Three summer stocks have considerable development prospects centered upon their distinct technical breakthroughs and strategic initiatives.
The first one started operating a foundry, and the business took a major stride toward becoming the first systems foundry built for the AI age. This endeavor has garnered significant support from prominent IT behemoths and a top U.S. aerospace and defense corporation, demonstrating trust in Intel’s state-of-the-art process technology. Additionally, the business has a strong pipeline of test chips, and extensive industry interactions show tremendous development potential.
Moreover, despite income difficulties, the second one maintains its leadership in the coffee sector and worldwide brand equity. This year, the firm intends to establish over 3,000 new locations worldwide, showcasing its solid retail development skills and expansionist mindset.
Finally, with its remarkable free cash flow and well-timed stock repurchases, the third demonstrates its sound financial standing. The organization focuses on augmenting user engagement by increasing the number of active monthly accounts. This indicates its approach to foster stronger customer connections and propel revenue expansion.
Intel (INTC)
With significant backing from ecosystem partners, Intel (NASDAQ:INTC) made history by successfully launching its foundry company, Intel Foundry, the first systems foundry for the AI age. This groundbreaking achievement, coupled with the faith shown by important clients like Microsoft (NASDAQ:MSFT) and a significant aerospace and military customer in the US who committed to Intel 18A, underscores Intel’s cutting-edge process technology. The release of its Process Technology Roadmap and the addition of Intel 14A to its cutting-edge node lineup further demonstrate Intel’s dedication to customized product development and innovation.
Additionally, Intel Foundry’s healthy pipeline of approximately 50 customer test chips and relationships with nearly every Foundry customer in the industry highlight strong market interest and future expansion possibilities. Intel produced better-than-expected gross margins and EPS by exhibiting great operating spending control and cost discipline. Adopting a new foundry operating model improves accountability and transparency, promoting improved decision-making and organizational efficiency.
Finally, Intel anticipates growth in all segments in the second half of 2024 despite difficulties in the first half. Therefore, this growth may be driven by better demand signals and the implementation of its transformation plan.
Starbucks (SBUX)
Despite revenue and comparable store sales difficulties, Starbucks (NASDAQ:SBUX) continues to have great global brand equity and leadership in the coffee industry. Their devoted clientele around the globe and their unrivaled dominance in the coffee sector for over 50 years provides clear evidence of this.
Additionally, Starbucks has a strong and thriving worldwide network of outlets, demonstrating a unique capacity for retail expansion. The company intends to develop and construct over 3K new stores worldwide in the current year alone, signaling its ongoing focus on global reach.
Further, strong unit economics, average unit volumes (AUVs) and returns on investment (ROIs) throughout their portfolio make the growth financially accretive. Starbucks places a lot of emphasis on digital interaction, and one of the main ways it drives consumer value is through the Starbucks Rewards program. Hence, with 32.8 million active U.S. members as of Q2 2024, the program boasts a 6% year-over-year (YoY) rise in participation.
Overall, the firm wants to increase the number of Starbucks Rewards members over the next five years. Thus, the company is investing in its mobile app to improve the consumer experience and customization.
PayPal (PYPL)
PayPal (NASDAQ:PYPL) had 220 million monthly active accounts out of 427 million active accounts (Q1 2024). However, there was a 1% YoY decline in active accounts. Similarly, there was a 2% YoY gain in monthly active accounts. The number of monthly active accounts increased even if the consolidated number of active accounts decreased somewhat, indicating that PayPal is successfully interacting with its user base.
Indeed, the focus on monthly active accounts reflects PayPal’s effort to build stronger bonds with its most frequent customers. Over time, this may result in more frequent transactions and more income per user. Moreover, in Q1, PayPal recorded $1.8 billion in free cash flow. Meanwhile, adjusted free cash flow came to $1.9 billion. Additionally, the business bought back almost $1.5 billion worth of ordinary shares. Thus, PayPal has demonstrated its financial strength and disciplined capital allocation plan. As a result, the company holds high free cash flow creation and focuses on returning capital to shareholders through stock repurchases.
Lastly, PayPal’s focus on the operational edge is reflected in cost-management programs and automation investments. Therefore, this signifies the company’s mark on enhancing profitability and fostering long-term, sustainable valuation growth.
As of this writing, Yiannis Zourmpanos held long positions in INTC, SBUX and PYPL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.