Today’s episode of Full Court Finance at Zacks explores where the market stands at the moment after a dismal January and a strange early part of February, highlighted by solid comebacks from some mega-cap technology stocks and huge double-digit falls from others. Given this volatile backdrop and rising interest rates, investors might want to consider buying top-ranked stocks that pay a dividend and trade at reasonable valuations.
Market sentiment appears improved since stocks began to mount a bit of a comeback at the end of January. The S&P 500 suffered its worst month since March 2020 to start 2022, but it is now up around 4% from its January lows and back above its 200-day moving average. Meanwhile, the Nasdaq is down roughly 12% from its highs, after dropping as much as 17%.
The market could experience more selling and certainly increased volatility in the coming weeks and months, considering the lingering covid impacts on economic growth, rising inflation, and the increased likelihood of more Fed rate hikes. The 10-year U.S. treasury touched 1.97% on Tuesday.
This has seen many investors shy away from growth-focused names, many of which have struggled to find buyers even after they fell back to 2020 prices and saw their valuations recalibrated. For example, Apple, Microsoft, and Amazon have mounted comebacks after strong quarterly results, while Netflix, PayPal, and Facebook/Meta plummeted on signs of slowing growth.
Taking everything into consideration, some investors might decide it’s best to stay on the sidelines. But it is nearly impossible to call a bottom and even though interest rates are rising, they aren’t at levels that make stocks broadly unappealing. And the outlook for S&P 500 margins, sales, and earnings are resilient and historically strong for 2022 and 2023 (also read:
Tech Earnings Impress in the Face of Economic Headwinds
).
For investors who decide they want to add to their portfolios amid the rocky start to 2022, they might want to consider looking outside of technology and other areas that had been big winners for years. Plus, it’s prudent to add some income via dividends.
The first stock on the list today is
Public Storage
PSA
.
The REIT primarily acquires, develops, owns and operates self-storage facilities and Public Storage has benefited from broader storage industry expansion. Americans also own more stuff than ever before, which helps make Public Storage a solid candidate.
The next name we take a look at is historic chip maker
Texas Instruments
TXN
. The company is coming off a strong fourth quarter despite the broader semiconductor shortage. TXN offers investors exposure to chips, which are key cogs in the tech age, with Texas Instruments stock having soared over 400% in the past 10 years. Yet, unlike some other big names in the industry, Texas Instruments is committed to returning value to shareholders in a big way.
The last stock we dive into is oil and gas behemoth
Exxon Mobil
XOM
. The company topped our Q4 earnings and revenues estimates on February 1. Exxon stock has surged in 2022, as Wall Street drops growth in favor of energy and other cyclicals. Exxon executives are also committed to growing earnings and keeping down costs in the coming years, instead of ramping up capital spending to chase high oil prices.
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
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