Wall Street experienced a notable rebound as the Standard & Poor’s 500 index surged by 0.8%, recouping losses from the previous day and indicating renewed investor confidence. The Dow Jones industrial average also made a modest gain, hinting at a potential recovery after recent stagnation. This rebound has led to the rise of stocks to buy.
Most prominently, the Nasdaq composite led the market with a remarkable 1.4% gain, signaling renewed interest in technology and growth-oriented companies. These positive developments in the stock market reflect improving bond yields and falling oil prices, alleviating concerns about inflation and interest rates.
This overall market resurgence suggests a more favorable economic outlook and heightened investor optimism, setting the stage for potential future growth for these three stocks in the long term.
Earthstone Energy (ESTE)
Earthstone Energy (NYSE:ESTE) is a leading growth company that develops and converts oil and natural gas to energy. With a high-valued rating in the oil and gas E&P industry, Earthstone Energy recently had a breakthrough in property acquisition, contributing to a 49.39% increase YTD in stock price.
In 2022, the oil and gas infrastructure market was valued at $7 trillion, with projections to grow to $7.33 trillion in 2023 market at a CAGR of 6% to 2030. The Russia-Ukraine War contributed to a major deficit in the industry as a whole, but projections for the industry are back on track for growth.
Financially, Earthstone performed well in Q2 2023. Both revenue and EPS hit consensus earning estimate marks of $370.01 million and $0.54, beating projections by 5.67% and 6.24%. Various geographical and political factors can be attributed to the decline in revenue YoY. These decreases in performance were expected and mirrored across the industry.
The most prominent growth catalyst for Earthstone comes from the acquisition of a $1 billion basin in Delaware to continue mining operations for energy. Through obvious measures, the basin will allow for more expeditions for Earthsone, maximizing energy profits while operating from both Texas and Delaware. Furthermore, a more subtle benefit arising from the purchase comes from domestic expansion. Typically, Earthsone has been isolated to the southern Texas region, and this purchase initiated the company’s plans for national expansion across the United States. A more national brand awareness as well as different climate conditions will further contribute to growth in profits. All in all, it’s definitely one of those stocks to buy.
Overall, a number of catalysts such as strong financials and expansion in operational territories have led to 9 out of 10 investors ranking ESTE as a buy or strong buy. With the current cheap valuation of $18.68, ESTE is a stock for long-term growth.
NuScale Power (SMR)
NuScale Power (NYSE:SMR) is an Oregon-based designer and builder of small modular reactor nuclear power plants.
SMR stock is down 51.29% YTD and is currently priced at $4.90. Yahoo! Finance reports 3 analysts having a mean 12-month price target of $12.38, with the range spanning from a low of $8.00 to a high of $18.00.
The global energy nuclear energy market is expected to grow from $204.41 billion in 2023 to $271.08 billion in 2027 at a 5.7% CAGR. A key driver of this growth has been the growth in energy demands from developing countries.
NuScale Power’s Q2 earnings were below estimates, but NuScale is currently in the growth stage so financials will look more favorable in the future. Revenue of $5.8 million grew 110.08% YoY, and net income has increased by 8.21% YoY to -$9.52 million. Finally, operating income has decreased by 6.56% YoY to -$56.12 million. These fundamentals make it one of those stocks to buy.
NuScale Power’s main current catalyst is the potential of its recently issued Standard Design Approval (SDA), which is an approval by the US Nuclear Regulatory for a new design, disrupting the industry. The company had been attempting to get approval for a small modular design that could fit into places where plants could not be before. This had them stopped in place for a significant period waiting for this approval, but now it is full steam ahead. If it can begin to land contracts in the US like the one it landed in Romania in May, which is highly likely as its units dramatically lower costs, it could see a surge in stock price.
With its significant potential to lower its costs in an industry with huge growth potential, NuScale Power Corp emerges as a ‘buy’ for growth-oriented investors.
Royal Caribbean Cruises (RCL)
Royal Caribbean Cruises (NYSE:RCL) is an international cruise line that has various cruises that range from Alaska to Hawaii to Europe to the Caribbean.
RCL stock is up 84.46% YTD at $91.27 and 15 analysts predict a 12-month mean to high forecast of $125 to $139, or a 37.1% and 52.4% upside.
The travel and tourism industry valued at $854.70 billion as of 2023 is projected to reach $1016.00 billion in 2027 at a CAGR of 4.42%. Key factors for this speedy growth include urbanization, the increase in leisure time, new technologies in the field, and greater affluence.
Annual revenue has grown over the past 2 years, from $1.53 billion in 2021 to $8.84 billion in 2022 and to $12.00 billion in 2023. Royal Caribbean has a gross profit margin of 39.49% which is 11.53% more than the sector median of 35.41%. Cash from operations reached $3.23 billion which is 1,344.71% more than the sector median of $223.80 million. These metrics indicate that RCL is growing speedily while remaining profitable meaning the company is thriving. These financials put it above others, and also make it one of those stocks to buy.
Royal Caribbean beats the competition by offering the best cruise ship experience in the industry from a friendly united crew from dedicated teams based on port and investments in local talent. The company is also the first cruise line to offer fast WiFi on board, ice skating rinks, surf simulators, and Broadway shows on the ship. The company further has private islands in Haiti and the Bahamas which allows guests to have an unmanned private yet enjoyable experience offboard.
Ship design also is being improved to offer some of the best amenities possible. Recently, the Wonder of the Seas was introduced which will be the largest ship in Royal Caribbean’s fleet until late 2024 in which Utopia of the Seas will debut. Utopia of the Seas will be the first environmentally friendly ship in its class and will be powered by Liquified Natural Gas.
Due to RCL being a major innovator in the cruise ship world as well as having the best experiences on board, RCL stock is one to buy a the Utopia of the Seas debuts. It’s therefore definitely one of those stocks to buy or one to keep on your watchlist.
On the date of publication, Michael Que 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.
The researchers contributing to this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
