With the first half of the year officially in the books, the best stocks to buy now aren’t what they were at the beginning of 2022. Investors on Wall Street have been confronted with new challenges that will test their patience and understanding. Most notably, the ramifications of stimulating the economy to offset the impact of the pandemic are starting to accumulate. Years of government payouts and supply chain issues have resulted in more inflation than the Fed is willing to accept.
According to the Bureau of Labor Statistics, the Consumer Price Index (an indicator that tracks the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services) rose 7.0% in one year. Buying power has been diminished, and the Fed has already increased interest rates to combat inflation.
While the impending interest rate hikes aren’t sneaking up on anyone, they are altering the entire investing landscape. In particular, higher borrowing costs have led to an exodus out of high-growth tech companies with little to no revenue. Investors are more inclined to trade speculative earnings for value plays, as evidenced by the violent drop in the NASDAQ throughout most of the year.
Established companies with legitimate earnings will be more likely to shelter investments from volatility, hence the rotation into value and free cash flowing companies. However, broader market selloffs are starting to look overdone. While the bottom may not be in yet, many promising companies in each of the major indices are now trading well below their 52-week highs. As a result of the disruption, long-term investors may be able to turn some of the casualties of the downturn into the best stocks to buy right now. While value plays will help hedge against volatility in a rising interest rate environment, the latest decline in some of today’s best companies may represent an opportunity to initiate a new position in high-growth equities.
The best stocks to buy now are directly correlated to the Fed’s decision to increase interest rates and fight inflation. Consequently, the higher-rate environment won’t treat every company similarly. Today’s economy will certainly serve as a catalyst for some companies and an obstacle for many more. Therefore, we have compiled a list of the companies that should benefit from today’s trends and outperform the broader market indices over the next five to 10 years.
Is Now A Good Time To Buy Stocks?
Investors in tune with the market are painfully aware of how volatile Wall Street has been throughout 2022. Dating back to the fourth quarter of last year, in fact, almost all of today’s major indices are down considerably. The S&P 500 index, which tracks the performance of 500 of the most prolific companies in the United States, is down about 24.7% year-to-date. The Nasdaq Composite index, on the other hand, is down a much less modest 39.3% year-to-date.
In each case, inflation and the looming threat of a recession have tempered forward-looking guidance. The Nasdaq, in particular, has been hit hard because of the tech industry’s growth-oriented dependence on borrowing capital. As the cost of borrowing increases, unprofitable companies will have a harder time making money.
The impending inflationary economy will make it more difficult for businesses of all sizes to surpass previous earnings reports, and stock prices are reflecting as much. Shares of just about every equity on the market are down year to date, which begs the question: Is now a good time to buy stocks?
To be clear, there is no right or wrong answer to the question, only conclusions based on individual circumstances. Since it is impossible to predict the future and which way the market will head, investors must first determine their investment strategy and time horizon; then, and only then, will they be able to determine if now is a good time to buy stocks.
Investors with a short-term investment horizon will find today’s market much more difficult to navigate. If for nothing else, volatility looks like it’s here to stay until multiples are compressed, guidance is reigned in, inflation peaks, and the economy staves off a recession, all of which are easier said than done. Wall Street as a whole faces a lot of headwinds after government stimuli flooded the economy and resulted in some of the fastest-paced inflation the U.S. has ever seen. As a result, short-term trading is at the mercy of an incredibly volatile market.
While investors with short-term aspirations will find it difficult to trade in today’s market, those with long-term horizons may find today to be the best time to invest. At the very least, valuations have come in a lot; perhaps too much in some cases. The market tends to overcorrect, both to the upside and downside. As a result, the latest decline in today’s indices may represent a great buying opportunity for patient, long-term investors.
If history has taught us anything, bear markets like the one we are currently in represent a great time to invest for those with long-term goals. With a little due diligence, a lot of patience and the right investments, investing now could help maximize future returns. Despite all of the red in investors’ portfolios, there’s a good argument to be made that the bottom is close. With each passing day, it appears more and more likely that today’s market has priced in all of the headwinds facing the market: inflation, geopolitical tensions in Europe, China’s lockdown, and a possible recession.
There’s no doubt about it; the bear market is warranted, but things seem to have gone too far in many cases. With that in mind, is now a good time to buy stocks? If investors are willing to hold a diversified portfolio of quality stocks for no fewer than five to 10 years, the answer is most likely yes. Some of the market’s best equities have been thrown out with the bathwater and warrant an investment.
However, it is worth noting that it’s impossible to time the bottom. Stocks can still decline from here, so investors will need to be able to endure some volatility. Practice some restraint and maintain some liquidity by buying in smaller increments and averaging down. In the end, history has taught us that the market usually goes down faster than it goes up, but it often goes up more than it goes down; if investors keep that in mind, now looks like a great time to invest.
Best Stock To Buy This Week (08/09/2022)
Few stocks have had a harder time over the course of the pandemic than The Boeing Company (NYSE: BA). Consequently, it is the recent misfortune of Boeing that makes it one of the best stocks to buy in 2022; let me explain.
As recently as 2019, in fact, Boeing was soaring to all-time highs. Months before the pandemic, shares were trading around $340 on the heels of a booming travel economy. However, the introduction of the Coronavirus brought shares back to a level they hadn’t seen since 2015, wiping out about a half decade’s worth of gains. In the first quarter of 2020, when the pandemic was declared a global emergency, shares of Boeing spiraled down about 257%. Not surprisingly, fear and uncertainty brought the travel industry to a halt, and shares of Boeing along with it.
Today, shares of Boeing continue to languish in the wake of the pandemic. Instead of merely being weighed down by COVID-19, however, Boeing has also dealt with significant issues related to malfunctioning equipment. Dating back to before the pandemic, the aerospace engineer was being weighed down by problems stemming from the 737 MAX aircraft following two fatal crashes.
Over the last three years Boeing has dealt with severe quality control concerns and a non-existent travel industry, and the stock’s price illustrates the struggles. Despite a rebounding travel sector, Boeing still trades with a price-to-sales ratio of 1.6x, which is below the aerospace industry’s median. Perhaps even more telling, most of Boeing’s peers have rebounded from the depths of the pandemic much quicker.
There’s no doubt about it; Boeing has been one of the worst performing stocks on Wall Street since the pandemic sent share prices tumbling. However, the light at the end of the tunnel is starting to grow brighter.
At the beginning of August, Boeing was cleared by the U.S. Federal Aviation Administration (FAA) to resume deliveries of one of the company’s most popular products: the 787 Dreamliner. FAA permission to resume deliveries should serve as a significant tailwind for the company, as estimates by Morgan Stanley suggest there may be as much as $17 billion worth of 787 jets built and ready to deliver immediately.
In addition to receiving FAA approval to resume delivery, Boeing is seeing an increase in orders as airlines ramp up for a post-pandemic travel season. Delta alone ordered 100 737 MAX jets in July. The order was the largest request of its kind in over a decade and brings Boeing’s total orders to somewhere in the neighborhood of 4,239 aircraft.
The increase in orders appears to be directly correlated to consumer spending habits. If for nothing else, people look ready and willing to spend on travel, regardless of a slowing economy. With forecasts calling for worldwide leisure travel to increase as much as 8% year over year, airlines are growing confident in demand. The leisure travel industry is expected to reach $880 billion as soon as next year and $970 billion by 2026, making Boeing’s revenue stream look stronger than ever.
Boeing has been one of the worst stocks to invest in over the last few years. However, sentiment surrounding Boeing and the travel industry are steadily improving. As one half of the duopoly supplying the world with the overwhelming majority of its aircraft, Boeing should be able to regain the trust of passengers, the FAA, and shareholders. In the event Boeing is able to avoid self-inflicted wounds and simply do what it has done in the past, secular tailwinds should make it one of the best stocks to buy now.
Top 10 Stocks To Buy Right Now
It needs to be made abundantly clear: There is no such thing as “the best stock to invest in.” Stocks for beginners and veterans will vary based on individual needs. Even today’s best stocks to invest in aren’t guaranteed to play out as many predict. Market volatility has a way of humbling even the top 10 stocks to buy right now.
Nonetheless, now is an interesting time for the stock market. Quality companies have been undervalued while unprofitable, new entrants to Wall Street are extremely overvalued; there’s no making sense of a lot of what’s going on. That said, some equities have managed to navigate the market better than the rest of their counterparts.
Again, there’s no such thing as a perfect stock. However, these are the top 10 best stocks to buy now:
Apple Inc. (NASDAQ: AAPL)
QUALCOMM Incorporated (NASDAQ: QCOM)
Shopify Inc. (NYSE: SHOP)
Advanced Micro Devices, Inc. (NASDAQ: AMD)
SoFi Technologies, Inc. (NASDAQ: SOFI)
The Walt Disney Company (NYSE: DIS)
CrowdStrike Holdings, Inc. (NASDAQ: CRWD)
MercadoLibre, Inc. (NASDAQ: MELI)
The Goldman Sachs Group, Inc. (NYSE: GS)
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1. Apple Inc.
With a market cap of $2.3 trillion, Apple Inc. (NASDAQ: AAPL) is currently the largest company in the world. Yet, despite its position as a global leader in multiple industries, Apple hasn’t been immune to broader market selloffs. Indiscriminate selling has taken place over the course of 2022, and not even Apple could prove to be the exception. With inflation running rampant and fears of a recession looming, Apple is down about 28% year to date. That said, shares aren’t down because of anything the company has or hasn’t done, but rather negative sentiment surrounding all of Wall Street.
On the surface, Apple has performed poorly thus far in 2022. Beneath the surface, however, Apple’s fundamentals look better than ever. Most notably, the latest drop in share price has given investors a great opportunity to open a position in one of the best stocks to buy and hold. Not only is the company trading at a price it hasn’t seen since the third quarter of last year (right before it jumped to an all-time high), but the tech leader’s valuation looks a lot easier for investors to digest. Today, Apple’s price-to-earnings ratio is a little high, but not high enough to scare away new money. In fact, the company’s valuation seems fairly reasonable when you consider the incredible tailwinds the company has lining up at its back.
For starters, Apple has fared better than most other tech companies on the market. The company’s product segment, which includes the iPhone, Mac, iPad, wearables and other accessories, grew sales year over year and accounted for 80% of total revenue. Apple’s service segment, which includes the App Store, Apple Music, Apple TV+, iCloud and other subscription businesses, increased sales 17.3% year over year to nearly $20 billion. There’s no doubt about it; the company is firing on all cylinders at a time when others are finding it hard to stay afloat.
The latest ember to stoke the fire came in the form of Apple’s most recent announcement at the Worldwide Developers Conference. In the keynote, Apple made a number of announcements, not the least of which divulged its intentions of entering the “buy now, pay later” business. The announcement was far from revolutionary, as other companies have already pioneered the space. However, Apple’s interest in the growing lending space is particularly attractive when you consider Apple Pay is already used by 500 million people around the world.
Apple’s decision to enter the “buy now, pay later” space gives it an opening into the fastest-growing segment in the $10 trillion global payments industry. While it will compete with established businesses like Affirm and Block, Apple has the added benefit of an existing payments platform that’s already in the pockets of more than one-billion people: the iPhone. Both Affirm and Block need to rely on integrations into third-party platforms to offer their services. Apple, however, can simply offer all of its iPhone users direct access to the new service, granting it a significant advantage. To be perfectly clear, no stock is without an inherent degree of risk. In fact, the “buy now, pay later” industry isn’t guaranteed to work. However, Apple has a big enough balance sheet that the risk is well worth the reward.
Instead of the new endeavor into “buy now, pay later,” the biggest threat to the business is Apple’s own success. If for nothing else, Apple has grown into such a big company that growth may not be as easy to come by as it has in the past. For example, forecasts are calling for a 7.7% increase in Apple’s top line revenue by the end of this fiscal year. In 2023, however, the same analysts expect revenue growth to drop to somewhere in the neighborhood of 5.6%. While growth in a multi-trillion dollar company is admirable, analysts are starting to suspect growth may be harder to come by.
The threat of slowing growth is a very real possibility, especially with inflation running high and a recession looking more and more likely, but Apple is built differently. The company has more than enough cash on its balance sheet to thrive in a high inflationary environment. Apple is increasing its optionality and revenue streams almost exponentially. Once known solely for its desktop computers, Apple offers best-in-class services and products in a variety of spaces. Today, Apple seems to be aware of its maturing business and is more than capable of doing what it takes to stay relevant. “Buy now, pay later” is just one of the many levers Apple will pull in the coming years to make it one of the best stocks to buy now.
2. Alphabet Inc.
Not only is Alphabet one of the best stocks to buy now, but it wouldn’t be hard to argue that it’s the single best stock to buy in today’s market. Of course, different investment strategies covet different types of equities and there’s no universal way to objectively place a single company at the top of every investor’s wishlist, but Alphabet belongs in almost every conversation. At the very least, Alphabet is one of the most prolific companies on Wall Street with plenty of secular tailwinds at its back.
Perhaps even more importantly, the company’s attractive valuation and pristine balance sheet should enable it to thrive, with or without a recession on the horizon. In fact, Alphabet didn’t even mention the words “recession” and “slow” in its latest earnings report; that’s an important distinction to make at a time when the Fed is literally trying to slow down the pace of the economy to combat inflation.
While Alphabet may not be worried about a recession, it appears its investors are. After all, tech stocks tend to sell off when interest rates increase. The tech-heavy Nasdaq has sold off about 38% year-to-date because higher borrowing costs will indiscriminately detract from the future earnings of unprofitable companies. Unfortunately, Alphabet could escape the selling, despite having as close to a perfect balance sheet as possible. Consequently, Alphabet is now down about 27% year-to-date.
Shares of Alphabet are now about 41% down from their all-time high. Following the drop, Alphabet trades at a price-to-earnings growth multiple of 1.14x, which is one of the lowest in its respective industry. In other words, Alphabet is trading at a discount relative to its peers despite exercising a significant industry advantage. The company is now trading at its cheapest valuation in a decade, and it has done nothing but increase cash flow, revenue and profits in that time.
It is worth noting, however, that while Alphabet is down, it is far from out. If for nothing else, the latest selloff has more to do with broader market sentiment than Alphabet. That said, long-term investors should view Alphabet as one of the best stocks to buy now because it remains a great company with a long runway at an attractive valuation.
While its stock price may not reflect as much, Alphabets primary sources of revenue are either at or near the forefront of their respective industries. Android operating systems are estimated to make up as much as 71% of today’s mobile operating systems. Google’s search engine segment has the market cornered, making up about 86% of the desktop search field. YouTube is the most widely used online video platform.
While Google Cloud may not be on the same level as Amazon’s AWS and Microsoft’s Azure, it is performing admirably in a market where even a small market share goes a long way. Over the entirety of last year, Google’s cloud segment generated $19.2 billion in sales, more than doubling the previous year. Moving forward, Alphabet only needs to capture a fraction of the market for its cloud endeavor to prove worthwhile.
All things considered, Alphabet is firing on all cylinders; so much so, in fact, that the company’s free cash flow may be the biggest reason it’s one of today’s best stocks to buy now. Specifically, Alphabet has increased its free cash flow about 150% in just three year’s time. The cash Alphabet has on its balance sheet will easily help the company weather any sort of recession.
Alphabet has such a surplus of cash, in fact, that it recently announced a $70 billion repurchase plan to buy back its own shares. Doing so will increase the intrinsic value of every share. If the company can simply maintain its current cash flow levels, it can replenish the money spent on the buyback in as little as five quarters.
Alphabet has been one of the best stocks to invest in since it went public nearly two decades ago. That said, the company’s time at the top appears to be just getting started. In addition to growing revenue 23% year-over-year as recently as last quarter, Alphabet boasts a 30% operating margin, which is more than enough to make investors happy. The real reason to invest in Alphabet, however, are the secular tailwinds at its back. Google Cloud, in particular, could turn an already cash-generating machine into one of the best stocks to buy for the next decade if it becomes profitable in the near future.
3. QUALCOMM Incorporated
Headquartered in San Diego, Qualcomm is a multinational corporation which specializes in designing and developing semiconductors, software, and services for wireless technology. As an industry leader in wireless technology, Qualcomm’s contributions are vital to the rollout of 5G, 4G, CDMA2000, TD-SCDMA and WCDMA mobile communications standards. Despite its important role in wireless communications, however, Qualcomm saw its shares drop following the company’s latest earnings report.
From the time the market closed on earnings day to the market close on the following day, shares of Qualcomm dropped about 4.7%. The drop added insult to injury, as shares of Qualcomm were already down nearly 30.0% year-to-date in the wake of the broader market selloff. There’s no doubt about it; Qualcomm hasn’t been good to investors over the course of 2022. The looming threat of a recession and increasing interest rates have taken their toll on the entire technology sector.
Now trading somewhere in the neighborhood of 11.7x forward earnings estimates and 3.5x trailing sales, Qualcomm is not only a growth equity trading for a discount, but also one of the best stocks to buy right now. In particular, investors should take solace in the fact that Qualcomm’s decline has more to do with the broader market than the company itself. In fact, Qualcomm has done quite well considering the macroeconomic circumstances.
In the latest earnings report, management generally had good things to say about the quarter. Revenue beat expectations, increasing 37.0% year-over-year to $10.93 billion. Adjusted earnings per share increased 54.0% year-over-year to $2.96 per diluted share. All things considered, Qualcomm actually outperformed analysts’ expectations across the board.
Despite the positive news, tempered guidance caused the stock to drop in price. Analysts were expecting revenue in the fourth quarter to guide to roughly $11.87 billion, but management lowered guidance to $11.4 billion, citing weaker macroeconomic headwinds and weaker smartphone orders.
Short-term headwinds are real and the drop in shares is understandable. However, Qualcomm’s problems don’t appear to be long-term obstacles. In the event Qualcomm weathers the short-term storm, which it appears more than capable of doing, the company may be in a position to ride several secular tailwinds to decades of positive growth. For starters, Qualcomm is the industry leader in smartphone chips, a market that’s expected to grow nine times its current market cap by 2028 to $66.5 billion. For all intents and purposes, Qualcomm just needs to keep doing what it is doing to capture the growing opportunity.
In addition to facilitating the rollout of the 5G cycle, Qualcomm is expected to branch out into several edge technologies, like automobiles and IoT (Internet of Things) connectivity. Doing so will give Qualcomm more optionality and room to grow operations.
Qualcomm has had a rough year, but that doesn’t mean it is not one of the best stocks to buy now. The latest drop in price is actually an opportunity to buy a great company at a good valuation. Patient investors who are able to stomach short-term volatility may be glad they bought shares in this downturn.
4. Shopify Inc.
Shopify is a Canadian multinational e-commerce company which specializes in connecting merchants to customers on a global scale. Most notably, however, Shopify lives up to its name; it provides businesses of every size with the tools they need to thrive in an ever-increasing digital marketplace. As diverse as it is versatile, Shopify’s platform can simultaneously provide merchants with a means to operate an online store, collect payments, advertise goods and services, ship orders, and more. Simply put, Shopify gives businesses everything they could possibly need to operate online.
Not surprisingly, Shopify’s position in the e-commerce industry has made it one of the best stops to buy over the course of the pandemic. As lockdowns ensued and more people turned to online shopping, Shopify thrived. So much so, in fact, that shares of the e-commerce platform increased from about $416 when the pandemic was declared a global emergency to their all-time high of $1,762 as recently as the fourth quarter of last year. Revenue increased at a blistering pace, which left investors wondering how high the stock could really go.
However, it is worth noting that shares dropped nearly fifty percent following the company’s fourth quarter earnings report and have continued to drop lower over the course of 2022. Today, shares are trading at $33.04 because of a 10 to 1 stock split. Despite the split, the decrease may be primarily attributed to less-than-perfect forward-looking projections. Specifically, management expects “year-over-year revenue growth to be lower in the first quarter of 2022 and highest in the fourth quarter of 2022.” Management added fuel to the selloff when they said they didn’t expect COVID-19 to trigger as much acceleration as it had in the past. In other words, the pandemic appears to have pulled a lot of business forward.
The threat of tempered revenue growth caused shares to drop faster than shareholders would like to see, and even more over the following months. While it’s too early to tell for sure, it appears as if the market has overreacted. Slower revenue growth rates aren’t necessarily a good thing, but it’s important to look at what transpired last quarter with some added context.
In the last two years, Shopify’s revenue has grown 86.0% and 57.0%, respectively. Shopify was a clear beneficiary of the stay-at-home trends created by the pandemic. As a result, it would be unfair to assume revenue growth would persist on the same line with pandemic coming to an end.
In the quarter, revenue from merchant solutions reached $1.03 billion, up 47.0% from the previous quarter. In the same call, management acknowledged subscription revenues increased 26.0%, up to $351.2 million. For all intents and purposes, Shopify had a great quarter. However, the short-minded market saw fit to take the company’s share price down nearly twenty percent.
That’s an important distinction to make: Wall Street can only react to the forecasted drop in revenue. With an already expensive valuation, it only made sense for investors to sell when revenue wasn’t expected to maintain its momentum. However, the pandemic inflated previous revenue reports, and Shopify has several tailwinds working in its favor.
As the adoption of e-commerce continues to grow, Shopify’s suite of online tools will become increasingly valuable. Already a household name for small businesses across the country, Shopify accounts for approximately 10.0% of all e-commerce sales in the United States, trailing only Amazon. Now, cross-reference that metric with the fact that e-commerce represents a mere 13.0% of retail sales in the country, and it becomes easy to see why Shopify can become a long-term winner.
If that wasn’t enough, Shopify is expanding its efforts to grow in international markets. Most notably, Shopify partnered with JD.com, one of China’s largest e-commerce platforms. The move will allow merchants to set up shop on J.D.’s platform using Shopify’s products. Growing their presence in one of the largest e-commerce countries in the world gives Shopify unfettered optionality, and should put any concerns of slowing revenue growth to rest.
Shopify is a true leader in the e-commerce sector. As a result, the stock is highly valued. However, the latest drop in price makes the risk/reward profile a lot more attractive. With years of promising tailwinds, in fact, Shopify looks like one of the best stocks to buy now.
5. Advanced Micro Devices, Inc.
Advanced Micro Devices has become synonymous with some of today’s greatest semiconductors, microprocessors and graphics processing units (GPUs). The semiconductor company’s products are already invaluable to a number of industries around the globe, but it’s hard not envision a larger role moving forward. It is growing more and more apparent that AMD will provide a catalyst in the future advent of technology. Therein lies the reason AMD looks like one of the best stocks to buy and hold in 2022: the already established tech business will be a clear beneficiary of future trends in technology.
The first case to be made for AMD as one of the best stocks to buy today centers on the company’s current performance relative to its valuation. At 1.00x, AMD’s price-to-earnings growth ratio is below the entire semiconductor industry’s median of 1.37x; that means AMD looks like it is trading at a discount when expected earnings growth is factored into the equation. Despite the inexpensive valuation, however, AMD’s latest earnings report highlighted some impressive milestones.
As recently as the first quarter, AMD recorded $5.9 billion in revenue, up 22% from the previous quarter and 71% year-over-year. Thanks—in large part—to higher server processor revenue and the closure of the Xilinx merger, gross margins increased 48% year-over-year.
“The first quarter marked a significant inflection point in our journey to scale and transform AMD as we delivered record revenue and closed our strategic acquisition of Xilinx,” said AMD Chair and CEO Dr. Lisa Su. “Each of our businesses grew by a significant double digit percentage year-over-year, led by EPYC server processor revenue more than doubling for the third straight quarter. Demand remains strong for our leadership products, with our increased full-year guidance reflecting higher AMD organic growth and the addition of the growing Xilinx business.”
AMD had a great first quarter, yet shares are down considerably year-to-date. Today, shares are trading for about half of where they were at the end of last year because of supply chain issues, inflation, fears of a recession, and geopolitical tension. It is easy to argue shares of AMD ran too high, but the latest correction seems overdone. If for nothing else, AMD is working with several secular tailwinds at its back. Instead of serving as an indictment on AMD, lower share prices are more reflective of a great opportunity.
At the moment, the single greatest catalyst for future growth may be AMD’s new data center server processors. Set to be released in the fourth quarter, AMD’s 5-nanometer processors (codenamed Genoa) will help power one of the fastest growing industries on the planet. With the need for data centers expected to grow exponentially, AMD’s focus on data center server processors gives the company a much longer runway than today’s share price suggests. According to analysts, AMD’s focus on the data center industry could increase earnings at an annual rate of 28% through 2027.
AMD’s current valuation suggests it is trading at a discount. As a result, investors who start a position in this company today and hold for at least five to 10 years may be rewarded nicely. Secular tailwinds in the technology sector should simultaneously make AMD one of the best stocks to buy now and a good bet to beat the market over the long term.
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6. SoFi Technologies, Inc.
SoFi Technologies, or SoFi for short, is attempting to become one of the best stocks to buy after going public no more than two years ago. For those who have never heard of it, SoFi is an online fintech company attempting to disrupt the multi-trillion dollar banking industry. In doing so, the new banking platform is promising to help its customers “get their money right.” As the tagline suggests, SoFi’s services are designed specifically to put loyal customers’ capital to work and help them realize financial independence. Instead of merely acting as an antiquated banker with high fees, however, SoFi allows its customers to take just about every step necessary to realize financial freedom—all in one place.
With everything from student loans and a variety of refinancing options to credit cards and an investment platform, SoFi is seeking to place every financial convenience at the fingertips of its account holders. For all intents and purposes, SoFi’s intent to disrupt the banking industry is playing out according to plan. In the second quarter 450,000 new members signed up to use at least one of SoFi’s products, bringing the young bank’s total to 4.3 million active users. Galileo, SoFi’s recently acquired financial services API and payments platform added 7 million new accounts in the quarter, bringing its total up to 117 million users. Additionally, the fintech had its second-highest quarter of new loans. All things considered, SoFi is starting to gain momentum.
All of the new business generated in the quarter allowed SoFi to beat analysts’ estimates. As a not-yet profitable business, Sofi’s net loss of $0.12 per diluted share on total revenue of $362.5 was actually very encouraging. As a result, the banking platform was able to raise guidance for the rest of the year; something not many companies are doing in this economy.
SoFi provided investors with another impressive quarter, yet shares have been cut more than in half since going public at the beginning of last year. Even after jumping 23.8% after the latest earnings report, shares are still trading at what appears to be a discount. If for nothing else, SoFi still has another trick up its sleeve.
SoFi made a name for itself providing affordable student loans for years. As a result, the current administration’s decision to place a moratorium on student loan debt during the pandemic has served as a significant headwind. For nearly two and a half years SoFi hasn’t been able to collect on one of its biggest revenue drivers, which makes the latest earnings report even more impressive. As recently as 2020, SoFi originated more than $2.1 billion of student loans; today, the student loan branch of the company is only operating at about 50%.
At the moment, the moratorium is still in play, but it won’t last forever. When SoFi is able to collect on student debt and refinance existing loans it could experience a windfall of revenue. The unique convergence of student loan revenue (when the moratorium eventually expires) and a rapidly growing user base makes SoFi look like one of the best stocks to buy now. With what looks like a suppressed share price and a long runway built on secular tailwinds, SoFi could be one of the best stocks to invest in for years, if not decades.
7. The Walt Disney Company
The Walt Disney Company needs no introduction; it’s one of the most well-known companies on the face of the earth with perhaps the most valuable intellectual property (I.P.) ever created. Known primarily as an entertainment company, Disney has become an integral component to the lives of millions of people the world over. Despite its position as one of the world’s most beloved companies, Disney’s stock price has languished for more than a year.
At the beginning of last year, shares of Disney were trading around their all-time high, just shy of $200. Today, shares are trading around $96. The drop is due primarily to two factors: the lingering impact of the Coronavirus suppressing in-person business and lower-than-expected streaming numbers associated with Disney+. To make matters worse, Netflix’s latest earnings report is weighing heavily on other streaming services.
It is worth noting that the two major obstacles holding Disney shares back over the past year are merely short-term headwinds. That’s not to downplay the impact COVID-19 has had on the lives of everyone around the globe or the economy as a whole, but rather to suggest the worst may be behind us. If for nothing else, “The Great Reopening” looks more likely to happen with each passing day. Barring any significant setbacks or a new variant, the economy looks poised to return to full speed, and Disney should benefit from one of the busiest travel seasons the world has ever seen. Disney has already reopened its Shanghai park and is prepared to send the latest addition of its cruise fleet, The Disney wish, on its maiden voyage; things can only go up from here.
To be fair, Disney won’t report earnings until August, but it is growing more and more apparent that the travel industry is starting to fire on all cylinders. As perhaps the most telling indicator of pent-up demand in the travel industry, airlines appear to be doing very well.
Of course, Disney isn’t an airline, but ticket purchases suggest travel is coming back in a big way. The willingness to travel is growing, and Disney will undoubtedly benefit from the eventual reopening of the economy. In particular, Disney has used the last two years to develop new technologies, attractions, and premium offerings which should bolster earnings. It is becoming safer and safer to assume more people will be spending more money at Disney resorts as the year progresses.
In addition to the return of travel, Disney is starting to look like a great hedge against an unpredictable economy. Whereas unprofitable, high-growth tech stocks are falling out of favor in today’s inflationary environment, Disney looks more than capable of thriving. Disney possesses the pricing power and brand loyalty to maintain the type of profitability investors like to see. Perhaps even more importantly, Disney’s current valuation should attract more investors who are looking to mitigate risk in their portfolios.
All things considered, Disney’s PEG ratio isn’t cheap, but it does seem to fail to account for the multiple tailwinds lining up at the company’s back. Shares of Disney are trading at a significant discount relative to last year and the world looks more ready than ever to travel. With Disney resorts representing the pinnacle of family travel, there’s no reason to believe this summer won’t be a major revenue catalyst for the company. As a result, Disney looks like one of the best stocks to buy now; both its long-term and short-term prospects look too encouraging to ignore. At their current level, it may only be a matter of time until shares of Disney test new highs again.
8. CrowdStrike Holdings, Inc.
While not a name many people outside of Wall Street or major corporations are familiar with, CrowdStrike is a name that deserves to be on every investor’s radar. If for nothing else, CrowdStrike provides an invaluable service which increases in utility as technology becomes progressively integrated into our daily lives: cybersecurity.
More specifically, CrowdStrike’s unique Falcon platform provides cloud-delivered solutions for endpoint and cloud workload protection. The company’s ability to secure online platforms has granted it the ability to take advantage of several tailwinds, not the least of which are expected to last decades, if not forever. As a result, CrowdStrike isn’t just a great long-term play; it’s one of the best stocks to invest in.
The unique convergence of several factors has made CrowdStrike a timely opportunity for today’s investors. Most notably, however, the latest tech selloff has made CrowdStrike’s incredibly high valuation much more palpable. With investors abandoning high-growth tech stocks in favor of value plays that can survive in an inflationary environment, the entire tech sector has been beaten down for the better part of 2022, and CrowdStrike is no exception.
Through no fault of its own, CrowdStrike is trading well below its November 52-week high. Shares have faced downward pressure in 2022 because of overall market sentiment. That’s not to say CrowdStrike wasn’t due for a correction; even after the slide CRWD boasts a lofty valuation. With a price-to-sales ratio of 26.52x, shares of CrowdStrike are some of the most expensive in the software industry.
There’s no doubt about it: CrowdStrike is trading at an incredibly expensive valuation, but is common for the best stocks to buy in today’s market to demand a premium. CrowdStrike is the industry leader in a field that’s growing more important with each passing day. Our reliance on the internet has increased the need for cybersecurity, as evidenced by the latest actions taking place in Ukraine. With tension mounting on a global scale, the threat of cyber attacks is more likely than ever. Cyberattacks have already hit businesses of every size in recent history, and growing tensions between global leaders suggest the need for cybersecurity will only grow in the next few decades.
CrowdStrike’s unparalleled ability to protect sensitive data means its services will only grow more necessary as our dependence on technology increases. According to management, CrowdStrike’s market opportunity in 2022 will grow to $55 billion; however, that’s just the beginning. Estimates suggest CrowdStrike’s market opportunity could reach as high as $116 billion by 2025 because of the tailwinds currently being generated in the cybersecurity sector.
To be perfectly clear, CrowdStrike is an expensive stock, but it’s trading at about half the price it was a few months ago. Today’s price represents a great opportunity for investors to start a new position in the best cybersecurity company at a time when online protection is more important than ever. That said, long-term investors could experience some short-term volatility, but patience will likely pay off. CrowdStrike looks like a long-term winner, and its current price makes it one of the best stocks to buy right now.
9. MercadoLibre, Inc.
Headquartered in Buenos Aires, MercadoLibre is an Argentinian company incorporated in the United States that operates an online platform dedicated to e-commerce, financial technology, and a number of other services. While operations are primarily carried out in Argentina, the company services at least 16 countries across Latin America and is estimated to account for about 30% of the e-commerce market share in its respective region. For lack of a better comparison, MercadoLibre is the Amazon of Latin America and it is continuing to grow at a fast rate.
The bull case for MercadoLibre centers on the secular tailwinds of e-commerce and the incredibly long runway it has in Latin America. If for nothing else, Fidelity International suggests e-commerce only penetrated about 9% of Latin America as recently as last year. Perhaps even more importantly, analysts expect the market cap of e-commerce to double as soon as 2025.
Representing nearly one-third of the entire Latin America e-commerce traffic, MercadoLibre is already an industry leader. If it were to simply maintain its current market share, the mere growth of e-commerce would serve as a significant tailwind. However, MercadoLibre amassed 81 million active users by the end of the first quarter, up 15.7% year over year. As the digitization of e-commerce progresses, MercadoLibre should see its active user count increase accordingly. In other words, MercadoLibre is one of the biggest e-commerce players in a region that has a lot of untapped potential. As more people transition to online shopping, MercadoLibre will be a clear beneficiary.
The advent of online services have already delivered great results for the company. In the first quarter of this year, revenue reached $2.25 billion, up 63% year over year. Net income, on the other hand, grew to $65 million over the same period. There is no doubt about it; the business is firing on all cylinders, and this appears to be just the beginning. Provided e-commerce penetration continues to grow and MercadoLibre remains an industry leader, it’s hard to argue MELI isn’t one of the best stocks to buy right now.
At the very least, shares of MELI are trading for much less than they were at this time last year. With a price-to-earnings growth ratio somewhere in the neighborhood of 1.57x, Mercado Libre appears to be trading at an expensive value relative to the Internet & Direct Marketing Retail industry. However, the company’s 4.5x price-to-sales ratio suggests it hasn’t traded at this much of a discount since 2009. Now about one-third of its 52-week high, Mercado Libra is starting to look like too much of a bargain for long-term investors to pass on.
Not only has the company’s share price come in quite a bit, but its long-term prospects remain more attractive than ever. That’s not to say MercadoLibre will be immune to short-term volatility onset by a high inflationary environment and the lingering impact of COVID-19, but rather that few companies look better positioned to thrive over the long run than MELI. As one of the best stocks to buy now, investors who start a new position with MELI, or add to an existing one at these prices, will most likely look back fondly on their purchase.
10. The Goldman Sachs Group, Inc.
The best stocks to buy now are those which will shelter investors’ capital in an uncertain economic environment. If for nothing else, the looming threat of a recession (if we aren’t already in one) will most likely undermine equities which are susceptible to a decelerating economy. As inflation continues and borrowing costs are elevated, unprofitable companies are naturally at a disadvantage. Growth companies who continue to spend with the future in mind will find it hard to post positive earnings in today’s macroeconomic landscape. Therefore, it’s time for investors to add a defensive position to their portfolios: The Goldman Sachs Group, Inc.
Goldman Sachs is one of the most well-known financial institutions on the planet. The banking juggernaut has developed a reputation for providing a wide array of financial services for corporations, financial institutions, governments, and individuals on a global scale. Goldman Sachs gives each of these entities access to personalized investment banking, global markets, asset management, and consumer and wealth management services.
While Goldman Sachs has been dubbed a defensive play, it is important to note it isn’t immune to macroeconomic headwinds created by the pandemic and a possible recession. Most notably, the company’s second-quarter earnings report revealed an earnings drop of 48% year over year. The drop was largely the result of an aversion to investment banking in an inflationary marketplace. Uncertain economic conditions also detracted from acquisition activity and equity underwriting.
2022 hasn’t been kind to Goldman Sachs, which is why shares are down nearly 24% from their all-time high at the end of last year. Despite the downward spiral, however, Goldman Sachs remains one of the best stocks to buy now. At the very least, the company is trading at an attractive valuation. With shares trading around 7.2x trailing 12-month earnings and right above book value, the global bank looks like it’s trading at a discount. As an added bonus, the financial institution trades for less than 9.5x forward earnings. These valuations make Goldman Sachs look incredibly affordable, especially when you consider its defensive positioning in today’s market and potential for growth.
To be clear, the first half of 2022 wasn’t all bad for Goldman Sachs. While investment banking took a hit, the company has many levers to pull, regardless of the economic landscape. The volatility which slowed investment banking operations actually increased fixed-income revenue by as much as 55% year over year. Trading revenue jumped to $6.5 billion, up 32% year over year. Representing more than half of Goldman Sachs’ total revenue, the increase in trading revenue actually enabled the bank to beat earnings expectations on the top and bottom.
While some volatility is expected in the near term, investors need to be encouraged by the bank’s latest performance relative to its share price. The company trades at an attractive valuation, yields a dividend of 3.1%, and has some underrated tailwinds lining up at its back. In particular, Goldman Sachs’ consumer banking branch boasts a lot of potential.
Goldman Sachs is primarily known for its investment banking operations, but the financial giant has been building a strong consumer banking business behind the scenes. In a relatively short period of time, G.S. has given consumers access to savings and loan accounts, credit card lending services, and even a robo-advisory platform.
In the company’s latest earnings report, the bank’s consumer banking branch grew 67% year over year. Most of the revenue was directly correlated with Apple (NASDAQ: AAPL) and General Motors (NYSE: G.M.) credit cards, as Goldman Sachs was the bank behind each. However, Goldman Sachs hopes to diversify revenue streams generated by its consumer banking branch in the future. Management has already hinted at offering checking accounts and more types of loans to consumers. The more products the bank successfully rolls out, the more likely it is to increase revenue in the future.
In its current state, Goldman Sachs is already one of the best stocks to buy now. The bank provides investors a strong defensive position in an inflationary environment at a reasonable valuation. It should be noted, however, that the stock’s current valuation seems to be underestimating the bank’s future revenue growth potential. If Goldman Sachs can scale its consumer banking branch well, there’s no reason it shouldn’t be viewed as one of the best stocks to buy today.
What Are The Best Stocks With The Most Value In 2022?
The threat of looming rate hikes has forced a rotation out of high-growth tech stocks and into value stocks with actual revenues. As a result, many high-quality companies have been sold in an attempt to seek refuge from impending volatility. Even some of today’s most promising companies couldn’t avoid the downturn, and Meta Platforms, Inc. (NASDAQ: META) was no exception. The latest “tech selloff” caused shares of Meta Platforms to drop about 127% from their highs in the third quarter of last year. To be clear, the decline was largely the result of a broader market selloff, and less of an indictment on the company itself.
That said, Meta Platforms is one of the few stocks which have jumped after its first quarter earnings report. Investors responded positively to a growth in users that was missing in its previous report. More specifically, Meta Platforms added 50 million users to its suite of apps that include Facebook, Instagram, Messenger, and WhatsApp. The increase surprised investors, who were expecting slower growth, or perhaps even a continuation of user declines. That said, the increase in users was encouraging for a stock that has been beaten down for far too long. It is worth noting, however, that the metrics weighing down Meta are expected to be short-term, and make the social media giant one of the best stocks to buy now.
In addition to being undervalued by today’s metrics, few companies boast greater potential than Meta Platforms. For starters, 2.9 billion people are already using one of the company’s platforms. The recent increase in daily active users is certainly encouraging for a company that already owns such a significant market share. In the event Meta is able to monetize its users more efficiently, there’s no doubt it will remain one of the best stocks to buy now.
More important than Meta Platform’s user base, however, is what the company intends to introduce in the future. As its name suggests, Meta Platforms rebranded in an attempt to become the face of the impending metaverse. Not unlike how they built and scaled Facebook, Meta Platforms wants to serve as the foundation of all social interaction in web 3.0. While it’s too soon to tell just what the metaverse will turn into, some estimates place the opportunity upwards of $800 billion by 2024; that’s just two years away. That, combined with an attractive compound annual growth rate, places F.B. firmly on the “best stocks to invest in 2022” list.
To be perfectly clear, the metaverse remains highly speculative. However, Meta Platforms’ user base and rebranding to focus on web 3.0 is intriguing, especially at today’s valuation. Those who start a position today may quickly find out why it’s one of the best stocks to buy right now.
What Are The Fastest Growing Stocks In 2022?
The market created in the wake of the pandemic has shifted the balance of power. The teach-friendly NASDAQ, in particular, has experienced significant gains in momentum since the introduction of the Coronavirus. Thanks largely to more people staying at home (and working from home), technology stocks have excelled where brick and mortar businesses have retracted.
Brian Martucci, a professional finance expert at Money Crashers, suggests the pandemic may act as a tailwind for today’s fastest-growing stocks. “As long as the pandemic and its economic repercussions remain front and center, expect defensive plays like utility stocks and technology plays (especially those that enable remote work) to outperform the broader market,” says Martucci.
The new economy has created some obvious winners in the stock market, but one stock appears to be growing faster than many of its counterparts: Snowflake Inc. (NYSE: SNOW).
The advent of technology has also expedited the need for translating and using data in a post-pandemic world. Snowflake, in particular, has seen its growth prospects increase exponentially as data becomes more valuable in the twenty-first century. Snowflake is best known for being one of 2020’s most anticipated IPOs. More specifically, however, Snowflake is a cloud-based data platform that offers an entire platform for individual businesses to consolidate data into valuable metrics which facilitate growth and progression. In other words, Snowflake can take all of the information a company collects and translate it in a meaningful way that promotes future insights. Snowflake builds off the concept of Big Data and allows businesses of every size to benefit from it.
Today, Snowflake’s CEO is forecasting $1 billion in revenue for the current fiscal year. However, by the end of the decade, the same CEO is forecasting more than $10 billion in revenue. In other words, Big Data will be one of the biggest industries moving forward, and Snowflake is well-positioned as one of the best stocks to invest in right now.
The Best Stock With The Most Momentum In 2022
The inflationary environment created by the Fed’s decision to stimulate the economy for the better part of two years has shifted which stocks have the most momentum. Wall Street has already turned its back on the high-growth technology stocks that have soared since the beginning of the pandemic. Inflation inherently weighs on unprofitable companies. The tech-heavy Nasdaq, for example, has dropped approximately 1,939 points since topping out in the third quarter of last year. The decline has been fairly steady, as investors appear more inclined to favor safer stocks with better valuations.
The exodus out of the technology sector has created tailwinds in several other industries. However, two industries in particular appear to have the most momentum in 2022: travel and energy.
The travel industry is currently preparing for what many assume will be the busiest summer in years. As pandemic restrictions lift and more people grow comfortable getting out of the house, it’s safe to assume pent-up demand for travel will boil over as the weather heats up.
The energy sector, on the other hand, has seen many investors flock to it as the crisis in Ukraine grows more severe. In particular, sanctions on Russian gas have made subsequent sources of energy more valuable. Natural gas, in particular, is experiencing a renaissance, as it is growing more apparent the world needs more to cover the loss from Russian sourced pipelines.
The travel and energy sectors have received their own unique catalysts, and investors can use the recent tailwinds to their advantage by adding the following stocks to their portfolios:
Booking Holdings Inc. (NASDAQ: BKNG): As the parent company of popular travel sites like Booking.com and Priceline.com, Booking Holdings is unquestionably one of largest online travel portals. Of course, the company suffered over the course of the pandemic, but it survived the trial by fire with billions in cash on its balance sheets. Today, Booking Holdings can deploy its cash to take advantage of what may be one of the biggest travel seasons ever. Few companies are positioned as well as Booking Holdings to take advantage of pent-up travel demand, making it one of the best stocks to buy now and hold throughout 2022.
NVIDIA Corporation (NASDAQ: NVDA): As a leader in the tech industry, NVIDIA has built up a lot of momentum in 2022, albeit in the wrong direction. Year-to-date, shares of NVIDIA are trading for about half the price they were at the beginning of January. All things considered, NVIDIA has trended downwards for the better part of a year. That said, downwards momentum certainly makes a strong case for NVIDIA to be one of the best stocks to buy right now. While there may still be room to the downside, shares of the best semiconductor company in the world are discounted significantly from their all-time high. At its current price, NVIDIA appears to have already priced in a worst-case scenario, but there may be no other company with a brighter future. Patient investors may want to use this downside momentum to their advantage and build a position in a great company.
The Best Stocks To Buy And Hold In 2022
The stock market entered into 2022 walking on eggshells, as whispers of interest rate hikes shifted investor sentiment almost overnight. The moment the Federal Reserve announced it would be hiking interest rates to combat inflation served as a catalyst for investors to trade high-growth, unprofitable businesses for their safer counterparts. Higher interest rates will weigh heavier on companies who aren’t generating enough cash.
The threat of higher interest rates is shifting the way Wall Street looks at stocks in 2022, and retail investors need to pay attention to the direction sentiment is heading. In particular, the best stocks to invest in at the moment are those which can thrive in an inflationary environment.
Higher interest rates make it more expensive for businesses to operate, and less-profitable businesses will have a harder time producing the cash flow investors want to see. Therefore, the best stocks to buy and hold in 2022 are those with enough pricing power to offset inflation.
There are plenty of good stocks to invest in, but two seem to have separated themselves from the rest of the competition for now:
Bank of America Corporation (NYSE: BAC): With the possibility of a recession growing more by each passing day, now may be a good time for investors to play a little defense. In particular, Bank of America may be able to provide investors with some attractive upside at a time when most of the market is struggling to find its footing. That’s not to say that Bank of America is immune to the downside of a recession, but rather that the worst-case scenario already seems to be baked into the current price. Down nearly 35% from its latest high and trading for less than 1.1 times book value, bank of America is trading at a discount relative to its peers. Despite the attractive valuation, however, Bank of America is performing admirably, and should continue to do so. Few banks, for that matter, look better positioned to benefit from a rising interest rate environment. With somewhere in the neighborhood of $800 billion in non-interest-bearing deposits, Bank of America can increase the rate it charges on loans and increase profit margins. The latest estimates suggest an interest rate increase of just 1% may lead to an additional $5.4 billion in net interest income each year. As a result, Bank of America looks more insulated from a recession than most equites and should be one of the best stocks to buy and hold in 2022.
Merck & Co., Inc. (NYSE: MRK): The healthcare industry is particularly recession resistant. When the dollar starts to buy less and families start saving money, the last thing to get cut out of the budget is healthcare. As a result, many of the best stocks to buy today are associated with the healthcare sector. Of the entire sector, however, few stocks look more prepared to thrive over the course of 2022 more than Merck. As one of the top healthcare companies in the world, Merck should continue to see sales grow. On its own, Merck already looks to have a lot of momentum, but rumors suggest the healthcare giant may be looking to acquire Seagen, a growing cancer treatment company that doubled its revenue in two years and now sits around $1.4 billion. The addition of Seagen would provide a nice revenue boost for an already profitable company. Perhaps even more importantly, however, investors can acquire said growth at what looks to be a great valuation. With one of the lowest price-to-earnings growth ratios in the pharmaceutical industry, investors may acquire an industry leader with plenty of upside at a discount. Even if the acquisition falls through, Merck looks like one of the best stocks to invest in for the rest of the year.
Determining the top 10 best stocks to buy now isn’t as simple as reading an article and starting a position in a new company five minutes later. In reality, investors must first understand what they want out of their investment portfolio before they even consider investing a dollar in a single stock. Once intentions are disclosed, investors must then take a look at the overall market and determine which stocks will thrive alongside its current trends. The best equities aren’t in their current position simply because of each company’s performance, but rather because of how well they operate in a specific economic environment. The unique combination of great companies and complimentary macroeconomic conditions will create unparalleled opportunities for patient investors.
When all is said and done, there is no way of knowing the best stocks to buy unless you set a goal. How long is the investing window? Do you prefer passive investments or active investments? What is your risk tolerance? All of these questions, and many more just like them, must be answered before anyone can determine the best stocks to buy.
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