My 2 Favorite Stocks to Buy Right Now

Key Points

• Target is struggling and has become oversold.

• Sea Limited is making a comeback amid growth in all three of its business segments.

A market at all-time highs is mixed news for investors wanting to put more money to work. Although the momentum points to a positive direction, the bargains in the stock market tend to be more challenging to find.

Fortunately for investors, some stocks buck overall trends and can be buys even with record stock prices. Knowing this, investors may want to give additional consideration to the following stocks, and possibly add positions if they prove to be a fit for their portfolio.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

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Target

Investors have turned on Target (NYSE: TGT) in recent years for a variety of reasons. High inventories, a sluggish economy, and controversial political stances contributed to declining foot traffic and lower sales in its nearly 2,000 stores across the U.S.

Those challenges also come at a time when rivals such as Walmart and Costco have managed to grow sales levels. Consequently, those stocks have risen as Target stock has fallen, and today the retailing giant is down by more than 60% from its all-time high.

However, the market has seen increasing indications that the stock has become oversold. Despite its troubles, Target stock is up by around 20% from its April low. Also, even with this increase, Target trades at a P/E ratio of around 11, comparing favorably to Walmart at 42 times earnings and Costco at a 56 P/E ratio.

The lower stock price and valuation have also had a positive effect on Target's dividend yield. As a result, its payout now returns 4.3%, far above the S&P 500 average of 1.2%.

Target also increased the dividend for the 54th straight year in June, making the company a Dividend King. That streak means it is less likely Target will stop the yearly payout hikes, as abandoning such a streak would probably further diminish confidence in the company at a time when it has struggled.

Also, CEO Brian Cornell has held that role since 2014. With the stock down over the last three years and his contract coming due around the September time frame, Target may experience a change in leadership in the near future.

Target's difficulties are likely not over, and a change in CEO could add to the uncertainty. But with the company still in a position to recover and the valuation at rock-bottom levels, its stock may be too appealing not to buy at current prices.

Sea Limited

Sea Limited (NYSE: SE) stock is available to U.S. investors through American depositary receipts. Still, the Singapore-based tech conglomerate is likely not a familiar name outside of Southeast Asia and Latin America.

The company is made up of three segments. Garena is a major force in the gaming world, particularly with its mobile game Free Fire again becoming one of the world's largest mobile games as measured by daily active users. Its other segments, e-retailer Shopee and its fintech enterprise Monee, lead both of those industries in seven Southeast Asian countries.

Sea Limited is also strong in Brazil despite competition from MercadoLibre, the e-commerce and fintech leader in Latin America.

Sea Limited stock dropped from lofty highs in 2021 when it made the ill-advised decisions to introduce Shopee to Europe and Latin America, places where it held no obvious competitive advantage. At the same time, Free Fire lost its No. 1 position and fell victim to a ban in the world's most populous country, India.

However, Shopee has scaled back in markets outside Southeast Asia and now follows the lead of MercadoLibre and Amazon, bolstering its logistics network in its home markets. Moreover, aside from Free Fire, it again operates esports in India, serving as a bullish sign for its stock.

Sea Limited stock is in recovery mode. Despite still trading at a 60% discount from its all-time high, the stock has more than quadrupled in value since its 2023 low.

Those gains have taken Sea Limited's P/E ratio to 105. Nonetheless, the recovery-driven profit growth places the forward P/E ratio at 38, a potentially attractive level for a fast-growing tech conglomerate. With all three segments back in growth mode, the stock is likely to continue moving higher as it seeks to return to all-time highs.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Will Healy has positions in MercadoLibre, Sea Limited, and Target. The Motley Fool has positions in and recommends Amazon, Costco Wholesale, MercadoLibre, Sea Limited, Target, and Walmart. The Motley Fool has a disclosure policy.