Hate Meme Stocks? Buy These Companies Instead

Long-term
investors
should
avoid
speculative
short
bets
and
focus
on
stocks
with
strong
fundamentals.
These
stocks
within
Morningstar
analysts’
coverage
universe
offer
reliable
portfolio
growth
compared
to
their
volatile
meme
counterparts.

Low-price
retail
giant
Walmart
offers
a
convenient
one-stop
shopping
destination
with
4,600
stores
across
the
US
and
another
10,000
around
the
world.
The
company
wracked
up
over
$440
billion
(£344
billion)
in
domestic
sales
in
fiscal
2024
top
line.
Internationally,
it
generated
$115
billion
in
sales.

Shares
recently
soared
on
blockbuster
earnings
and
strong
outlook,
including
a
6%
revenue
jump,
from
$152.30
billion
to
$161.5
billion
a
year
ago.
Sales
surged
21%
year-on-year.

“Wide-moat
Walmart’s
unrivaled
scale
relative
to
its
brick-and-mortar
retail
peers
provides
the
firm
with
the
rare
ability
to
formidably
adapt
to
a
dynamic
retail
landscape,”
says
a
Morningstar
equity
report.

The
retailer
boasts
a
vast
physical
footprint
and
entrenched
position
in
the
communities
it
serves.
Furthermore,
its
“unique
promise
of
a
wide
assortment
of
goods
at
low
prices
has
allowed
Walmart
to
retain
its
status
as
the
nation’s
preeminent
retailer
for
over
30
years,”
asserts
Morningstar
equity
analyst
Noah
Rohr,
who
recently
raised
the
stock’s
fair
value
to
$52
from
$50,
prompted
by
strong
quarterly
results.

While
Amazon
has
gained
a
dominant
place
in
the
e-commerce
market,
“Walmart
retains
an
enviable
position
due
to
its
unmatched
access
to
consumer
wallets
as
the
leading
domestic
retailer
by
dollar
sales,”
notes
Rohr.

With
$9
billion
of
cash
on
hand,
$15
billion
of
undrawn
lines
of
credit,
and
low
debt,
Walmart
is
expected
to
continue
reinvesting
in
the
business
while
paying
out
shareholders.

The
maker
of
globally
favoured
Budweiser
beer,
Anheuser-Busch
InBev
is
the
largest
brewer
in
the
world.
Its
portfolio
contains
six
of
the
top
10
beer
brands
by
volume,
according
to
Euromonitor.
As
many
as
23
of
its
brands
boast
over
$1
billion
retail
sales
each.
The
firm
also
holds
a
62%
stake
in
Brazilian
brewer
Ambev.

Wide-Moat
Anheuser-Busch
InBev
recently
reported
better-than-expected
results
for
the
first
quarter
of
2024
with
EBITDA
of
$4.9
billion,
up
5.4%,
handily
surpassing
estimates.
The
company
also
delivered
a
90-basis-point
margin
expansion.
Past
acquisitions
have
created
a
giant
with
expansive
global
scale
and
regional
heft.

“AB
InBev
has
one
of
the
strongest
cost
advantages
in
our
consumer
defensive
coverage
and
is
among
the
most
efficient
operators,”
says
a
Morningstar
equity
report.

Moreover,
AB
InBev
benefits
from
substantial
fixed-cost
leverage
and
procurement
pricing
power,
given
its
dominant
positions
in
Latin
America
and
Africa.
This
is
reflected
in
the
company’s
exceptional
returns
on
invested
capital
and
industry-leading
operating
and
cash
cycles,
asset
turnover
ratios,
and
working
capital
management.

“AB
InBev
delays
payments
to
trade
creditors
more
than
20%
longer
than
its
closest
rival
Heineken,
and
its
free
cash
flow
conversion
has
been
consistently
higher
than
peers
in
recent
years,”
says
Morningstar
equity
analyst
Ioannis
Pontikis,
who
puts
the
stock’s
fair
value
at
$90
per
ADR
and
forecasts
4.5%
revenue
growth
in
2024
and
4.2%
beyond
that
horizon.

Chinese
internet
behemoth
Baidu
owns
84%
share
of
the
local
search
engine
market.
Online
marketing
services
from
its
search
engine
contribute
72%
of
its
revenue.
Baidu
is
a
technology-driven
company
with
artificial
intelligence
cloud,
video
streaming
services,
voice
recognition
technology,
and
autonomous
driving
representing
most
of
its
growth
initiatives,
beyond
its
search
engine.

Baidu’s
online
advertising
business
will
account
for
the
bulk
of
its
revenue
in
the
medium
term
owing
to
its
leading
market
position
in
search
engines.
However,
“unless
it
can
develop
another
industry-leading
business,
it
could
face
long-term
challenges
for
advertising
dollars
from
growing
competitors
such
as
Tencent
(TCEHY)
and
ByteDance,”
cautions
a
Morningstar
equity
report.

More
recently,
Baidu
has
been
making
an
intense
push
into
the
rapidly
growing
artificial
intelligence
market
with
its
flagship
generative
AI
model,
Ernie.

“Baidu
is
an
early
mover
and
should
benefit
from
China’s
AI
development,”
contends
Morningstar
equity
analyst
Kai
Wang,
who
puts
the
stock’s
fair
value
at
$174.

The
Chinese
tech
heavyweight
is
also
making
a
sharp
pivot
towards
generative
AI,
cloud,
and
autonomous
driving,
and
while
its
economic
benefits
may
not
be
immediately
visible,
“there
are
encouraging
signs
of
its
AI
cloud
monetisation
growing
to
19%
of
core
revenue
in
2022
from
12%
in
2020.”

Baidu’s
Wide
Economic
Moat
stems
from
network
effect
from
its
vast
user
base
and
intangible
assets
from
years
of
AI
development
and
research.
It’s
one
of
the
earliest
internet
companies
in
China,
with
a
robust
ecosystem
around
its
search
engine
and
its
flagship
Baidu
app.

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