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of S&P500 Up 15% in the past three months, the market seems to be doing well. However, this is a bit misleading as many individual stocks are still struggling. Many artificial intelligence and technology stocks are doing well, but this isn’t a big rally for the overall market.
But when the index hit a new all-time high on Jan. 19, it signaled it was in a bull market since the old bear market bottomed in October 2022. And it could rise further, especially if the market continues for a long time. The feared recession will not put pressure on the economy.
In a strong bull market, there are three stocks that could be the biggest winners. PayPal (PYPL -2.72%), real estate income (oh -1.79%)and green thumb industries (GTBIF 4.12%). Here’s why:
1.Paypal
Fintech stock PayPal has performed poorly in recent years. As more companies offer different payment options, including “buy now, pay later” services, there are growing concerns that PayPal faces too much competition to become a big growth stock anymore. . Over the past year, PayPal’s stock price has fallen by 17%.
However, as of 2021, nearly 77% of the top 1,000 retail chains offered PayPal as a payment option, according to Digital Commerce 360. And usage among those retail chains increased in that year compared to 2019. Even if PayPal’s market share declines, PayPal will remain the top online payment company for years to come.
Investors may also be underwhelmed by PayPal’s recent performance. Through the first nine months of 2023, revenue totaled $21.7 billion, an increase of just 8%. However, the global economy remains concerned about the possibility of a recession, and there is some hesitation among consumers. In a bull market, there could be more optimism, more consumer spending, and better performance for PayPal.
The company’s era of growth is by no means over. And with the stock trading at a fairly modest 12 times forward earnings, there’s plenty of room for PayPal stock to rise.
2. Real estate income
Realty Income is another stock that hasn’t benefited from the S&P’s rally. The company’s stock price has fallen 15% in the past 12 months. Still, real estate investment trusts (REITs) have been doing pretty well lately, and there are no serious concerns about their performance or the safety of their dividends, which yield around 5.5%.
For the first nine months of 2023, the REIT reported funds from operations (FFO) of $3.09 per share, which was better than $2.99 a year ago. This REIT has a diversified portfolio focused on major companies in the retail industry, making it one of the safer REITs you can invest in right now.
There are no obvious concerns for investors about the business itself, as FFO, a key number that REIT investors look at when evaluating dividend safety, is strong. The REIT pays a monthly dividend of $0.2565, for a total of about $2.31 over nine months. This is much lower than his FFO per share of $3.09 paid over a similar period. The payout ratio based on this metric is 75%.
Concerns about high interest rates are likely the main reason investors continue to be hesitant to invest in Realty Income and other REITs. But interest rates are widely expected to start coming down later this year, which could provide a tailwind for these companies. Real estate income is another stock that could grow under more encouraging economic conditions.
3. Green Thumb Industries
Green Thumb Industries is a top cannabis producer, but federal marijuana prohibition makes it the riskiest stock on this list. While excitement around the potential for marijuana reform and legalization often boosts the economy, Green Thumb and other multistate operators have largely struggled due to a lack of progress on significant reforms.
While the stock has gained an impressive 60% over the past 12 months, looking at Greenthumb’s three-year performance, its value has actually fallen by 58%.
The cannabis company generated more than $1 billion in revenue over the subsequent 12 months, was close to breaking even, and suffered a loss of $18.2 million during the period. The company’s relatively strong financial position makes it one of the safest cannabis companies to invest in, but uncertainty surrounding marijuana reform will likely bring some volatility to this investment.
Excitement is growing about the possibility of cannabis being rescheduled and downgraded from a Schedule I substance to a Schedule III substance. However, that in no way guarantees or implies that legalization is imminent.
But in a broad bull market, there should be more excitement about growth stocks in general. Also, Green Thumb, which has been underperforming for the past few years, is a major player in the industry with a presence in 15 states and 90 retail stores, so its stock could see a big jump.
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