Finding and buying industry leaders is a good investment strategy, especially when you can pick up stocks at affordable prices. It doesn’t make sense to invest in semi-large companies when there are so many great areas to invest in.
If you’re looking for market leaders to invest in, consider these three companies.
Amazon
Amazon (AMZN -0.79%) is the undisputed king of e-commerce. Many of Amazon’s innovations have been imitated by other commerce companies looking to improve their online presence.
Amazon is also a leader in another area: cloud computing. Cloud computing has become essential for many businesses because it allows a variety of workloads, such as generating artificial intelligence models, to be run on off-site servers. Amazon currently leads the cloud market share, but competitors also microsoft Azul approached. Still, management recognizes that new workloads will come online, which should give him increased revenue through 2024.
Amazon is a market leader in at least two industries, so it’s easy to buy. Amazon stock’s price-to-sales ratio is below its trading price from 2018 to 2022, making it an even better buy now.
AMZN PS Ratio Data by YCharts
pro core
pro core (PCOR 0.96%) is much smaller and less well-known than Amazon, but that doesn’t mean Amazon isn’t dominant in the industry. Procore specializes in construction management software, giving owners and contractors better visibility into progress and budget. It also helps reduce costly rework by creating a “single point of trust” for all parties to work from.
Procore is growing at a healthy pace, with revenue increasing 29% to $260 million in the quarter. 2024 is expected to be another strong year, with sales expected to increase by around 20%.
Procore is on track for another strong expansion this year, and while you might think investors would be excited about the stock, its stock price is far below that of many of its software-as-a-service (SaaS) peers. ing.
PCOR PS Ratio Data by YCharts
However, 11x sales is still a bargain price for Procore, and investors shouldn’t hesitate to add to this market leader’s stock today.
airbnb
airbnb (ABNB -0.36%) is the leader in short-term rentals and experiences. Airbnb has continued to succeed even though many expected it to fail due to the coronavirus, the recession, or various cities banning short-term rentals.
The user experience has also been improved. Items like cleaning fees were once a way for hosts to hide costs until the last moment. The company says about 40% of its properties now have free cleaning fees, making renters even happier.
Airbnb has also been successful financially, with fourth-quarter revenue up 17% year-over-year to $2.2 billion, driven by a 12% increase in room and experience bookings. 2024 looks set to be another strong year for Airbnb, but it’s also a good buy right now thanks to a reasonable valuation of 25 times free cash flow (the price-to-earnings ratio is currently distorted by temporary effects). ).
Airbnb is a niche market leader and could be a boon for long-term investors.
John Mackey, former CEO of Amazon subsidiary Whole Foods Market, is a member of the Motley Fool’s board of directors. Keithen Drury has held positions at Airbnb, Amazon, and Procore Technologies. The Motley Fool has positions in and recommends Airbnb, Amazon, and Procore Technologies. The Motley Fool has a disclosure policy.
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