August is off to a rough start for investors. A combination of weak economic data and a surprise interest rate hike in Japan prompting the end of the carry trade pushed the S&P 500 index down 6% in the first three days of the month.
Investors are suddenly fearful that a recession could be around the corner, and that the Federal Reserve waited too long to lower interest rates.
However, not every stock got hit on the sell-off. Let's take a look at three soaring stocks that are worth buying right now.
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1. MercadoLibre
It's hard to think of a stock that has been a more consistent performer than MercadoLibre (NASDAQ: MELI) . The Latin American e-commerce giant delivers strong growth quarter in and quarter out through volatile periods including the pandemic, the post-pandemic slowdown in e-commerce, and the Argentinian economic crisis.
Along the way, it's withstood competition from giants like Amazon and Sea Limited , and expanded into new businesses like Mercado Pago, its fintech arm; MercadoEnvios, a logistics business; a credit business, and advertising.
That's helped drive growth in the top and bottom lines, and investors cheered its second-quarter earnings report with the stock jumping 11% on Aug. 2 while the rest of the market was crumbling. MercadoLibre traded flat the following session when stocks were tumbling after the Japanese Nikkei index fell 12%.
MercadoLibre's focus on Latin America helps insulate it from the vicissitudes of the U.S. economy, so it's a good option for investors looking to diversify away from the U.S.
The company's record speaks for itself. The stock is up nearly 2,000% over the last decade, and it just posted 42% revenue growth in the second quarter, continuing its streak of five years of quarterly revenue growth of 35% or better.
2. Deckers
One of the most overlooked consumer discretionary stocks in the market right now is Deckers (NYSE: DECK) , the footwear company that owns brands like Ugg, Teva, and Hoka.
The stock has broken out in recent years, largely thanks to the strength of Hoka, a running shoe brand known for thick midsoles that has been embraced for running, comfort, and even fashion. It's won over nurses and others who work on their feet all day, and Hoka continues to put up impressive growth.
Revenue at Deckers increased 22% in the recently reported fiscal first quarter to $825 million, led by 30% growth from Hoka to $545.2 million.
Deckers' margins also surged in the quarter, with gross margin improving from 51.3% to 56.9% thanks in part to the higher price point Hokas command, and its operating income nearly doubled from $70.7 million to $132.8 million.
Considering the recent weakness from industry leaders like Nike and Adidas as well as Deckers' relatively small size, Hoka has a long runway of growth in front of it if it can maintain its popularity. The stock is up 500% over the last five years, but more gains could be in store.
3. Realty Income
While tech stocks and the S&P 500 index have been pulling back from their peak in July, one stock has been steadily marching higher.
Realty Income (NYSE: O) , a real estate investment trust (REIT) focused on triple-net retail properties, has gained roughly 15% during that time.
Realty Income is the textbook definition of a safe stock. The company owns stand-alone retail properties, and its tenants primarily represent recession-proof businesses like Walgreens and 7-Eleven. Realty's triple-net model, which means that the tenant pays for property taxes, maintenance, and insurance, also helps protect this asset manager from financial risk.
Realty Income also appeals to dividend investors; the stock currently offers a dividend yield of 5.2%.
That dividend should help the stock continue to move higher because interest rates are expected to come down, and that should encourage investors to rotate back from fixed income into dividend stocks as bond yields are falling. The company also pays a monthly dividend, sweetening the deal for income investors.
Finally, as a REIT, Realty Income's business will benefit from lower interest rates, as they will make it easier for the company to borrow money to buy new properties and potentially allow it to lower interest payments on its existing debt.
Overall, Realty Income appears to be in the right place at the right time and should reward investors looking for a safe dividend stock to ride out the current market volatility.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Jeremy Bowman has positions in Amazon, MercadoLibre, Nike, and Sea Limited. The Motley Fool has positions in and recommends Amazon, MercadoLibre, Nike, Realty Income, and Sea Limited. The Motley Fool recommends the following options: long January 2025 $47.50 calls on Nike. The Motley Fool has a disclosure policy .
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