The market losses in the first three days of August provided a tremendous opportunity for stocks to buy now.
Between the July 31st close and the August 5th close, the S&P 500 lost 6.1%. At its peak, the index was off 8.5%, putting it on the brink of a correction. On August 2nd, close to $3 trillion was temporarily washed away as investors fretted about a global recession.
The headlines screamed of billionaires losing billions. According to Fortune, the world’s 500 wealthiest people lost $134 billion on August 2nd, including a $17 billion single-day loss for Elon Musk. Of course, when you still have $235 billion, it’s a little easier to take.
For a little perspective, Amazon (NASDAQ:AMZN) founder Jeff Bezos lost $16 billion on August 2nd. Yet, it was only his third-worst loss, with the worst in April 2019 when his divorce settlement redistributed $36 billion to his former wife.
These three billionaires might have been buying their stock on August 2nd. If you missed buying on the dip, and are focused on holding for the long term, these three billionaire stocks to buy now will make you money over the next three to five years.
Amazon (AMZN)
As I mentioned in the introduction, Jeff Bezos recently lost $16 billion, bringing his net worth to $191 billion. According to the Bloomberg Billionaires Index, his net worth is just about where it was nearly two weeks ago.
Even better, his net worth is up $13.3 billion in 2024, a mere $37 billion away from catching the Tesla (NASDAQ:TSLA) CEO in first place. Bezos’ gains year-to-date are the 14th best amongst the Bloomberg billionaires.
When you consider that Amazon’s five-year gain is nearly 90%, just 180 basis points higher than the S&P 500, I don’t know how you can’t buy at these prices.
Amazon had $232.89 billion in sales and $12.42 billion in operating income in 2018. In 2023, its revenues were $469.82 billion, and its operating income was $36.85 billion. That’s compound annual growth of 15.1% and 24.3%, respectively.
Yet, the CAGR for its share price is 15%, considerably less than its operating income. If it’s true that share prices follow profits, AMZN has some catching up to do.
LVMH (LVMH)
Bernard Arnault is the CEO and creator of LVMH (OTCMKTS:LVMUY), the world’s largest luxury conglomerate. As a result, Arnault is the world’s third wealthiest person, with a net worth of $184 billion.
However, as the 500 wealthiest billionaires go in 2024, he’s lost the most — down $23.8 billion. That would be depressing if Arnault thought in weeks or months. Fortunately, for shareholders, he thinks in years and decades.
The American Depository Receipt is down over 11% year-to-date and nearly $21 over the past 52 weeks. It now is up just 81% over the past five years, less than the S&P 500.
The thing I’ve found about LVMH stock over the years is that, like its Louis Vuitton bags, they rarely, if ever, go on sale. This is one of those moments. It’s down 26% from its March 52-week high of $191.63.
At the end of July, LVMH reported first-half 2024 earnings. The results had more than a few holes. The biggest being a 14% decline in its Asia sales in the second quarter, excluding Japan, on top of a 6% decline in the first quarter. Additionally, LVMH’s net profit declined by 14% in the first six months to 7.27 billion euros ($7.99 billion).
The good news? Its free cash flow increased 74% to 3.13 billion euros ($3.44 billion), or 7.5% of revenue, 320 basis points higher than a year earlier.
LVMH will be fine, and should be considered one of the stocks to buy.
Estee Lauder (EL)
Estee Lauder (NYSE:EL) Chairman Emeritus Leonard Lauder’s net worth has fallen 21% or $4.1 billion in 2024 to $15.8 billion. That’s because Estee Lauder stock has lost 37% year-to-date. It’s now down nearly 49% over the past five years.
EL is the riskiest of the three stocks to buy.
In February, the company announced a restructuring that would cut up to 5% of its global workforce. Starting in Q3 2024, the cost of the plan was estimated to be between $500 million and $700 million. Once completed, gross profits will increase by between $350 million and $500 million. This will ultimately boost its operating profit to $1.25 billion, up from $900 million.
Fashion Dive reported in late July that the initiatives to cut organizational layers at Estee Lauder are underway. Fashion Dive reported Morningstar analyst Dan Su’s comments:
“We believe initiatives to cut organizational layers in value chain management, marketing and channel functions are already underway. In addition, we think the company is in the process of exiting unprofitable brands and channels while carefully managing the impact on the overall company image and important retailer relations.”
EL stock hasn’t traded at this level since May 2017. This is a compelling risk/reward proposition if you’re an aggressive investor.
On the date of publication, Will Ashworth 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.
