The bull market has raged on through the first half of 2024; the S&P 500 index is up 16% year to date and is sitting at new highs. But there are still plenty of stocks that could head higher in the near term.
These three Motley Fool contributors see more upside for Carnival (NYSE: CCL) , Roku (NASDAQ: ROKU) , and Amazon (NASDAQ: AMZN) . Here's why they believe these top stocks are timely buys in July.
This travel stock is poised to hit new highs
Jennifer Saibil (Carnival): Carnival is coming off a rebound year when it completely crushed the market, gaining 130%. You would think it would have to demonstrate some seriously strong performance to keep that up, and so far, so good.
The market seems to think it's had enough, and Carnival stock is trading down 6% this year. But as it continues to exceed expectations, it shouldn't stay down for much longer.
Management delivered an excellent update for the 2024 fiscal third quarter (ended May 31), with many metrics hitting new highs, including customer deposits and booking levels.
Revenue hit a second-quarter record of $5.8 billion, and operating income was five times last year's levels. It reported a positive net income of $92 million, $500 million better than last year. Management raised its outlook across the board for the full year.
There's been concern that Carnival's incredible rebound is a short-term reaction to cruise closures, but demand remains strong, and customers are booking out into 2025. In a classic illustration of supply and demand, Carnival has been able to charge top prices due to high interest and low inventory for longer periods. This is helping it move further out into higher profitability and wipe out more of its debt, which remains high. But it's looking quite likely that it will be able to clear it over the next several years and return to a solid financial position.
Management is taking a number of actions to improve the business, not only from a financial standpoint. It's investing in the passenger experience with better connectivity and celebrity performances. It has upgraded its planning software and is strategically streamlining its fleet to effectively use its resources.
These are the kinds of actions that should generate more demand, increased sales, and sustained profits. With Carnival stock still down year to date, investors can get excited about a rebound in the back half of the year.
This oversold stock looks ready for a comeback
Jeremy Bowman (Roku): While the S&P 500 continues to churn to all-time highs, the streaming sector has lagged behind. Entertainment giants like Walt Disney and Warner Bros Discovery are still trading down substantially from their previous highs, and Roku stock has fallen nearly 90% from its peak during the worst of the pandemic.
The industry has undergone a brutal correction after a boom during the pandemic, but there are signs that the correction could be coming to an end. Disney just reported its first-ever profitable quarter in streaming, and a pending merger between Paramount Global and Skydance could also help alleviate some of the competitive pressure in the industry. Meanwhile, digital advertising has begun to recover following a sharp drop during the pandemic.
All of those developments are good news for Roku. Shares of the streaming distribution leader plunged as its path to profitability under generally accepted accounting principles (GAAP) looked unclear and revenue growth slowed following a spike during the pandemic, but the underlying metrics in the business remain strong.
Streaming hours jumped 23% year over year in the first quarter to 30.8 billion, and streaming households were up 14% to 81.6 million, showing it's still rapidly gaining new customers. Revenue also rose 19% year over year to $881.5 million, and it reported its third quarter in a row of adjusted profitability in earnings before interest, taxes, depreciation, and amortization .
Roku has struggled as its media partners have pulled back on advertising spending due to the challenges in the industry, but that should start to change as the streaming platforms take steps to profitability and new launches, like the flagship ESPN streaming network, which is due out next fall.
As Roku grows its user base and revenue, and the stock price remains down, the buy case gets stronger. As business conditions improve, the bottom line and the stock price should respond in kind.
Investors should stick with this winner
John Ballard (Amazon): Amazon stock has doubled the S&P 500's 24% return over the last 12 months by rising 51%. The stock just recently broke to another new high, which could be a sign of things to come in the second half of 2024.
The main story for Amazon over the past year has been improving profitability . The company is focused on widening its competitive moat in e-commerce by growing its selection of items while keeping costs down. This has led to improved sales momentum in online retail stores, but most importantly, its cost reduction led its first-quarter operating income to triple over the year-ago quarter to $15 billion.
It's no surprise to see Wall Street analysts upbeat about Amazon. For example, Wells Fargo sees it reporting better-than-expected financial results in the next earnings report. The bank bumped up its price target on the stock from $234 to $239, implying a 21% upside from the current share price of $197.
The consensus Wall Street estimate projects Amazon's earnings per share to grow 23% per year over the next several years. Assuming that estimate holds up, it would be enough for the share price to potentially double within the next four years.
Wells Fargo is an advertising partner of The Ascent, a Motley Fool company. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Roku, Walt Disney, and Warner Bros. Discovery. The Motley Fool recommends Carnival Corp. The Motley Fool has a disclosure policy .
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