Earlier this month, President Joe Biden made a comment about “Neanderthal thinking.” What did that mean exactly? It doesn’t matter, because we’re not going to get political. Instead, it made us think, “what are some of the most obvious stocks to buy right now?”
You know, those stocks that even novice investors would recognize and consider a great opportunity.
Here’s the thing: investing doesn’t have to be complicated and it doesn’t have to be hard. In fact, it’s often quite the opposite. Keeping it simple often yields superior results and better nights of sleep. It’s particularly helpful when the brands and products that we love are also great companies.
So in that light, I wanted to take a closer look at what stocks might have declined over the last few weeks to create some opportunities. We don’t have to be in a raging bear market to find good deals, either.
With that in mind, let’s look at seven stocks to buy that even the most basic investor can get behind:
- Apple (NASDAQ:AAPL)
- Amazon (NASDAQ:AMZN)
- Walmart (NYSE:WMT)
- PepsiCo (NYSE:PEP)
- Realty Income (NYSE:O)
- Nike (NYSE:NKE)
- Nvidia (NASDAQ:NVDA)
Stocks to Buy: Apple (AAPL)
At this point, everyone on the planet should know Apple. Not only is it the most valuable public U.S. company, but it’s also one of the most well-recognized brands anywhere in the world.
When we break it down to its simplest form, the Apple model is simple: Sell products a vast majority of its users love and print profits as a result.
The company is fresh off its launch of the iPhone 12 line, its first set of 5G smartphones. However, refreshes in other products – like the iPad and Apple Watch – along with the new M1 chip in several of its computers makes it clear Apple will continue to innovate.
iPhone forecasts remain strong, while multiple analysts have made the case for Apple’s market capitalization to swell to $3 trillion. That’s up from about $2 trillion right now.
Best of all, Apple’s continued strong sales of its hardware has fueled the strong growth of its Services revenue. The company’s Services business is growing faster than its hardware business and it’s about twice as profitable.
This stock has a winning recipe for years to come.
Amazon (AMZN)
U.S. consumers are well aware of Apple, but they are equally aware of Amazon.
Just like Apple, the company has seen its market cap swell in recent years, currently commanding a valuation of $1.54 trillion.
This stock has my attention simply because it hasn’t gone anywhere in the past six months. Now some momentum investors and traders will think that logic is crazy. To me though, I see a company that’s dominating e-commerce, cloud and advertising.
Those trends aren’t going anywhere and Amazon has shown through the last several earnings results that it’s doing just fine. As shares continue to consolidate, they’re offering long-term investors an opportunity to accumulate.
Admittedly, CEO Jeff Bezos announcing he will step down in Q3 does create some hesitation given that he’s the founder. However, he wouldn’t step down if he didn’t believe Amazon was in a good position to thrive in the years to come.
Plus, maybe that means we’ll finally get that stock split Bezos seems so against doing.
Walmart (WMT)
Walmart is giving investors a juicy dip to feast on, but they’ll have to be patient. While it’s possible we see a V-shaped recovery in the stock price, remember that this isn’t a high-octane growth stock.
However, it is a high-quality retailer. In retail, it’s very much a mixed bag – particularly at the moment.
The companies that did well during the novel coronavirus are seeing selling pressure, while those that struggled – like department stores – are being bid higher. More broadly speaking though, retail is made up of the haves and the have-nots. The former has successfully pivoted to today’s world of shopping, with an emphasis on e-commerce, order-and-pickup and other solutions to keep customers engaged.
In the case of Walmart, the retailer is thriving with its omni-channel efforts and should continue to build on that momentum over the years.
Shares were recently 18% off the highs, giving investors an opportunity to swoop in and scoop up some stock. The modest 1.7% dividend yield is also a nice catalyst in the short term.
Stocks to Buy: PepsiCo (PEP)
Like Walmart, PepsiCo is a well-known brand that’s been tossed by the wayside. Investors are ditching these names and are chasing other industries and stocks that have more momentum.
For the patient investor, what more could we ask for?
PepsiCo stock topped two days before the new year after having just recently surpassed its 2020 high from its pre-coronavirus days. Since then, the stock has shed about 14% on its way to the March low.
Shares pay a 3.1% dividend yield and trade at a modest valuation of 22 times earnings. For a premium brand, that’s not bad. Plus, PepsiCo is incredibly consistent. Analysts expect sales to climb about 7% this year and for earnings to grow by almost 10%. Next year, earnings are forecast to grow another 8%.
Let’s also not forget its portfolio of products. Obviously there’s Pepsi, but there’s also Lay’s, Doritos, Gatorade, Tropicana, Aquafina, Tostitos, Quaker Oats and more.
PepsiCo has the grocery store on lock and that’s great for long-term investors.
Realty Income (O)
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There are not many stocks that continue to fly under the radar. However, Realty Income is certainly one of them. Check out the chart, which shows how stagnant this stock has been for months now.
I find this pretty interesting. First, the companies that were unaffected by Covid-19 surged in 2020. Then the companies that were devastated by it enjoyed the “reopening trade,” ripping higher in Q4 2020 and in Q1 of this year.
Realty Income? It hasn’t really participated in either rally, despite maintaining its business and monthly dividend.
It’s one of the most consistent REITs in the industry and is known as The Monthly Dividend Company. As a result, it’s a blue-chip holding among REIT investors. With the U.S. just months away from fully reopening, it’s hard to imagine that our worst days are still ahead of us.
With that in mind, Realty should get back to doing what it does best, all while paying out a 4.6% dividend yield.
Nike (NKE)
If Nike proved one thing in 2020, it’s that not even a global pandemic can’t knock the stock off its pedestal. At least not for long.
Nike is one of the premier sports apparel companies in the world. As soon as Covid-19 hit, the stock took a hit just like the rest of the market. Why shouldn’t it?
Sports were being halted across the globe and retailers were boarding up shop. Of course sales and earnings were going to take a hit. However, Nike was able to recover more quickly than its peers for two main reasons.
First, it has spent years building out its direct-to-consumer business. That means it didn’t need Foot Locker (NYSE:FL) and others to sell its apparel and shoes. Instead, it could take orders directly from its customers and ship to them.
Second, China recovered more quickly than the United States. Being one of Nike’s largest markets, China helped generate a quick recovery in Nike’s business. In other words, geographic diversity and multiple sales channels helped soften the blow for Nike and drive a swift recovery in its business.
Analysts now believe Nike will see a massive recovery in earnings this year to $3.02 a share. In 2022, consensus estimates call for almost 30% growth. Nike’s best days are nowhere near behind it.
Stocks to Buy: Nvidia (NVDA)
Last but certainly not least is Nvidia. Now Nvidia may not be the most basic or simple stock, simply because many people are not familiar with its products.
Everyone knows what an iPhone is, just as everyone knows what Amazon is. Not everyone knows how a GPU works, what it does or why it matters. Without knowing that, they don’t know Nvidia that well.
The basics here are simple, though.
Nvidia is helping to power multiple secular growth themes that have many years left of growth in them. Its end markets include cloud computing and datacenters, autonomous driving, video games and graphics, robots, drones and artificial intelligence/machine learning.
So unless someone thinks consumers are going to want slower load times, poor graphics and worse technology, there’s little reason to bet against Nvidia.
Add to it the fact that shares were recently 25% off the highs and it’s even more attractive for long-term dip buyers.
On the date of publication, Bret Kenwell held a long position in O and NVDA.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell.
