For investors, 2022 has been a roller-coaster ride of emotions. First, there was a steep sell-off in US stock markets on high inflation and the prospect of rising interest rates.
Then we had a strong rebound on corporate earnings but now it looks like geopolitical instability is putting the market back on edge.
However, amid all the excitement, investors might have forgotten that Valentine’s Day is upon us. It’s a day where couples globally show their love and appreciation for one another.
When love is in the air, it’s always expected that flowers and chocolate will be part of the celebrations. But instead, for this Valentine’s Day, couples could consider buying each other these three solid stocks.
1. Match Group
For matchmaking abilities online, no company comes close to Match Group Inc (NASDAQ: MTCH). The firm owns several of the most popular online dating apps globally, including Tinder, OkCupid, and Hinge.
While its shares are down over 30% in the past 12 months, this has been more down to the sell-off in high growth stocks rather than any indication of the health of its business.
That’s because Match saw its fourth-quarter 2021 revenue expand by 24% year-on-year to US$806 million, giving the company an annualised revenue run rate of over US$3 billion.
Total paying users of its apps jumped to 16.2 million as of the end of Q4 2021, up 15% year-on-year.
More importantly, Match’s revenue growth, adjusted operating margin and geographic diversification profiles have been incredibly stable – with particularly strong growth coming from Asia Pacific (see below).
Source: Match Group Q4 2021 earnings presentation
Finally, for the whole of 2021, Match was both operating and free cash flow positive to the tune of US$912 million and US$833 million, respectively.
For a company that has had its growth slowed by the Omicron variant, Match could be the ideal “re-opening” play to tap into a global dating community that is desperate to go out and meet up face-to-face.
2. Ulta Beauty
For those of us who want to spend some money on our outer beauty, then Ulta Beauty Inc (NYSE: ULTA) – one of the largest beauty retailers in the US – is a prime investment choice.
Like many retail chains, it was hit hard by Covid-19 and the subsequent lockdowns in the US as people bought less the stuff it sold, including cosmetics, fragrances, nail products and haircare products.
However, more recently, Ulta has bounced back on the back of the opening up of the US economy – with its shares up over 10% in the past 12 months.
In its latest third-quarter fiscal year (FY) 2021 earnings – for the three months ended 30 October 2021 – Ulta posted record revenue and earnings.
Over that quarter, Ulta recorded just under US$2 billion, an increase of an impressive 28.6% year-on-year. Meanwhile, net income soared to US$215.3 million from US$74.8 million during the same period in 2020.
Meanwhile, the company’s ongoing store refreshes and a focus on “experiential” spaces – perhaps no better illustrated than with Ulta Beauty’s booths in Target Corporation (NYSE: TGT) stores – means that management is continually looking at new channels to increase its reach.
With more and more people going out, and starting to spend again on cosmetics as well as other beauty products, Ulta Beauty is set up for a strong 2022.
3. Brookfield Infrastructure Partners
Nothing says love like oil & gas, data centres and toll roads. Luckily for investors, that’s exactly what Brookfield Infrastructure Partners LP (NYSE: BIP) specialises in.
The publicly-traded limited partnership is an infrastructure specialist that is a subsidiary of Canadian asset management giant Brookfield Asset Management Inc (NYSE: BAM).
Brookfield Infrastructure owns and operates a variety of utility-like assets, including midstream gas assets, data centres, telecom towers, toll roads and ports.
The great thing about this is that these assets generate very predictable revenue streams, which allow Brookfield Infrastructure to pay out a sustainable and growing dividend.
In fact, the company has paid out an increasing dividend for 13 consecutive years, with its latest fourth-quarter 2021 earnings seeing a 6% year-on-year hike to its payout.
With rising inflation also threatening to snuff out business growth, it’s comforting for investors to know that Brookfield Infrastructure has inflation-linked contracts for many of its assets – providing a measure of pricing power and protection for its future revenue streams.
Stocks are the new chocolates
While many of us many love a box of Godiva chocolates, it might be preferable for investors this year to buy their significant others a basket of rock-solid stocks.
With Match Group, Ulta Beauty and Brookfield Infrastructure Partners, investors can forget splurging on flowers and instead buy three great businesses for the long haul.
Disclaimer: ProsperUs Head of Content & Investment Lead Tim Phillips owns shares of Brookfield Infrastructure Partners LP.
