks has retained growth over the last decade, which makes them attractive investments to buy and hold indefinitely.
Here’s why Amazon, Microsoft, and Disney are no-brainer buys right now.
Amazon
Amazon shares plunged almost 50% last year as steep rises in inflation hit its e-commerce business hard, resulting in £10.6 billion in operating losses between its North American and international segments in 2022. The company’s stock has gradually begun recovering since the start of the year yet remains down 34% year over year, prompting a buying opportunity. E-commerce declines won’t last forever, and the segment is likely to improve as economic challenges subside.
Meanwhile, Amazon has much to gain from cloud computing with its platform Amazon Web Services and its new venture into space-based internet. From March 13 to March 17, the stock climbed over 8% after the company unveiled its new satellite internet technology, which will rival SpaceX’s Starlink. Amazon plans to invest £10 billion in over 3,000 satellites to provide high-speed and affordable internet to consumers worldwide.
The company will sell three tiers of antennas, with the standard version costing less than £400 to produce. Moreover, the tech giant holds a leading 34% market share in cloud computing, an industry valued at £483.98 billion in 2022 and projected to grow at a compound annual growth rate (CAGR) of 14.1% through 2030.
Amazon likely has a fruitful future in multiple areas of tech, making its stock a no-brainer buy with its price still significantly down year over year.
Microsoft
Microsoft’s stock has risen over 16% year to date, with investors increasingly bullish over the company’s growing position in artificial intelligence (AI). According to Grand View Research, the AI market was valued at £136.55 billion in 2022 and is projected to expand at a CAGR of 37.3% through 2030.
Meanwhile, Microsoft is one of the biggest backers of start-up OpenAI after investing £1 billion in the artificial intelligence company in 2019. OpenAI stunned the tech world in November 2022 with the release of ChatGPT, an advanced chatbot capable of producing human-like dialogue. Since its successful launch, Microsoft has announced a plan to invest an additional £10 billion in the start-up and has integrated its software into several of its homegrown platforms.
For instance, ChatGPT is now available on Microsoft’s cloud computing service, Azure, and has been used to enhance the company’s search engine, Bing.
Moreover, Microsoft’s stock jumped more than 5% from March 15 to March 19 after the company announced it would add OpenAI’s technology to Office programs such as Word, Excel, and PowerPoint, with the new features called Copilot.
Microsoft is quickly becoming one of the biggest names in AI, a lucrative market that is only just getting started. As a result, the company’s stock is a screaming buy right now.
Disney
As with many consumer-reliant companies, Disney has had a challenging few years. However, 2023 will see the entertainment giant celebrate its 100th year of business, with its stock rising 64% in the last 10 years and proving its worth as a long-term investment.
Despite a slight recovery since Jan.
1, Disney’s stock remains down 33% year over year. However, its dip also means its forward price-to-earnings (P/E) ratio has decreased 39% over the last year to 22.34, making it a bargain buy. As the home of brands such as Star Wars, Marvel, Avatar, Pixar, and Walt Disney Studios, the company has compelling assets to pull consumers in across multiple avenues with its significant market shares in theme parks, box office returns, and streaming.
The COVID-19 pandemic was detrimental to Disney’s theme park and box office revenue. However, reopenings have seen fans return to both in droves, with parks revenue up 73% year over year to £28.7 billion in fiscal 2022 and a recent box office success with Avatar: The Way of Water. In fact, the Avatar sequel overtook 1997’s Titanic for the third-highest-grossing film of all time, earning £2.243 billion.
Disney’s stock has plunged over the last year, heading from a pandemic to macroeconomic headwinds in 2022. However, the company’s strength is its longevity and consistent growth over the long term. A stock dip and an attractive forward P/E make now an excellent time to invest in Walt Disney.
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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. Dani Cook has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends couponmatrix.uk, Microsoft, and Walt Disney. The Motley Fool recommends the following options: long January 2024 £145 calls on Walt Disney and short January 2024 £155 calls on Walt Disney.
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