AMC Entertainment Holdings (NYSE: AMC) closed its theaters during the pandemic and lost billions. But that hasn’t stopped it from becoming one of the best performing stocks of the year to date. A group of investors on Reddit flocked to the stocks, helping them rise by more than 2,000%. At the same time, AMC issued more shares to raise much-needed funds.
But the situation remains grim. Investors are not happy with the dilution of stocks. AMC’s debt stands at more than $ 5 billion, its highest level on record. The company reported a loss of $ 4.5 billion last year. For the future, a post-pandemic world should help AMC.
But the fortunes of the company will not improve overnight. AMC faces the challenge of bringing moviegoers back to theaters and paying hundreds of millions in deferred rents. Stocks seem extremely expensive given all of this. That’s why I would forget about AMC and go for the following two companies instead. They will allow you to grow taller and will not prevent you from sleeping at night.
Nike (NYSE: NKE) stocks climbed 14% in a trading session last week after reporting double-digit earnings gains for the quarter and year and predicting “significant” opportunities ahead. The pandemic has taken its toll on the sportswear maker in two ways: it has temporarily closed stores and it has put an end to professional sporting events.
Nonetheless, Nike’s growing digital activity, connection with fans, and the strength of its brand have boosted revenue and profits during tough times. In 2017, Nike decided to focus on its digital platform and direct-to-consumer sales. Thus, the main elements of success were already in place by the time the pandemic emerged. As a result, Nike announced a 19% increase in revenue to over $ 44 billion for the 2021 fiscal year ended May 31. And earnings per share climbed 123% to $ 3.56.
But here’s the best news: it’s just the start. Nike won’t face the headwinds of closed stores and canceled sporting events in a post-pandemic world. And the company will also see growth thanks to the connections it has made with fans. For example, during the Crisis, he encouraged fans to use his training apps for training and advice – and that often resulted in sales.
“Today, we are better positioned to generate long-term sustainable growth than before the pandemic,” said CEO John J. Donahoe during the call for results. Nike forecasts high single-digit to low double-digit revenue growth through fiscal 2025.
Nike has a solid long-term track record. The company has generally increased its profits and revenues over time.
And the latest earnings report and management commentary indicate this is likely to continue.
Abbott Laboratories‘ (NYSE: ABT) the strength of coronavirus testing has made it a stock to watch – and buy – during the worst of the pandemic. The stock jumped 26% last year as Abbott sold billions of dollars worth of COVID-19 tests. At the same time, some of Abbott’s other businesses – particularly medical devices – suffered. That’s because hospitals have postponed non-essential surgeries in order to focus on coronavirus patients.
The problem for Abbott investors now is that demand for COVID testing is declining. In fact, Abbott even lowered its earnings per share forecast to a range of $ 4.30 to $ 4.50 from earlier expectations of $ 5. This is adjusted diluted EPS from continuing operations.
We have a different scenario: a slowdown in COVID testing, but a recovery and growth in other areas. And this scenario is a great reason to buy Abbott stock. Here’s why: Medical devices typically represent the largest portion of Abbott’s annual revenue. In 2019, this activity represented 38% of total turnover. Thus, a return to normal in sales of medical devices is excellent news.
Other segments of society – nutrition, diagnostics and established pharmaceuticals – are also expected to experience positive trends in a post-pandemic world. For example, at times during the pandemic, some labs downsized their operations and did not perform non-essential testing. These areas have already started to rebound.
Another good sign: Abbott’s revised forecast still represents solid year-over-year growth. Adjusted diluted earnings per share from continuing operations in 2020 was $ 3.65. Abbott could post at least 18% profit growth this year from 2020 if it hits the lower end of its forecast range.
Abbott is trading at around 36 times earnings over 12 months.
That’s near its lowest by this measurement in just over a year. And this represents an opportunity to get into that stock that you will want to hold for the long term.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.