Leading stock indexes like the Nasdaq Composite and Dow Jones Industrial Average saw massive drops last week.
Traditionally, the stock market has been subject to external forces like inflation data, geopolitics and new technological advances. The market always goes through cycles of bear and bull markets. Long-term investors know that picking the right comeback stocks is the only way to earn big investment returns.
These are stocks whose long-term performance will lead to huge returns. For investors, the best option is stocks that have shown resilience during headwinds. Companies that have enough resources and a competitive advantage are your best option.
If you are looking for respectable gains amid the dip in global stock markets, these three stocks are your best bet.
Alphabet (GOOG, GOOGL)
Alphabet (NASDAQ:GOOG, GOOGL) is a holding company with an better than $2 trillion market cap as of recently. It is the power behind the leading search engine, Google.
Alphabet recently released its second-quarter fiscal 2024 results that showcased the strength of its Cloud and Search businesses. According to the results, revenue grew 14% to $84.7 billion compared to last year.
The search business generated the most revenue at $48.51 billion. The Cloud business generated $10.35 billion. The company also announced that it returned $2.5 billion to investors through dividends while its balance sheet is also quite impressive with over $100 billion in liquidity.
The revenue growth is due in part to Search highlighting positive returns from the company’s AI efforts. Alphabet said it plans to continue to deploy AI across all its services, which would boost revenue in the long term.
Yet GOOG stock is down 16% from its all-time amid the tech sector selloff last month. Analysts, though, remain cautiously optimistic about it being a comeback stock. They forecast GOOG could rise by 22.79% in the next 12 months to $203.76 per share from the current price of $165.39.
If you are looking for a great tech stock at the tip of innovation in the tech world. GOOG is an excellent choice. The stock has been in growth mode for over a decade. As Alphabet ramps up its AI products, revenue will only keep rising. GOOG is a great choice for long-term investors to add to your portfolio amid the meltdown.
Travel+Leisure (TNL)
Travel+Leisure (NYSE:TNL) is a renowned membership and leisure travel company that develops and sells timeshare properties.
The company exceeded analysts’s expectations in the second quarter results. Revenue came in at $985 million, a 3.5% year-over-year increase. Meanwhile, tours rose 13% year over year, while new owner tours were 22% year over year.
Net cash from operations doubled to $221 million for the six months ended June 2024, compared to $110 million last year. It also announced it had returned $105 million to shareholders in dividends and buybacks.
For the full year, the company expects gross vacation ownership interest (VOI) sales of $21.25 billion to $2.35 billion and $620 million to $650 million in the third quarter. The positive outlook reflects buoyant demand for timeshares.
Over the past 12 months, its price has been up 3% but is down 16% from its 52-week high hit in July. That makes TNL a great comeback stock opportunity, as leisure and travel will increase when the economy improves.
The Federal Reserve expects to start cutting rates in September and well into 2025, which could boost the stock price. Fed Chair Jerome Powell has already hinted that the Fed could cut rates starting in September if inflation data looks promising. In general, lower rates mean travelers are more willing to take loans for travel.
Analysts predict a 32.28% upside for the stock for an average price of $54.09, compared to the current price of $42.03. Over the long term, the stock could see major price increases as the leisure travel market recovers.
Confluent (CFLT)
Confluent (NASDAQ:CFLT) is a major player in data streaming services. Its second-quarter fiscal 2024 results surpassed expectations.
Revenue rose 24% from last year to $235 million, demonstrating healthy demand for its products. However, customers seeking to control short-term cloud costs have impacted its short-term growth.
The company’s stock price tanked following the release of its second-quarter results. Shares are down 9% in 2024 and 36% over the last 12 months. However, the recent drop was due to investor overreaction. With the company’s critical role in processing data streams, Confluent is a comeback stock to watch.
Confluent’s data streaming capabilities will be critical amid the rise of AI. This is especially true for machine learning, which needs a huge amount of data delivered in real time.
As generative AI continues gaining traction, real-time access will become crucial for great customer experiences. This includes applications like voice bots and personalized customer management.
Confluent has already changed its business model and is now focused on connectivity, stream processing and governance for its data platform. Thus far, it has enjoyed great success, adding 320 customers in the second quarter.
As AI applications rise, so will the need to streamline and speed up data processing. Confluent is uniquely qualified to provide this capability. It should be among the stocks to watch closely in 2024.
If you are looking for growth after the recent meltdown in the stock market, CFLT should be at the top of your list. It has all the hallmarks of a comeback stock poised for long-term growth.
On the date of publication, Joel Lim did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
