Long-term investing is more important than ever for securing your financial future as the cost of living continues to rise due to inflation. Even though $300 might not seem like a lot, it could be a good place to start on this journey.
1. Amazon
is distinct from the majority of businesses, which focus on a single market segment until it becomes unprofitable. The e-commerce giant has a history of successfully shifting its focus to new growth drivers like digital advertising and cloud computing. Project Kuiper, the company’s new satellite internet business, has the potential to be the next expansion and diversification pillar.
With Starlink, Elon Musk’s privately held SpaceX has demonstrated that satellite internet constellations are technically and economically viable. The platform provides services in dozens of nations, including Ukraine, where they are essential to the communication system used by the Ukrainian army during the Russian invasion. By using a fleet of low Earth orbit (LEO) satellites, Amazon’s Kuiper project intends to enter this market by providing broadband connections that are quick and affordable all over the world.
In 2024, Amazon intends to launch its production satellites. Even though it is too early to predict how this will affect the bottom line, an increase in internet use around the world could boost the company’s e-commerce and cloud computing operations by bringing in new online customers.
Amazon’s stock is significantly more expensive than the S&P 500’s average of 21 at a price-to-earnings (P/E) multiple of 57.
However, taking into account the company’s core operations’ near-term margin erosion, the premium makes more sense. Inflation, expansion during the pandemic, and client-level macroeconomic uncertainty are largely to blame for this obstacle. Morgan analysts, on the other hand, think that these problems are temporary and unlikely to last for a long time.
2. Luckin Coffee
is a chance to buy the rally rather than a buy-the-dip opportunity because it was the stock that saved my portfolio during the bear market in 2022. As its growing profitability and geographic expansion take shape, the soaring Chinese coffee shop, whose sales have increased by a whopping 183% over the past year, may have more room to operate.
Luckin Coffee has taken off from the moment it emerged from bankruptcy restructuring in April 2022 following the accounting scandal involving its previous management. Due to an increase in the number of customers who conduct business on a monthly basis to 24.5 million, fourth-quarter sales increased by 52% year-over-year to $535.7 million. Luckin intends to disrupt the coffee shop industry using a technology-driven strategy, despite the market’s fierce competition.
An “online-offline model” is used in its stores, where customers can order and pick up their purchases without having to deal with cash or talk to a cashier. Luckin is now expanding into other South Asian markets, including Singapore, a nation with a significant Chinese diaspora and potential consumers who may share similar tastes, after demonstrating the viability of its strategy in China.
Luckin Coffee trades at a significant premium over the S&P 500 average of 2.3 with a price-to-sales (P/S) multiple of 4.6. However, considering its rapid expansion and profitability, the price seems reasonable. In the fourth quarter, the business made $45.4 million in operating income.
Which stock suits you best?
Luckin Coffee and Amazon are both excellent choices, but there are some differences. Amazon is a comeback story because it is a large, well-established company that is currently struggling financially. Investors should have faith in management’s ability to capitalize on new opportunities like satellite internet while repairing the core businesses. Luckin is a young company that is finally finding its stride. However, even though it is less well-known, there is probably more room for growth in the long run.
