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Now is the time to buy these shares – The Motley Fool



Stocks are 10 years in a beef market, which means that it becomes more difficult to find good deals. However, there are still stocks out there that are worth buying.

Here's why I believe Amazon.com (NASDAQ: AMZN) Mattel (NASDAQ: MAT) and St. Joe ( NYSE: JOE is worthy of the investor's money at current prices.

  A man with eyes opened wide, looking at something in a chest that shines brightly.

PICTURE SOURCE: GETTY IMAGES.

1
. Amazon.com

Shares of Amazon have boosted 2.300% over the last decade, but don't think you've missed the boat – there are two good reasons why the stock is still a good investment for today's $ 1,831 price per share.

First, there is still a long path of opportunities in e-commerce, given that physical stores still generate about 90% of worldwide retail.

In addition, Amazon's relentless focus on providing a better customer experience with technology is likely to hold it ahead of the competition. For example, the company continues to push ahead with the use of robots to reduce acquisition costs, increasing the ordering process and allowing Amazon to transfer cost savings to customers at lower prices.

Second, and perhaps the best reason to consider buying Amazon, is the rapid growth of Amazon Web Services (AWS). The AWS sales increased by 41% year-on-year last year, and it now generates an annual interest rate of $ 30 billion in revenue. More importantly, AWS produces an operating margin of around 30%, which means it is made up of most of the Amazon profits right now.

Consider this: IBM buys Red Hat an enterprise cloud service provider, for 10 times sales. Using the same valuation for AWS gives a $ 300 billion valuation. However, AWS can be worth more since it grows faster and earns better margins.

Analysts believe the AWS will be worth between $ 350 billion and $ 1 trillion within the next five years. Amazon's market value is currently $ 905 billion (total stock outstanding times the stock price), meaning investors place a fair value on AWS five years, but give much less value to the rest of the company.

2. Mattel

Shares of Mattel, producer of Hot Wheels and Barbie, fell hard in recent years. The share's slide derives from past management errors that left the company debt-ridden and unprofitable. But new management has strengthened and has a plan to turn Mattel into one of the most profitable companies in the industry.

Recent results show that management strategy works. In the first quarter, the constant currency sales increased by 1% year-on-year. More encouraging was the improvement in adjusted gross margin, which expanded by 670 basis points. Higher margins have had the bottom line, as the adjusted operating profit was significantly reduced year-over by nearly $ 150 million. These are very encouraging results and mark the third quarter in a row with the improvement of gross margin and operating revenues.

 MAT Gross profit margin (TTM) Chart

MAT Gross profit margin (TTM) data of YCharts.

Mattel continues to be a partner for Walt Disney s Pixar film properties, as a licensed toy manufacturer for Toy Story and Cars . Also for growth, Mattel has collaborated with MGM studios to produce live-action movies based on some of their brands, including Hot Wheels and Barbie.

The shares are relatively cheap at a sales ratio of 0.87, while the competitor Hasbro trades for 2.65 times sales. I am a good time to consider buying shares before better news sends the shares higher.

3. St. Joe

St. Joe is a real estate development company in the holiday magnet that is Northwest Florida. It owns and operates several valuable properties, including WaterColor Inn in Seaside, as well as several residential areas. It also owns 115,000 hectares of forestry, which gives a small amount of income each year in timber sales.

In total, the company owns 170,000 hectares of land – about two-thirds of it is within 10 miles of the Gulf of Mexico. Management has these capabilities to either develop and operate or sell to someone else who can better exploit the country.

After several years of low activity, management finally begins to be more proactive in unlocking the value of their big property decisions. Time is ripe as Northwest Florida is bustling with economic activity as vacationers flock to the beautiful beaches of the Gulf Coast.

There are several projects underway, including building apartments, beach clubs, office parks, marinas, several residential areas and several hotels. Over the past three years, investments have increased by 30% to $ 31 million – a leading indicator of revenue and profits.

In addition, St. Joe has a financially solid balance, with about $ 240 million in cash and short-term investments, $ 365 million in real estate investment and just $ 78 million in debt. The company currently has a market value of $ 1 billion.

Management clearly sees the value of the shares as it has repurchased 34% of the company's outstanding shares over the past five years – a clear signal that the stock can be undervalued.


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