There was plenty of volatility in the first trading week of August. You should expect more of the same for the rest of this summer and beyond. But that doesn’t mean you should ever stop investing. You just need to fine-tune your selection process.
I believe that Costco (COST +0.52%), Royal Caribbean (RCL -3.75%), and Sirius XM Holdings (SIRI -2.90%) are buy-and-hold investments, and that won’t change the next time there’s a market sell-off. Let’s take a closer look at these three steady investments.
Image source: Getty Images.
1. Costco
There’s a good time to buy Costco stock, and then there’s a great time. The good time to buy the country’s leading warehouse club operator is most of the time. It’s a business built to survive and largely thrive in all economic climates. Net sales have increased in 32 of the past 33 years.
The great time to buy is when the stock is out of favor, and as it turns out, that is right now. Costco is trading 3% lower over the past year. The market’s rising. Costco’s sales and earnings are also moving higher. The shares have been inching lower, which has improved its recent valuation. More importantly, Costco doesn’t tend to stay down for long.
Today’s Change
(0.52%) $4.93
Current Price
$952.75
Key Data Points
Market Cap
Day’s Range
$940.56 – $952.89
52wk Range
$844.06 – $1096.50
Volume
1.5M
Avg Vol
2.4M
Gross Margin
12.88%
Dividend Yield
0.58%
Costco is as close as you can get to an all-weather investment. Members know they’re getting great deals on household essentials, as Costco’s annual dues make up more than half of its operating profit. A retailer that delivers more bang for the buck will fare better than chains feasting on wider margins.
The stock is trading at 42 times next year’s earnings target, a much steeper valuation than the other two names on this list. However, Costco’s excellence over the long haul and its stellar operational consistency make it worth its market premium. Yes, you can be a safe stock without being a cheap one. If you’re like me, you probably prefer it that way.
Today’s Change
(-3.75%) $-12.00
Current Price
$308.00
Key Data Points
Market Cap
Day’s Range
$307.13 – $317.00
52wk Range
$232.10 – $366.50
Volume
1.9M
Avg Vol
2.6M
Gross Margin
39.09%
Dividend Yield
1.56%
2. Royal Caribbean
The country’s largest cruise line operator by market cap isn’t just bobbing in the water. Royal Caribbean is cruising with industry-leading margins and growth. There are some choppy waters right now, but to an opportunistic investor, Royal Caribbean is tempting at just 3% higher over the past year.
The second-quarter results it posted two weeks ago were mixed, and not in the way you might initially expect. Revenue rose 6% for the spring quarter, in line with Wall Street projections. It landed ahead of analyst profit targets, even if adjusted earnings declined for the period. But an 11% jump in operating costs, fueled mostly by rising fuel costs as well as increases in food and labor expenses, was too much to overcome. Royal Caribbean slightly lowered its full-year revenue growth forecast from 10% to 9%, but it did boost its adjusted earnings outlook.
Demand remains thankfully robust here. Royal Caribbean’s load factor was 110% based on double occupancy. Bookings for 2027 are ahead of historical levels, even in areas facing geopolitical uncertainties. Buying Royal Caribbean at a forward earnings multiple in the mid-teens sounds like a healthy watery escape. The stock’s 1.6% yield rewards patient investors.
Today’s Change
(-2.90%) $-0.86
Current Price
$28.78
Key Data Points
Market Cap
Day’s Range
$28.61 – $29.60
52wk Range
$19.77 – $32.66
Volume
4.6M
Avg Vol
4.9M
Gross Margin
40.40%
Dividend Yield
3.61%
3. Sirius XM
Finally, we close on a name that you might not think would weather a market setback. As a product consumed largely in cars, the country’s satellite radio monopoly may seem susceptible to rising fuel prices in more ways than one. As a premium entertainment subscription, Sirius XM may also seem like an easy one to nix when drivers need to cut costs.
Here’s where Sirius XM steps up as a cheap cash cow. SiriusXM has run into some growing pains in recent years, but it has managed to marginally increase its year-over-year revenue for three consecutive quarters. The bottom line is where Sirius XM is faring better, as a 17% increase in earnings balloons to a 20% jump on a per-share basis, given its aggressive share buybacks.
Unlike Costco and Royal Caribbean, Sirius XM is beating the market with a 40% gain over the past year. It’s still reasonably priced at 10 times this year’s profit forecast with a healthy 3.6% yield. With 33 million subscribers still tuning in, Sirius XM isn’t afraid to get loud when it needs to.