At first glance, investors have reason for optimism regarding the nightmare that is the novel coronavirus. First, new daily infections appear to be declining significantly. Just as importantly, major economic data — such as the national unemployment rate — have surprisingly ticked lower. This may lull us into complacency when it comes to selecting top stocks to buy.
However, investors should remain vigilant for paradigm-shifting developments. While I don’t think these forward events are necessarily all doom and gloom, they will probably be enough to warrant serious strategy changes. Whatever were the top stocks to buy prior to this pandemic may not play out so profitably in the new normal.
Specifically, the Federal Reserve has little choice but to adopt a dovish monetary policy. Yes, unemployment is down. But the number of permanent job losses remains uncomfortably elevated. If we don’t get relief soon, many small businesses could wind up closing their doors forever.
This isn’t an empty threat. Earlier in this pandemic, economic experts estimated that more than 100,000 small businesses had already permanently closed. With Congress deciding it’s more important to go on vacation than to help the American people, we could see substantial turmoil ahead. Therefore, the Fed will adopt an accommodative stance, which may benefit these top stocks to buy:
- Newmont Corporation (NYSE:NEM)
- Sibanye Stillwater (NYSE:SBSW)
- Sociedad Quimica y Minera de Chile (NYSE:SQM)
- Ford (NYSE:F)
- Caterpillar (NYSE:CAT)
- 3M (NYSE:MMM)
- Microsoft (NASDAQ:MSFT)
- Becton Dickinson (NYSE:BDX)
- Intel (NASDAQ:INTC)
Finally, we’re not quite out of the woods with the coronavirus. Yes, cases are down, but medical experts warn that mass-scale testing has also declined. Sadly, this begs for an even greater wave to hit us in the winter, resulting in deeper economic pain. At least with these hot stocks to gain off dollar weakness, you won’t be caught off guard.
Top Stocks: Newmont Corporation (NEM)
If the greenback goes on a weakening spree, there’s one asset that shines above the rest. Of course, I’m talking about gold. As a safe haven, gold provides confidence as the universal store of value. However, physical precious metals can be cumbersome, to say the least. Therefore, investors may want to consider blue-chip mining companies like Newmont Corporation.
According to its website, Newmont “has the largest gold reserve base in the industry.” With gold prices moving higher based off economic uncertainty and social unrest, NEM stock is in an enviable position. In addition, Newmont generated nearly $2.4 billion in the quarter ended June 30, up almost 5% against the year-ago quarter.
I expect shares to represent one of the top stocks to buy for the rest of this year and over the next several years. No matter who is put in charge come November, the next presidential administration will have a doggedly difficult journey. Under these conditions, physical gold is your best bet in my opinion. Next to that are shares of NEM stock.
Sibanye Stillwater (SBSW)
While gold is an obvious play if the U.S. dollar weakens, you shouldn’t ignore other precious metals – they’re called precious for a reason. For this simple fact, investors should consider adding Sibanye Stillwater to their list of top stocks to buy.
Sibanye offers a trifecta of bullishness for metals bugs, as the company is the “world’s largest primary producer of platinum, the second largest primary producer of palladium and the third largest producer of gold (on a gold-equivalent basis)…” Of these, I’m particularly interested in palladium and platinum.
For one thing, palladium is incredibly rare. Useful as an automotive catalyst, we may see a shift from industrial to monetary demand. With a price tag of over $2,200 at time of writing, palladium is still the most expensive precious metal among the four major ones. However, with Russia owning most of the palladium supply, SBSW stock is well positioned thanks to Sibanye’s more favorable location in South Africa.
Second, platinum is no slouch either in the rarity department. But the metal also has significant demand from industrial and medical industries. These sectors will be relevant no matter what the state of the global economy, potentially insulating SBSW stock.
Top Stocks: Sociedad Quimica y Minera de Chile (SQM)
While precious metals clearly have significant upside in a weakened dollar environment, don’t ignore other vital commodities. Over the last several years, lithium has gained significant attention due to its use as a power source for advanced electrical technologies. And among the top stocks in this sector is Sociedad Quimica y Minera de Chile.
Currently, SQM stock enjoys two longer-term tailwinds. First, the present economic malaise almost guarantees a dovish, accommodative policy. That translates to an inflationary setup for the U.S. dollar, which is positive for commodities. Second, the electric vehicle revolution means lithium will only rise in demand. Indeed, with so many EV competitors out there, it’s difficult to know which one will be the next Tesla (NASDAQ:TSLA).
With SQM stock, you don’t have to play any guessing games. They all need lithium.
Further, Sociedad enjoys advantages over other lithium miners because of its geopolitically favorable geography. For the most part, we’re on good terms with Chile. Therefore, you should keep SQM on your list of top stocks to buy now and for the foreseeable future.
For decades Ford has suffered a perception problem. Though the iconic automaker has made a push recently to improve reliability and quality, it’s hard to magically erase a culture of mediocrity. Don’t get me wrong — I know people who swear by Ford’s modern cars. But the ghosts of the past have haunted the company and by extension, F stock.
But with Ford’s pivot to electric vehicles, specifically its Mustang Mach-E SUV, I believe the company has the chance to make things right. So much so that I went ahead and bought some F stock on the cheap. Although I don’t like American cars at all, I recognize the potential upside.
First, with EVs, they are inherently more reliable than combustion-engine cars because of fewer moving parts. So, throw the reliability stigma out the window. Second, Tesla overwhelmingly dominates the EV market. But people eventually want variety — we couldn’t imagine a world where only one manufacturer produces combustion cars.
To this end, I think the Mach-E is very attractive. And I wouldn’t worry about criticisms that Ford is doing away with its classic two-door pony cars. Nobody buys those things anymore.
Finally, a weakened dollar makes our exports more attractive to foreign buyers. This generation’s Ford should finally capture the magic abroad.
Top Stocks: Caterpillar (CAT)
Amid the drama of this pandemic, it’s easy to forget about “boring” names like Caterpillar. While it may not generate headlines during this period, CAT stock has been a high-flier since its March doldrums. Should the dollar weaken considerably from here on out, I expect Caterpillar to maintain its position as one of the top stocks to buy.
Historically, Caterpillar has performed relatively well when the Federal Reserve has implemented dovish monetary policies. When the greenback is weaker against other major currencies, American exports are comparatively cheaper. And for CAT stock, this is brilliant news as the underlying company generates more than half its sales from international markets.
Should President Donald Trump win reelection, this would be an even bigger signal to trust Caterpillar. In the historic 2016 presidential campaign, Trump routinely talked up the industrial equipment manufacturer. Either way, whoever wins the White House must start rebuilding the economy, which should be a positive for CAT.
In previous years when we had a strong dollar, this negatively affected applied science and industrial firms like 3M. Logically, if the situation reverses, we should see some positive trading action for MMM stock. Of course, nothing is ever that cut and dry in the markets. However, it does provide one reason among several to consider 3M.
First, the rather ho-hum company suddenly surged to relevance because of the pandemic. When the virus first struck us, people panicked and hoarded N95 face masks. Perhaps this alone isn’t a good enough reason to buy MMM stock considering its other vulnerabilities. However, this crisis is unlike any other we’ve suffered in modern American history in that everyone has been impacted in some way.
This is not a lesson we’ll soon forget. Therefore, people may buy 3M-branded protective equipment, just in case.
Further, 3M products are popular overseas so this action could be repeated across several countries. And with a weaker dollar, that should add up to some hefty sales, making 3M one of the underappreciated top stocks to buy.
Top Stocks: Microsoft (MSFT)
Logically, a weakened dollar translates to a favorable environment for American exporters. And one of the top stocks to buy in this space for reliability and consistency is Microsoft. Admittedly, it doesn’t quite have the cachet of other elite consumer electronic firms. However, that could be changing because of the pandemic.
As I’ve argued before, Microsoft products are very practical. And that comes into play significantly in the workplace. With so many people forced to shift their operations remotely, Microsoft’s dominance in business applications should help lift MSFT stock. In addition, the company has a substantial presence globally. Therefore, with the greenback falling against other currencies, we could see a favorable impact.
Finally, I like MSFT stock for its strong position in video games. As you probably know, the company is scheduled to release its latest Xbox console for the holiday season this year. Though competition is very stiff in this arena, Microsoft more than holds its own. Combined with its myriad other businesses, such as cloud computing and hardware, you’ll want to keep close tabs on MSFT.
Becton Dickinson (BDX)
A longstanding American medical equipment company, Becton Dickinson offers pertinent exposure to the broader healthcare market. Unfortunately, the novel coronavirus took some of the shine off BDX stock, with investors piling into biotechnology firms as a speculative bet on a vaccine. Still, once some of that corona-fever fades out, Becton Dickinson should swing higher.
For starters, the company has enjoyed significant growth in the past three years over its core businesses of medication delivery solutions, medication management, pharmaceutical systems and diabetes care.
Second, Becton Dickinson generates approximately 43% of its revenue from international markets. In prior years when the U.S. dollar was rising against other currencies, the company incurred negative exchange rate impacts. As well, BDX stock has been flat in at least some of those years featuring currency headwinds.
Intriguingly, though, BDX shares jumped substantially higher in 2017 when the U.S. dollar index plummeted. If the greenback continues its bearish trend — and especially if Trump wins reelection — BDX could be one of the surprising top stocks in the healthcare space.
Top Stocks: Intel (INTC)
Want to go a little crazy? If underlying economic conditions continue to drive the greenback down, you should consider throwing some speculative money at Intel. Of course, INTC stock has suffered all kinds of volatility following Intel’s disclosure of delays to its next-generation chips until 2022. That was a huge disaster, which subsequently saw Advanced Micro Devices (NASDAQ:AMD) jump to record highs.
Given the catastrophe to its longtime rival, this is a massive opportunity for AMD. However, one also has to wonder about its equity performance potential from here on out. For those seeking an undervalued opportunity, INTC stock seems a not unreasonable bet.
For instance, while the fallout has been ugly for Intel, INTC shares have bounced off a support level that’s been in place since late 2017. If the situation was truly untenable for Intel, you’d expect a much steeper selloff.
Also, the company has a renowned brand and significant market share across relevant tech sectors. It may take more than a production delay — no matter how significant — to take down this beast.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. As of this writing, he is long gold and F stock.