Stocks to Buy: These 3 Non-tech Best Places to Work Won't Steer You Wrong

The job-search website Glassdoor.com came out with its 2024 100 Best Places to Work (BPTW) on January 9th. I stopped counting, but the list easily contained over 50 publicly traded companies.

I've always found that Costco (COST) has succeeded partly because it pays its employees better than some of the other discounters and warehouse stores. 

At this point, I must shout out to Sam Latter, who writes This Is Fine on Substack. His Jan. 12 post discussed the performance of the 14 names on the BPTW’s top 25 that are public companies.   

“In total, these 14 stocks have returned an average of 1,692% over the past decade (including Toast and Procore’s abbreviated returns), versus the S&P 500’s 159% return,” Latter wrote. 

“Even taking out the big outlier in Nvidia, these stocks returned 718%, outperforming by 4.5 times.”

Why am I talking about this? Latter’s headline was An Unusual Place to Find Great Stock Ideas. 

I love when financial writers and investors think outside the box to find great stock ideas. It reminds me of the iconic portfolio manager, Peter Lynch. He was about looking in nooks and crannies for the next great 10-bagger. 

As Latter pointed out, many of the names are tech companies. For this reason, I’ll select three non-tech stocks you should buy -- or at the very least, put them on your watchlist in the year ahead. 

Delta Airlines 

Delta Airlines (DAL) is ranked 13th in BPTW’s 2024 list. It is the only airline in the top 100. That doesn’t surprise me. CEO Ed Bastian proved his worth to the company during the pandemic, leaving the middle seat unsold far longer than any other airline. 

Chief Executive magazinenamed Bastian its 2023 CEO of the Year. 

“Ed leads one of the world’s great companies with an impressive combination of attention to the finest details, a global vision and strategic savvy.  And Ed will tell you that Delta’s success more than anything comes from how his leadership team looked after their teammates throughout the company,” stated Chief Executive’s 2020 CEO of the Year, Bank of America (BAC) CEO Brian Moynihan. 

As Latter pointed out in his piece, DAL stock generated a 54% return over the past decade, considerably underperforming the 159% return of the S&P 500. 

That’s okay. That means it’s bound to revert to the mean over the next 5-10 years. I could see it hitting close to $60, where it traded in early 2020. 

In 2023, it generated $2.0 billion in free cash flow. In 2024, it could double, to $4.0 billion, on 3-6% revenue growth.    

Lululemon

Lululemon (LULU) is 24th on the list. Over the past decade, LULU generated a 950.4% return for its shareholders, 5x the return of Nike (NKE), its much bigger rival. It will outperform Nike over the next 10 years, too. 

I’m Canadian, so the fact that a Canadian company is outperforming the sporting goods industry’s most prominent business while led by Canadian CEO Calvin McDonald is excellent. Canadian business success stories don’t often get the headlines they deserve, especially in the apparel and retail industries, so Lululemon remains a beacon of hope here in Canada. 

As The Motley Fool reported in late December, Lululemon continues to push its “Power of Three x2” growth strategy. For the most part, it's working. With plans to double its revenue to $12.5 billion, double its men’s business, double digital, and quadruple its international revenues, all by 2026, are stretch goals that I’m confident it can achieve. 

On Jan. 8, Lululemon raised its Q4 2023 guidance. On the top line, it now expects revenue of $3.18 billion at the midpoint, up from $3.15 billion, with earnings per share of $4.98, up from $4.89. 

Many wondered if Lululemon would perform in the holiday shopping season, given consumers were slowing their spending. It appears that if they did, it wasn’t at the expense of LULU. 

It's a long, long-term hold. 

W.W. Grainger   

W.W. Grainger (GWW) is listed 65th in the BPTW list. The business-to-business distributor Seems like one of those companies that consistently flies under the radar with investors. However, that can't be true, given its shares are up more than double the S&P 500. 

Except for the March 2020 correction, GWW stock has spent most of the time moving higher. Sure, there have been corrections other than the big one, but it’s had more up days than down for the most part.  

At the end of October, Grainger reported its Q3 2023 results. Its guidance for 2023 included net sales growth of at least 8%, an 85-100 basis point increase in gross margin, a 115 to 130 basis point increase in operating margin, and at least a 21.4% increase in earnings per share. 

It expects operating cash flow of $1.85 billion in 2023 at the midpoint of its guidance, 39% higher than in 2022 and 64% higher than its three-year average between 2020 and 2022. Despite the headwinds it’s facing, it continues to perform at a very high level of efficiency. 

While analysts don’t love it -- of the 17 that cover GWW, only three rate it Overweight or an outright Buy, with a target price of $800, $42 below where it’s currently trading -- I see a business that tends to underpromise and overdeliver for shareholders. 

Is there a better kind?  

 

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On the date of publication, Will Ashworth did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.