The market has been a wobbly place so far this year, making picking investments a tricky business. However, that doesn’t mean there aren’t some good buys out there that can withstand a bit of turbulence and deliver impressive gains. If you’ve got some cash to spare and you’re wondering what to invest in now, here are three options to consider.
Stability Is King
The trouble with the current market is uncertainty. Since January, the Dow has been on a roller-coaster ride which has made it difficult for investors who are looking for stable, reliable investments. However, buying utility stocks is one way to mitigate some of that uncertainty because of their pretty-much guaranteed growth.
American Water Works Company Inc (NYSE:AWK) is the nation’s largest water utility, and although the company’s growth is slow, it’s very safe.
Regulators approve AWK’s customer rate increases based on the amount of money the firm spends on upgrading its infrastructure which gives the company a relatively reliable return on investment as well as predictable growth. 2017 was a big spending year for AWK, so rate increases are likely coming in 2019.
Not only that, but AWK stock has been on the decline so far this year which has created an attractive entry point. Since January the company’s share price has lost about $10 despite the firm’s forecast growth and 2.26% dividend yield.
In short, AWK stock is a boring buy, but it’s a stable company that will deliver even when the market isn’t. It might not light a fire under your portfolio, but with the share price down, now is a good time to add this old-faithful as a long-term safety net.
It appears that energy stocks are finally on the rebound for good, making now a good time to look for plays in the oil and gas sector. After being beaten down for years by oversupply and ultra-low crude prices, energy firms are finally making a real comeback.
This week, the International Energy Agency said the global supply glut that had been weighing on the industry has finally been rebalanced. The industry-wide effort to cut down on crude production appears to have helped stabilize prices, and oil and gas companies around the world are cheering.
However, the agreement between major producers around the world to cut back on production by some 1.8 million barrels per day is due to expire in November. So although the industry looks to be making a real recovery, it’s worth ensuring that the firm you invest in has a backup plan.
For that reason, Royal Dutch Shell plc (ADR) (NYSE:RDS.A) is my pick in the energy sector. Back in 2016, I named RDS.A as one of the top three oil stocks to buy to benefit as the sector recovers, and since that time, the company’s share price has risen nearly 30%.
But the comeback isn’t over yet. With crude prices likely to continue improving over the next six months, RDS.A stock will probably continue to benefit alongside the rest of the industry.
However, what makes RDS.A stand out among its peers is the company’s savvy business decisions that will protect the firm’s finances in the event of another downturn. Not only have the firm’s cost-saving measures made each dollar of income more valuable, but the firm has been paying down its debt pile with the influx of cash.
The firm has also beefed up its natural gas business which is expected to grow significantly over the next few years, meaning RDS.A won’t be so reliant on oil prices in the future.
Another good place to look for winning stocks in today’s market is turnaround stories. Of course, there are quite a few potential candidates — especially in the retail sector.
But one I particularly like is biotech firm AbbVie Inc (NYSE:ABBV). The firm was a market darling until mid-March when disappointing news regarding one of its promising pipeline drugs sent the share price markedly lower.
Clinical trials of ABBV’s Rova-T lung cancer treatment showed the drug may not be as effective as the firm initially believed, which caused investors to abandon the stock and took the firm’s share price below $100 per share. Despite the setback, ABBV reported strong Q1 results showing that its existing portfolio is full of heavy hitters that are driving impressive sales.
Looking to the future, ABBV also has a strong pipeline despite the Rova-T disappointment. The firm’s Upadacitinib is seen treating up to six different conditions which translates into a massive addressable market.
ABBV’s stock price has already started to rebound, but with a forward P/E of 13.51, it still looks like a bargain. Not only that, but ABBV investors enjoy a 3.69% dividend yield, making the stock a good passive income option as well.
As of this writing, Laura Hoy did not hold a position in any of the aforementioned securities.