Are these the hottest stocks to buy right now?

Andrew Woods assesses three companies and determines if they would be good stocks to buy for his portfolio amid a travel recovery and rising interest rates.

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I’m always on the lookout for top-quality investment opportunities. Given the volatility in the broader market, however, I’ve found that picking the right stocks can be difficult. As such, I’ve put together a list of three companies that I think may be the best stocks to buy at the moment for my portfolio. Let’s take a closer look.

Recovering travel

On The Beach (LSE:OTB) was battered during the pandemic as demand for holidays understandably dried up. In the past month, however, the shares are up 25%. At the time of writing, they’re trading at 118p.

For the years ended September, in 2020 and 2021, the company reported pre-tax losses of £46.3m and £36.7m. While this shows some improvement, it has still been a very difficult period for the business.

However, for the six months to 31 March, group revenue grew to £52.9m, up from £12m for the same period in 2021. 

Over that time, pre-tax losses also narrowed from £21.6m to £7m. It’s clearly benefiting from more holiday bookings and the relaxation of international pandemic restrictions.

With cash of £14.6m and debt of £3.65m, the firm should be able to navigate its way through any future pandemic variants, should they arise.  

Strong profit outlook

Next, The Berkeley Group’s (LSE:BKG) shares are down 14% in the last three months and currently trade at 3,441p.

For the 12 months to 30 April, pre-tax profit climbed to over £550m, with revenue up 6.6% and earnings per share (EPS) surging over 23%.

It’s worth noting, however, that this growth isn’t guaranteed in the future.

The upmarket housebuilding firm has forecast that profits will continue to increase over the next three years. The value of Berkeley’s land portfolio has also grown over the past year.

Despite this, the company’s cash balance fell by £859m to £269m. There are also worries that rising interest rates will ultimately deter potential homeowners from purchasing, because mortgages will probably become more expensive. This could lead to a slowdown in the housing market more generally.

Hitting calmer waters?

Finally, Carnival (LSE:CCL) shares are down almost 50% in the last six months, and trade at 708p.

The cruise firm had a tough time during the pandemic. For the years ended November, in 2020 and 2021, pre-tax losses came in at $10.2bn and $9.5bn. 

Net debt also spiralled during that time, and currently sits at over $36bn. The business has confirmed it will seek to raise $1bn through the issuance of additional equity. This may be used to pay down some of Carnival’s near-term debt.

On the other hand, occupancy levels hit 69% during the three months to 31 May. In the previous quarter, they were 54%. Additionally, customer deposits rose from $3.7bn to $5.1bn over the same period and booking volumes nearly doubled. 

While the underlying financials are still not as solid as I would like to see, demand appears to be recovering.

Overall, these three firms all face challenges, but there are enough exciting prospects in each to favour investing in them. As such, I’ll be adding all three businesses to my portfolio soon.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Andrew Woods has no position in any of the shares mentioned. The Motley Fool UK has recommended On The Beach. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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