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2 soaring stocks that I would buy now without hesitation

Stocks that have already experienced a big price increase can still be a smart purchase.

One of the more difficult tasks in investing can be convincing yourself to buy a stock that’s already had a big run. Buying a stock that’s near an all-time high or even a 52-week high requires investors to overcome a psychological hurdle. This is intuitive, at least at first. When a stock has already risen sharply, it’s easy to imagine that we’ve missed out on all the gains.

Fortunately, that’s not always the case. The world’s best companies regularly hit new all-time highs on their way to market-shattering long-term returns. Sure, getting in on these companies earlier will produce better results, but in many cases, an investor can do well by buying stocks several years after a big run-up.

Here are two stocks whose prices have risen sharply over the past year and a half, but which I would still buy now.

Chipotle Mexican Grill

Last year, the Mexican fast-casual restaurant chain Chipotle Mexican Grill (CMG 1.43%) has increased by 51%, significantly exceeding the S&P50027% earnings. The stock’s performance was driven by several quarters of impressive and consistent growth. For example, in the first quarter, revenue increased 14% year over year while earnings per share rose 24%. The company also generated free cash flow of $437 million.

Importantly, this growth was driven by both an increase in the number of Chipotle restaurants and continued higher sales from existing restaurants. The company increased its total restaurant count 8% year over year in the quarter, while comparable restaurant sales increased 7%.

These numbers show investors that Chipotle is still delighting its customers and that there is still plenty of growth possible by opening new restaurants. This combination could mean further strong returns for shareholders.

Still, it’s worth asking yourself whether the stock hasn’t already become too expensive. Chipotle is trading at 67 times trailing-12-month earnings. While that’s not cheap, it’s within the stock’s historical range. Premium companies are rarely cheap, and Chipotle is no exception.

Amazon

It is hard to believe that in early 2023 Amazon (AMZN 0.23%) was trading at its lowest price since 2019. However, the stock has since rebounded, rising 138%. Many investors discounted Amazon during the 2022 crash, but those who held out have been handsomely rewarded as the stock hit new highs this summer.

Both the decline and the rebound make sense in context. After doubling its distribution footprint to meet demand fueled by the pandemic, Amazon was left with a business that needed to be right-sized as most consumers were able to shop in person again and their e-commerce usage returned to levels closer to pre-COVID norms. Amazon’s operating income declined significantly from the beginning of 2021 to the end of 2022, unsettling investors.

AMZN Operating Income Chart (Quarterly)

AMZN operating income data (quarterly) from YCharts.

In hindsight, it’s clear that Amazon simply needed time to adjust to this change, and over the course of 2023, its operating profit improved dramatically. The turnaround was driven in particular by the e-commerce side of the business, where it managed to get expenses under control. The results over the past year and a half have been impressive.

AMZN Operating Income Chart (Quarterly)

AMZN operating income data (quarterly) from YCharts.

Amazon trades at 56 times trailing earnings. Unlike Chipotle, however, Amazon’s valuation is below historical levels. In other words, even after a triple-digit percentage return on the stock over the past year, one could argue that Amazon is still historically cheap.

The conclusion for investors

Chipotle and Amazon are fantastic companies with a long history of success, and neither shows any signs of slowing down. The recent price increase should not be a reason for investors to stay away from either company. Both seem to me to be attractive stocks to buy right now.

John Mackey, former CEO of Whole Foods Market, a subsidiary of Amazon, is a member of The Motley Fool’s board of directors. Jeff Santoro holds positions in Amazon and Chipotle Mexican Grill. The Motley Fool holds positions in Amazon and Chipotle Mexican Grill and recommends these companies. The Motley Fool has a disclosure policy.

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