I am constantly evaluating companies and adding to my watch list, however, a few stand out as stocks I wish I had in my portfolio.
For me, these would be Amazon (AMZN), Apple (AAPL), and Ulta Beauty Inc. (ULTA).
All three of these companies are giants in their respective markets and are wonderfully run. They have strong balance sheets and great numbers, with great future outlooks.
Let’s break each one down and look at why I believe they are great companies.
Amazon is by far the largest player in the e-commerce sector and considered to be a part of the big four technology companies along with Google, Apple, and Facebook.
Since going public in 1997, Amazon has trended upward every single year, including hitting an all-time high of $3,344.29 this year.
This is impressive considering we are currently in a pandemic that has sent the stock market reeling and the economy into recession. However, since people have been stuck at home, online retail sales have skyrocketed.
The company has a market cap of $1.52 trillion dollars, which makes it one of the largest market caps of all publicly traded companies.
Their earnings per share (EPS) currently sits at $20.94. Sales growth rate over the past 10 years has been right at 25%, which is a really strong and consistent number.
Average return on equity (ROE) for the last 10 years is around 14% and return on invested capital (ROIC) averages out to 9%, with increases over the last seven years.
Amazon has a free cash flow per share (FCF) of $46 and an estimated future growth rate of 24% which means the stock price could be worth over $8,600 in the next decade.
Also a part of the big four tech companies, Apple is another huge player in its respective sector.
It has a market cap of $1.67 trillion, even larger than Amazon’s. EPS is $12.73 and Apple has beat earnings estimates the past four earnings periods.
Over the last 10 years it has posted an average ROE of 48% and an average ROIC of 28%. Both of these numbers are great and show how great this company has been over the last decade.
Apple has very little debt and FCF per share sits around $14, which means tons of cash on hand.
Analysts currently peg future growth of between 10% and 11% which means in 10 years Apple could be worth more than $700.
However, it was recently announced that AAPL plans to do a 4-to-1 stock split, which means the current price of just under $400 per share would fall to between $90 and $100.
For anyone who doesn’t currently own any AAPL shares, this is great news because now investors can get in at a much lower price. I really like this move by the company and it just further increases my interest in adding it to my portfolio.
Ulta Beauty Inc. (ULTA)
This one may not be as well known to most people, but Ulta is a great company and one stock I think adds value to any portfolio.
Ulta is a chain of beauty stores across the United States. It has had the same CEO, Mary Dillon, since 2013. Currently, ULTA’s stock price sits in the $190 to $200 range.
Ulta has a market cap of $11.2 billion and a EPS of around $7.50.
The company’s average ROE and ROIC over the last 10 years is right at 31%, which is a really strong number.
FCF per share is around $6, which as mentioned with Amazon and Apple means they have lots of cash on hand.
The company also has little to no debt, which will allow it to weather all current and future storms without having huge impact on the business.
Ulta has an estimated future growth rate of 14% to 15% which would put the stock price at over $800 in the next decade.