While the biggest rewards may stem from the most unpredictable (and therefore speculative) of enterprises, sometimes, you just want additional reassurances. For such an endeavor, it may be wise to consider high-quality stocks to buy.
Of course, depending on your circumstances, you may want to continue maintaining a core position in growth opportunities. However, with so many variables over the horizon – from the state of the upcoming presidential election to geopolitical flashpoints – investors enjoy an easy juncture. To be better able to sleep at night, it makes sense to prioritize quality over outright profitability potential.
To establish a proper framework, I filtered out various stocks to buy based on three criteria:
- Consensus analyst rating of moderate buy or strong buy.
- Five-year earnings growth of 10% or more.
- Five-year revenue growth of 10% or more.
Granted, just because a company meets these standards doesn’t guarantee anything. However, you should enjoy a higher probability of success rather than targeting pure risk-on names. With that, below are high-quality stocks to consider.
Hyatt Hotels (H)
Based in the lodging industry, Hyatt Hotels (NYSE:H) really needs no introduction. Thanks to the revenge travel phenomenon giving way to a concept known as travel prioritization, Hyatt could be a beneficiary. Yes, the consumer economy is hurting. At the same time, people are recognizing that life is short. Therefore, they want to enjoy top experiences while they can.
To be fair, some of the quality has taken a hit with Hyatt. In the past four quarters, the company’s average earnings per share landed at 72 cents. Now, that’s above the average analysts’ estimate of 70 cents during that time. However, there were sizable misses in the second quarter of last year and Q1 of this year.
Still, I’m looking at the overall picture, which seems intriguing. As pointed out earlier, Hyatt enjoys a track record of earnings and sales growth. Despite that, H stock trades at 24X trailing-year earnings. Between Q1 2023 and Q1 2024, this metric landed at 26.11X.
For fiscal 2024, experts see EPS expansion of almost 50% to $3.83. Revenue could gain 2.3% to $6.82 billion. It’s one of the high-quality stocks to buy.
Baidu (BIDU)
When looking for high-quality stocks in the broader technology sphere, investors are spoiled for choice. However, if you want the potential for significant upside and are able to absorb volatility risk, China’s Baidu (NASDAQ:BIDU) offers a compelling take. Falling under the internet content and information industry, Baidu brings a lot of innovations to the table. These innovations include artificial intelligence.
Over the past five years, the company has been boosting its top and bottom lines. All signs point to the trend continuing. In the past four quarters, Baidu posted an average EPS of $2.94. This easily beat out the consensus view of $2.33. Further, the earnings surprise landed at 26.38%. That’s impressive.
Even with this performance, though, anxieties over the struggling Chinese economy has kept BIDU stock deflated. It trades at only 10X forward earnings and 1.89X trailing-year sales. In contrast, the metrics in the past year stood at 12.95X and 2.53X, respectively.
While fiscal 2024 could be a turbulent year, solid EPS and sales expansion to $11.80 and $20.6 billion in 2025 is projected. Thus, BIDU is one of the high-quality stocks.
Essential Utilities (WTRG)
As you might guess from the name, Essential Utilities (NYSE:WTRG) operates in the utilities space, specifically regulated water. What makes Essential one of the high-quality stocks to consider is the relevance of the business model. By providing water, wastewater and even natural gas services, the enterprise offers critical services to myriad customers.
Also, Essential – as with other top utility stocks to buy – benefits from its natural monopoly. Basically, steep barriers to entry allow the company to be entrenched in its core regions. Overall, the financial performance is solid. In the past four quarters, the utility posted an average EPS of 53 cents. In contrast, experts anticipated earnings of 48 cents per share.
What’s interesting here is that WTRG stock trades at a relative discount. Right now, the market prices shares at 19.16X trailing-year earnings. However, in the past year, this metric stood at 22X. Analysts believe that fiscal 2024 EPS could pop 10.22% to $2.05. Next year, earnings could rise again to $2.12 per share. It’s one of the high-quality stocks to put on your radar.
Phillips 66 (PSX)
Based in Houston, Texas, Phillips 66 (NYSE:PSX) falls under the oil and gas refining and marketing industry. Also known as downstream, Phillips 66 deals with the consumer-facing component of the hydrocarbon value chain. That’s what makes this idea so intriguing. Because of various political and geopolitical dynamics, it’s quite possible that global oil supply chains could be disrupted.
Under such a scenario, Phillips 66 may cynically benefit from an inflationary backdrop. Now, it’s true that former President Donald Trump has gained significant momentum in the electoral race. However, his heavy-handed approach to the economy could cause even worse inflation. If so, PSX stock may be the idea to target. People can’t just ignore getting gasoline for their combustion-powered vehicles.
Here’s where things get interesting for Philips 66, though. For fiscal 2024, analysts expect sales to land at $144.25 billion. That would be down 3.8% from last year. And in fiscal 2025, sales could slip again to $139.29 billion.
However, the most optimistic analyst calls for 2024 sales to hit $161.39 billion. And there could be an improvement to $163.03 billion next year. I believe in this narrative because of the geopolitical framework. Thus, PSX is one of the high-quality stocks.
Avino Silver & Gold (ASM)
Another intriguing idea among stocks to buy, Avino Silver & Gold (NYSEAMERICAN:ASM) obviously falls under the basic materials category. Together with its subsidiaries, Avino engages in the acquisition, exploration and advancement of mineral properties in Canada. Primarily, the company explores for silver, gold and copper deposits. All of these metals have monetary and/or industrial applications.
With some experts stating that a second Trump administration could lead to worse inflation than what we had under President Joe Biden, ASM stock should be on your radar. Even without the political noise and all the surrounding uncertainties, the underlying gold market itself has skyrocketed. There used to be a time when gold bulls aimed longingly for a $2,000 spot price. Now, it’s quite mundane.
Of course, precious metal miners tend to be speculative and therefore, investors should approach with caution. Also, ASM stock trades at a premium. For example, its price-to-sales ratio is 2.92X. In the past year, it was 1.77X.
However, analysts anticipate that fiscal 2024 revenue could jump 35.6% to $59.53 million. And next year’s sales could soar to $69.03 million. Thus, it’s one of the high-quality stocks to consider.
Akamai Technologies (AKAM)
Headquartered in Cambridge, Massachusetts, Akamai Technologies (NASDAQ:AKAM) falls under the infrastructure software ecosystem. Per its public profile, Akamai provides cloud computing, security and content delivery services in the U.S. and other international markets. As well, it offers solutions to protect users from cyberattacks and online threats. Thus, it’s a multitiered weapon in the wild cloud infrastructure space.
With so much data migrating to cloud networks, Akamai brings tremendous relevancies to the table. As stated earlier in terms of criteria, Akamai has been expanding its earnings and sales over the past half-decade. The trend should continue. In the past four quarters, the company posted EPS of $1.61, better than the expected $1.53.
What’s interesting is that AKAM stock is also relatively undervalued. Shares trade for 23.73X trailing-year earnings and 3.82X trailing-year sales. In the past year, the metrics stood at 31X and 4.26X, respectively.
For fiscal 2024, experts believe that EPS could rise 1.8% to $6.31. On the top line, sales could expand by 4.7% to $3.99 billion. It’s not particularly exciting. However, Akamai is one of the dependable high-quality stocks.
Cameco (CCJ)
Investors who want to focus on technology shouldn’t be stopped from doing so. However, it pays to spread a bit of that love to nuclear energy firms. Perhaps the best one out there is Cameco (NYSE:CCJ). As a giant in the ecosystem, broader news that bolsters the uranium space tends to benefit CCJ stock. More importantly, tech isn’t free.
What I mean is that all the innovations that are out there, from AI, machine learning, autonomous systems and everything else consumes energy resources. Yeah, no kidding, you might say. However, the scope of the consumption is unreal. According to The Washington Post, the proliferation of data centers and various AI protocols is stretching the capabilities of the U.S. power grid.
As much as we would like to get our energy from the sun and the wind, it’s just not realistic. We’re going to have a discussion about the advancement of nuclear energy: there’s no getting around this point. That should benefit CCJ stock for the long haul.
Analysts also see EPS rising 47.37% to 84 cents in fiscal 2024. Also, revenue could fly 17.7% to $2.23 billion. It’s one of the high-quality stocks to buy.
On the date of publication, Josh Enomoto 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.
