After the Federal Reserve’s shift in late 2021, many stocks have faced challenges in returning to their previous record highs. However, there are several companies that have the potential to reach new all-time highs in the future. Let’s take a closer look at what needs to go right for these stocks to achieve this milestone.
1. Amazon (AMZN)
Amazon’s stock has been steadily recovering from its bear-market losses and is on track to surpass its 2021 peak. For this to happen, Amazon must focus on improving margins within its retail business, which may involve streamlining its logistics network and reducing spending on unprofitable divisions. Additionally, a resurgence in growth at Amazon Web Services, their cloud-computing division, would significantly contribute to overall earnings per share.
2. Salesforce (CRM)
With a more significant focus on profitability, Salesforce is well-positioned to return to its previous high. The company has demonstrated improved operating margins and needs to showcase the financial benefits of its artificial intelligence investments. Furthermore, an uplift in the business climate and increased software spending from Salesforce’s customers would be favorable for its stock performance.
3. Danaher (DHR)
Danaher experienced a surge in orders during the pandemic due to increased demand for Covid-related products. To reach its 2021 peak, the company will require sustained growth beyond the pandemic-induced boost. Although the troubled bioprocessing division is expected to rebound in 2024, long-term growth is essential for Danaher’s stock to approach its previous highs.
4. Walt Disney (DIS)
Although reaching a new all-time high may be challenging for Disney in the near term, the stock still possesses significant upside potential. The previous peak was influenced by market manipulation and subscriber-growth projections for the streaming division. Since investor sentiment has shifted toward profitability, focus on present-day profits will be crucial. CEO Bob Iger’s turnaround efforts are expected to positively impact Disney’s stock performance.
In conclusion, these stocks have the potential to reach new all-time highs if they can overcome various challenges and capitalize on favorable market conditions. Investors should closely monitor their progress and evaluate the factors discussed to make informed investment decisions.
1. What does “bear market” mean?
A bear market refers to a prolonged period of declining stock prices, typically accompanied by negative investor sentiment.
2. What is the Federal Reserve’s role in the U.S. economy?
The Federal Reserve, often referred to as the Fed, is the central banking system of the United States. Its primary responsibilities include controlling monetary policy, regulating banks, and maintaining the stability of the financial system.
3. How do interest rate hikes impact the stock market?
Interest rate hikes by the Federal Reserve typically signal a tightening of monetary policy, which can dampen economic growth and lead to decreased stock market performance. Higher interest rates increase borrowing costs for businesses and consumers, potentially reducing their spending and affecting corporate earnings.
4. What is a P/E multiple?
The price-to-earnings (P/E) multiple is a valuation ratio that compares a company’s stock price to its earnings per share (EPS). It helps investors assess the relative value of a stock and determine if it is overpriced or underpriced.
5. How can investors evaluate a company’s profitability?
Investors can analyze a company’s profitability by looking at financial metrics such as operating margins, net income, and return on equity. These figures provide insights into how efficiently a company generates profits and can influence its stock performance.