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2 Stocks That Are Fantastic Deals Right Now - The Motley Fool

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Market corrections are frustrating when you're just getting started. But after you've been at it for a while, you start to view falling stock prices with enthusiasm. If you feel excited about the chance to buy top stocks at big discounts, you have something in common with the best investors in history.

There are two companies that have reported strong operating results recently, yet the market has punished their stocks over fears of a slowdown in consumer spending. But investors who buy shares today and hold for the long term should come out ahead.

Several folded dollar bills in the shape of a large dollar sign.

Image source: Getty Images.

1. Walt Disney

Walt Disney (DIS 2.90%) shares traded as high as $203 last year before sliding over slowing subscriber growth at Disney+. Disney launched its marquee streaming service in 2019 and added 95 million subs in the first year. Management's long-term goal was to grow the service to between 230 million to 260 million subscribers by the end of fiscal 2024 (which ends in September). But investors had their doubts after a couple of sluggish quarters last year.

Disney added just 2 million subscribers in the third quarter of fiscal 2021. But Disney+ has reaccelerated over the past few quarters, while theme parks are also experiencing strong demand right now.

While Disney+ added 7.9 million Disney+ subscribers in the quarter ending April 2, CEO Bob Chapek called the performance at the parks a standout. "They continue to fire on all cylinders, powered by strong demand coupled with customized and personalized guest experience enhancements that grew per capita spending by more than 40% versus 2019," Chapek said during the fiscal second-quarter earnings call with analysts. 

With the stock trading around the same level as the time management unveiled Disney+ in April 2019, investors are truly getting a fantastic deal on the House of Mouse right now. Investors are basically paying a fair price for Disney's legacy entertainment assets (ESPN, ABC, movie studios, and parks) and getting the future growth of Disney's streaming services, including Hulu and ESPN+, for free.

DIS Chart

DIS data by YCharts

2. BJ's Wholesale

Shares of the discount warehouse store are outperforming the broader market this year, which says a lot about the relative strength of BJ's Wholesale Club Holdings (BJ -0.11%) business model in a challenging economy. With inflationary pressures causing the price of goods to skyrocket, more consumers are visiting BJ's to find the best deals.

Year-to-date, BJ's shares are down only 6.8% compared to 17% for the S&P 500 index. The company entered the year with momentum. In the fiscal fourth quarter of 2021 (which ended Jan. 29), comparable-store sales were up 21.8% compared to the same period two years ago before the pandemic started. 

BJ's said that inflationary pressures were causing an increase in freight costs, but it was successfully offsetting that with price increases in select categories. The good news: People are still shopping at BJ's.

For the next few years, management is focused on accelerating growth. BJ's has a high concentration of sales in the New York metro area, which accounted for 23% of total sales in fiscal 2021. But the company is executing on a healthy real estate pipeline to open more stores and expand its business. After opening five new clubs last year, management plans to open 11 new clubs in new and existing markets this year, with 10 more planned for fiscal 2023. 

BJ PE Ratio (Forward) Chart

BJ PE Ratio (Forward) data by YCharts

At a price-to-earnings (P/E) ratio of 19 based on this year's analyst estimate, the stock trades at a considerable discount to industry peer Costco Wholesale, which trades at 37 times expected earnings. That's a relative bargain for a warehouse operator that is ramping up growth plans after completing its initial public offering in 2018. 

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2 Stocks That Are Fantastic Deals Right Now - The Motley Fool
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