I went shopping last week, buying into three stocks that I've been considering for months. I initiated positions in Zoom Video (NASDAQ:ZM), Sleep Number (NASDAQ:SNBR), and Nintendo (OTC:NTDOY), and I'll get into my thinking process shortly on all three of those fairly diverse companies.
I also moved on from one of my more disappointing investments, by selling my shares of Wyndham Hotels (NYSE:WH). I initially resisted unloading my stake in the hospitality giant that includes its own namesake brand as well as Ramada, Wingate, Travelodge, and its recently acquired La Quinta chain. When the stock was rocked alongside other hoteliers, I took comfort in knowing that Wyndham should hold up well given its franchising model. The 9,300 properties and 831,000 rooms under its watch -- representing a modest 3% increase over the past year -- sends a healthy trickle of high-margin franchising revenue Wyndham's way without the operating cost burden of actually owning the hotels.
However, the stock has been starting to recover nicely after bottoming out at $14.50 in mid-March, and I didn't want to overstay my welcome. Hoteliers will take a long time to recover. There will be an overcapacity issue, and it wouldn't be a surprise to see several hotels operating under Wyndham brands out of the game in a year or two.
Now let's talk about the three stocks I bought.
Image source: Getty Images.
Zoom Video
I've been hungry for a chance to buy one of this year's hottest stocks, and I finally joined the feast last week. Zoom has become a major part of my family life. My wife's a high school teacher, and she's now in her fourth week of conducting class via Zoom. My youngest son's vocational training has also turned to Zoom training since late March. I help run an improv comedy theater in Miami, and yes, all of the Just The Funny shows and rehearsals over the past month have exclusively been Zoom streaming events.
With the market bouncing back -- and with the investments that surged during the downturn as coronavirus sympathy plays heading lower in the general market's rally -- the pullback in Zoom felt like the right time to make it happen.
Zoom is getting a lot of flak for security concerns, but nothing is ever going to go smoothly for the unprecedented growth taking place for the platform. Zoom was hosting no more than 10 million participants of largely enterprise-vetted corporate meetings in December to hosting 200 million mostly free consumer-leaning participants three months later. A twentyfold increase in users over three months won't translate into a twentyfold increase in revenue, but Zoom is now ubiquitous. It's better to be popular than perfect, and Zoom will overcome its platform shortcomings.
Sleep Number
The company formerly known as Select Comfort had a great 2019. Net sales rose 11% last year for the maker of air-chambered mattresses with adjustable firmness settings, and earnings soared 41%. It raised the bar a couple of years ago with the rollout of Sleep Number 360, billed as the first smart bed since it leans on intelligent biometrics to adapt to sleep patterns to deliver ideal firmness and elevation settings.
Sleep Number is a vertically integrated player, and right now that means it has had to close down its showrooms during the pandemic shutdown. Business will take a hit now, but you have to like its chances. With folks spending more time at home, there will be a bigger interest in upgrading beds, and Sleep Number's differentiated product should be a winner.
Nintendo
There are a couple of reasons I finally became a Nintendo shareholder after being a fan of the iconic video game giant for decades. For starters, Nintendo is pretty hot right now. It can't seem to make Switch consoles fast enough to satisfy demand during the stay-at-home phase of this pandemic crisis. The release of Animal Crossing: New Horizons last month has broken Nintendo sales records.
The future should be even brighter. Nintendo's making a push into theme parks. Comcast's (NASDAQ:CMCSA) Universal Studios will be introducing Super Nintendo World at three of its theme parks starting with Universal Studios Japan -- the most visited of all Comcast theme parks -- later this year. Rollouts of the richly detailed theme park land featuring several Nintendo rides and attractions at the two stateside resorts will follow by no later than 2023.
The market's volatility is making all of these new stocks in my portfolio move quite a bit, but I still think I'm getting in on some of the top stocks at attractive prices. You can still go shopping despite the stay-at-home order.
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