The S&P 500 index has dropped about 7% from its year high set in late July. The main factor weighing down stocks has been the Federal Reserve saying it will keep short-term interest rates elevated longer to reduce economic demand and inflation.
Apple stock is down about 12% from its high for the year, and now trades at about 26 times analyst’s estimates for earnings per share over the next 12 months, down from a 2023 peak of about 30 times. Even though that’s above the S&P 500’s 18 times, earnings growth over the next few years—and predictability of it—should keep the stock moving higher.
Starbucks stock is down 20% from its 2023 high, set in early May. The cafe chain is growing its store count in China as consumers adopt coffee in the region, even though the country’s economy has weakened a bit this year. Despite the presumed maturity of the U.S. market for Starbucks, the company is still growing it, adding millions of new rewards customers each year, through the order app and new iced beverages.
The streaming firm is still adding millions of subscribers overseas each year, as well as taking in money from ad-supported plans at home. Revenue can rise about 11% annually to $46.5 billion in 2026. If Netflix can keep competition at bay without having to reduce the prices of ads or subscriptions, profit margins can rise in that time. That can help spur annual earnings-per-share growth of about 23% over the next three years.