3 Essential Stocks from the Top 100 That Are Truly Worth Investing In

Yesterday's 52-week highs and lows were relatively subdued at 91 and 63, respectively. Coincidentally, Stocktwits’ Trends with No Friends had two Canadian companies as the Best of the Best and Worst of the Worst. But that’s a subject for my Wednesday commentary. 

Tuesday is all about Barchart’s Top 100 and Bottom 100 Stocks to Buy. Leaning more positively, I noticed that Monday’s trading had 27 Top 100 Stocks to Buy, with share prices over $100 making big moves up the chart.

While the $100 price point doesn’t guarantee long-term returns, it often is a sign of a successful business that will keep moving higher despite the markets appearing overvalued. For example, according to FactSet Vice President and Senior Earnings Analyst John Butters, the S&P 500 forward 12-month P/E ratio is the highest in over three years.

Three of the $100+ stocks are truly worth investing in. 

Comfort Systems USA 

As its Barchart page states, Comfort Systems USA (FIX) “is a national provider of comprehensive heating, ventilation, and air conditioning installation, maintenance, repair, and replacement services.”

I don’t know if you believe in climate change. Still, the company is hectic, ensuring its commercial and industrial clients have the best heating, cooling, and mechanical systems and services. Its business isn’t shrinking. 

The stock jumped into the Top 100 in the 68th position, a 32-spot move. It is up 37% in the past three months and 134% over the past 52 weeks.

My three reasons for owning it are: 1) According to S&P Global Market Intelligence, just four analysts cover FIX. As more analysts jump on the bandwagon and provide coverage, retail and institutional investors will pile in, acting as a catalyst for its share price. 2) It has net cash of $112 million and is growing, and 3) Although it operates in 137 cities in the U.S., it has very little coverage west of the Mississippi, providing it with plenty of future expansion. 

My wife works in construction. Over the next decade, the entire MEP (mechanical, electrical, plumbing) business will see tremendous consolidation, and FIX should be at the forefront of that. 

Spotify Technology

Spotify Technology (SPOT) stock moved 33 spots on Monday to 45th place in the Top 100. SPOT is up 32% in the past three months and 159% over the past 52 weeks.

Full disclosure: I’m a Spotify subscriber. While I love the music selection available, I consistently use podcasts and audiobooks. My wife always has Spotify on in the car for work.

Investors and the investment media ask if it’s too late to buy Spotify stock. 

Spotify currently has an enterprise value of $87.66 billion, 69.4x its trailing 12-month EBITDA (through Sept. 30) of $1.22 billion. By comparison, Netflix (NFLX) trades at 34.9x EBITDA. However, Spotify’s total debt is 1.5x EBITDA, less than Netflix's at 1.7x, so it depends on what you’re after in a long-term growth stock.  

As the Motley Fool pointed out in a recent article about the company, it has nearly a 32% global market share in music streaming, is one of the world’s biggest podcast providers, and has over 375,000 audiobooks, second only to Amazon’s (AMZN) Audible platform. 

The company reported strong Q3 2024 results on Nov. 12. 

They included MAUs (monthly active users) of 640 million, 11% higher year-over-year and 2% higher sequentially. As investors have learned from Netflix, adding MAUs is not a straight shot higher. There will be the occasional blip that portends doom, but patient investors should the noise.

All its financial numbers in the third quarter were either in line with or above the company’s guidance. Financially, it’s looking better than ever, with a trailing 12-month free cash flow of 1.8 billion euros ($1.91 billion).

Another four quarters of free cash flow growth and SPOT stock will look cheap. 

Royal Caribbean Cruise Lines 

Royal Caribbean Cruise Lines (RCL) stock jumped into the Top 100 in 66th position, a move of 34 spots. Its stock is up 42% in the past three months and 117% over the past 52 weeks. Interestingly, its weighted alpha was 127.29 yesterday, higher than its 52-week gain, suggesting it has the most momentum of the three stocks discussed in this article. 

I have followed cruise stocks for years, partly because my wife and I married on a Royal Caribbean cruise ship in 2005. I have a soft spot for the company and industry, even though they’re horrible for the environment. 

At the depths of Covid, I knew that RCL stock would revisit triple-digit share prices. It was only a matter of time. While cruises aren’t my cup of tea, it’s easy to see why they are so attractive to many different age groups. You can visit many places and countries without packing and unpacking.

And, of course, the cruise ship I got married on was nothing like what sails the open seas today. They aren’t just floating hotels; they’re floating cities with all kinds of services and hospitality to keep you busy when not in port. 

Of the 19 analysts covering its stock, 15 rate it a Buy (4.53 out of 5), with a mean target price of $230.55, around where it’s currently trading. 

I wouldn’t be too concerned about the target price. Analysts are often slow to adjust their prices to revised earnings projections, etc.  

One investment firm that has upped its outlook for the company is Citigroup. It recently upgraded RCL stock from Neutral to Buy with a 50% increase in its target price. 

“Norwegian’s shift away from ‘quality at all costs’ toward a more measured approach can’t help but bear fruit,” Motley Fool reported comments from James Hardiman, an analyst at Citigroup.

With revenues expected to grow from $13.9 billion in 2023 to $22.67 billion in 2028, a compound annual growth rate of 10.3%, its EBITDA should nearly double over the same period. 

Barring another Covid-like issue, it should be smooth sailing for investors over the long term.