We're still in the middle of a tough economic environment -- so you may be feeling cautious about investing right now. But these times are actually the best times to prepare for what's next. And that's a bull market. History shows us bull markets follow tough market times. It's a better idea to buy potential bull market winners at a good price, before they take off. And you can do that now.
So, which stocks fit the bill? Etsy (NASDAQ: ETSY) and Disney (NYSE: DIS) offer you great opportunities right now. These consumer stocks have what it takes to perform in a growth environment, so you'll want to get in on them early. Let's find out more.
Etsy offers sellers of unique, handmade items an online spot to sell their wares -- and buyers love it. The company's popularity soared during the early days of the pandemic.
And it's managed to hang onto those gains. Etsy marketplace gross merchandise sales (GMS) have registered a 35% compound annual growth rate from 2019 through last year -- beating the company's estimate for 16% to 20% growth. And Etsy's annual active buyers totaled more than 89 million last year -- that's up from about 80 million in 2020 when the economic environment was more favorable.
Etsy also has contained its costs to maintain high levels of free cash flow even in a difficult economic context.
All of this sets Etsy up to benefit from a stronger economy. It's also important to remember that e-commerce is a high-growth market. Etsy has carved out a key niche here. And the company's ability to increase buyers and grow internationally should help it win over time.
Today, Etsy is trading for 23 times forward earnings estimates -- that's down from more than 30 earlier in the year. This is a bargain for a company that's positioning itself for success in the next bull market and beyond.
Disney's emphasis on growing its streaming services has brought in subscribers -- but it's come at a cost. Last year, the entertainment giant disappointed investors as its direct-to-consumer business' operating loss widened.
But better days may be around the corner. Disney late last year brought back longtime chief executive officer Bob Iger to set up a strategy to cut costs and boost overall growth. Iger has two years to meet the goals before handing the role off to a successor. So, it's likely he will be aggressive about getting things done.
Iger already announced efforts such as job cuts, a reorganization of departments to favor growth, and efforts to improve the guest experience. Iger's plan aims for $5.5 billion in cost savings.
At the same time, Disney is investing even more in key areas to boost growth -- for example, its big revenue driver, the parks, experiences, and products business. The company predicts total fiscal 2023 capital expenditures of $6 billion. Disney's parks consistently top the list of most-visited theme parks worldwide. And the company continues to report strength in the unit. In the most recent quarter, the parks business posted double-digit growth in revenue and operating income.
All of this means Disney should benefit from its own growth plan -- and from an environment that favors growth stocks. Disney shares trade for about 24 times forward earnings estimates, down from more than 30 last year. So now looks like the perfect time to get in on this top entertainment company.
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Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Etsy 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. The Motley Fool has a disclosure policy.