The time has come to buy these shares – The Motley Fool

Stocks are over 10 years in a bull market, which means that it's getting harder and harder to find good deals. However, there are still interesting stocks to buy if you know where to look.

This is why I believe Amazon.com (NASDAQ: AMZN), Mattel (NASDAQ: MAT), and St Joe (NYSE: JOE) are worthy of investors money at current prices.

1. Amazon.com

Amazon shares have climbed 2,300% over the past decade, but do not think you missed the boat – there are two good reasons why the stock is still a great investment at the current price of $ 1,831 per share.

First, e-commerce still offers many opportunities, as physical stores still generate around 90% of global retail sales.

In addition, Amazon's constant willingness to provide a better customer experience to the technology will likely allow Amazon to stay ahead of its competitors. For example, the company continues to use robots to reduce running costs, which speeds up order processing and allows Amazon to pass on cost savings to customers.

Second, and perhaps the best reason to consider buying Amazon is the rapid growth of Amazon Web Services (AWS). AWS sales were up 41 percent from the previous quarter, generating $ 30 billion in annual revenue. More importantly, AWS generates an operating margin of about 30%, which means that it currently accounts for most of Amazon's profits.

Consider this: IBM is in the process of acquiring Red Hat, a cloud service provider for business, for 10 times sales. Applying the same valuation to AWS generates a valuation of $ 300 billion. However, AWS may be worth more because it is growing faster and margins are better.

Analysts believe that AWS will be between $ 350 billion and $ 1 trillion over the next five years. Amazon's market value is currently $ 905 billion (total number of shares outstanding multiplied by the price of the stock), which means that investors attribute fair value to AWS five years later, but assign a much lower value to the rest of society.

2. Mattel

The shares of Mattel, the maker of Hot Wheels and Barbie, have fallen sharply in recent years. The decline in equities is due to past management errors that left the company indebted and unprofitable. But the new management has intervened and intends to make Mattel one of the most profitable companies in the sector.

Recent results show that the strategy of management works. In the first quarter, sales in constant currency increased 1% over the previous year. The improvement in the adjusted gross margin, which grew by 670 basis points, is more encouraging. The higher margins had a positive impact on net income, with the adjusted operating loss significantly down from the previous year by almost $ 150 million. These results are very encouraging and mark the third consecutive quarter of improvement in gross profit and operating profit.

Matrix Gross Profit Margin (TTM) Data by YCharts.

Mattel continues to be a partner of choice for Walt DisneyPixar film properties, as a manufacturer of licensed toys for Toy Story and Cars. In addition, to drive growth, Mattel has partnered with MGM studios to produce real-life action movies based on some of its brands, including Hot Wheels and Barbie.

The stock is relatively cheap with a price / sales ratio of 0.87, while its competitor Hasbro transactions for 2.65 times sales. It's a good time to consider buying stocks, before better news sends them higher.

3. St Joe

St. Joe is a real estate development company located in northwestern Florida, in the holiday magnet. It owns and operates a number of valuable properties, including the WaterColor Inn in Seaside, as well as several residential communities. It also has 115,000 acres of forest, which each year generate a small income on wood sales.

In total, the company owns 170,000 acres of land, about two-thirds of which is within 15 km of the Gulf of Mexico. Management believes that these properties are either developed and operated, or sold to someone else who can better utilize the land.

After several years of low activity, management is finally starting to be more proactive in unlocking the value of its vast property holdings. The time has come, as northwestern Florida is a busy economic activity zone as vacationers flock to the beautiful beaches of the Gulf Coast.

Several projects are underway, including the construction of apartments, beach clubs, office parks, marinas, residential communities and hotels. Over the last three years, capital expenditures have increased by 30% to $ 31 million – a leading indicator of revenues and profits.

In addition, St. Joe has a financially sound balance sheet, with approximately $ 240 million in cash and short-term investments, $ 365 million in real estate investments and $ 78 million in debt. The company currently has a market value of $ 1 billion.

Management clearly sees value in the shares since it has repurchased 34% of the company's outstanding shares over the last five years – a clear sign that the shares could be undervalued.