To The Moon

What's a monster stock? In my book, it's a company that's grown earnings over time and returns for investors. Today, a lot of these players have followed the general market lower. In some cases, they're struggling with current headwinds like higher inflation. But their positive long-term outlook remains intact. That's why you'll want to buy these stocks today, at a discount, and hold on for the long haul.

Two perfect examples are Amazon and Home Depot. They've proved their strengths. And they just so happen to be global leaders in their businesses.

1. Amazon

Amazon stock has climbed more than 125% over the past five years. Annual revenue and net income also have advanced, well into the billions of dollars, during that time period. This is as the company grew its position in two major businesses: e-commerce and cloud computing.

Today, net sales continue to climb at Amazon thanks to its leadership in these areas. But higher costs and supply chain troubles have been weighing on earnings. As a result, operating income and operating cash flow have been on the decline.

The stock price, too, has suffered. It's lost 32% so far this year. And that leaves Amazon trading at less than 3 times sales. That's close to its lowest level in about six years.

Here's why this is a bargain for Amazon. Today's troubles are linked to the overall economy, so they're temporary. At the same time, the company is making progress in handling them. It's controlling certain costs and improving productivity, for example.

Another bright spot is the cloud computing business, Amazon Web Services (AWS). It has continued to grow in spite of today's tough economy. AWS posted double-digit gains in sales and operating income in the second quarter. As for e-commerce, the strength of its Prime subscription service should power earnings growth once the economy improves. As it stands today, Prime members continue to spend more and more on the platform.

All of this makes me optimistic that Amazon can once again deliver more than just packages. It has what it takes to deliver great gains to shareholders over time.

2. Home Depot

When it comes to earnings, Home Depot has defied the general economic gloom. In the second quarter, the world's biggest home improvement retailer reported its highest quarterly sales and earnings ever. The stock price hasn't followed, though. Home Depot shares have lost more than 30% since the beginning of the year.

This leaves the shares trading at about 17 times forward earnings estimates. That's lower than the more than 25 number earlier this year. At the same time, as mentioned above, revenue continues to rise. This is a great entry point for a company that continues to grow in spite of a difficult environment -- and a company with solid prospects.

HD PE ratio (forward). Data by YCharts.

So, why is the stock down today? Some investors are avoiding stocks linked to consumer spending. And Home Depot falls into that category. It's also possible that it eventually will see a slowdown. But as I mentioned above regarding Amazon, any such slowdown is temporary.

Here's why there's more reason to be positive about Home Depot and buy the stock for the long term. First, if the company can do this well during tough times, there's reason to believe it can truly flourish when the economy improves.

Second, Home Depot has offered us some visibility on what's ahead, and it looks positive. The company recently reported its professional customers say their project backlogs remain healthy.

Another positive point is the company's move to improve its digital platform, for professionals and do-it-yourself customers. And that's bearing fruit. In the second quarter, it reported record downloads, sales, and traffic on its mobile app.

Right now, Home Depot shares look dirt cheap. That's considering today's earnings performance and the long-term picture for this market leader.