When the markets are exploding, value investors are consistently looking for stocks to buy right now amidst the frenzy.
Growth stock valuations are sky high at the moment. However, with the economy opening up again, I believe it’s the perfect time to take advantage of deep value picks that have remained depressed for quite a while.
So, as an investor, if you are concerned about the impact of inflation and rising interest rates, the relative safety of value stocks is exactly what your portfolio needs. Investors now have energy, financials and industrials back in their sights. You should expect these stocks to reward you with price appreciation during the summer as well.
With all of that in mind, here’s a handful of the best stocks to buy now to ride the economic recovery:
- PulteGroup (NYSE:PHM)
- Synchrony Financial (NYSE:SYF)
- Camping World Holdings (NYSE:CWH)
- Occidental Petroleum (NYSE:OXY)
- Mastercard (NYSE:MA)
- Chevron (NYSE:CVX)
- Caterpillar (NYSE:CAT)
Now, let’s dive in and take a closer look at each one.
Stocks to Buy Right Now: PulteGroup (PHM)
PulteGroup is one of the largest homebuilders in the United States. PHM stock is an excellent play amidst a booming U.S. housing market, which benefits immensely from pent-up demand and historically low mortgage rates. In fact, the red hot market has led to a shortage of lumber in the U.S. and a bonanza for lumber stocks.
Hence, I am not surprised that analysts are so bullish on this stock. If you are buying this one, expect to have a nice mix of momentum and value, though. PHM stock is up 27.7% in the last three months, but it still trades at just 8.5 times forward price-earnings ratio (P/E).
Last year, the bottom line and the top line grew by an impressive 28.9% and 8%, respectively. Looking ahead, the main issue the company will face is making sure that it can deliver units regularly because demand is rampant at this point.
Synchrony Financial (SYF)
Eagle-eyed investors in the financial services space will find Synchrony Financial a familiar name since it spun off from GE Capital’s retail financing business. However, as of this writing, the company is the largest U.S. private label credit card provider.
Financial stocks are always relatively safe investments. And Synchrony is cut from the same cloth. In the last three years, earnings per share (EPS) has grown by 10.4% on average, supported by respectable top-line growth. However, it’s important to note that this is firmly a value play. The past year wasn’t kind to the company due to lower finance charges and late fees.
In addition, the company reported in March that it lost one of its largest customers, The Gap (NYSE:GPS), not exactly good news. However, the consumer financial services company said the Gap loss would be EPS-neutral, and it will free up roughly $1 billion of capital that it can use elsewhere.
The stock is up 24.9% in the last three months. And despite this phenomenal growth, shares are trading at 8.4 times forward P/E.
Stocks to Buy Right Now: Camping World Holdings (CWH)
One of the big winners of the pandemic is Camping World Holdings, which sells recreational vehicles and spare parts. There was little to do with people stuck in their homes but take a road trip or experience the great outdoors. Considering all this, I find it surprising that there is still upside left on this one.
But analysts seem to think this way. Their logic is simple. Demand for RVs is soaring. In addition, it has created a platform to facilitate private short-term rentals of RVs, similar to the business model of Airbnb (NASDAQ:ABNB). As a result, analyst estimates tracked by Refinitiv are forecasting growth of 20.6% and 26.1% for fiscal 2021 and 2022.
After a while, it looks like there are significant tailwinds that the company can benefit from, making CWH one of my top stocks to buy right now.
Occidental Petroleum (OXY)
The pandemic devastated global energy demand last year. It was a double whammy for the industry since it was already suffering from a supply glut. It got so bad that the price of oil futures briefly went negative for a while.
However, now that vaccinations are rolling out, Occidental Petroleum, a Houston-based oil and gas producer, and other companies in the space are showing signs of life. Shares have a one-year return of 78.6% despite the company stumbling in recent quarters. Nevertheless, Occidental Petroleum has an enviable track record in the oil and gas sector. And investors understand that Occidental is still dealing with its debt-laced acquisition of Anadarko Petroleum for $57 billion.
Overall, if you are bullish on the oil and gas sector’s recovery, OXY stock is one of the best stocks to buy right now in the space.
Stocks to Buy Right Now: Mastercard (MA)
Mastercard is a permanent fixture in most lists of stocks to buy right now. However, the multinational financial services corporation will go from strength to strength due to fresh stimulus funds and unemployment rates coming down. Travel and tourism are also expected to improve dramatically in the forthcoming quarters due to the extensive vaccine rollout.
Due to these developments, credit card companies will benefit massively as they collect fees on increasing transactions. Plus, the shift towards cashless payments is a secular tailwind. This pandemic only amplified it. So no matter which way you look at it, Mastercard stands as a sure-shot winner.
In addition to the points highlighted above, analysts expect revenues to increase by 20.4% and 43.9% for Mastercard in 2021 and 2022. To me, that is a testament to the company’s operating model since Mastercard itself is quite a mature enterprise. Normally at this stage, you would not expect such double-digit growth. But then again, Mastercard is not your run-of-the-mill company.
Chevron Corp. (CVX)
Our next entry is all about pent-up demand due to the nature of this crisis. If you have cabin fever at this stage, then you are not alone. People are itching to travel by air, land, and sea, leading to an inevitable increase in demand for oil.
We already see this trend in many ways, with oil prices moving northward, and we are not even in the summer driving season yet. So travel, transportation, manufacturing are moving towards greener pastures after one of the most challenging years on record for these industries.
Apart from all these catalysts, one also has to commend Chevron for its impeccable payout record. The energy giant is a member of the exclusive Dividend Aristocrats — a company listed on the S&P 500 that has paid and hiked its dividend for at least 25 consecutive years. CVX stock will therefore appeal to both income investors and those looking for value plays.
Stocks to Buy Right Now: Caterpillar (CAT)
We polish this list off with another turnaround play. As the pandemic recedes into the background, we will see an explosive rise in demand for natural resources like oil and copper. In addition, President Joe Biden’s $2 trillion infrastructure plan will only help companies like Caterpillar, a leading manufacturer of construction and mining equipment.
This is not lost on investors. CAT has outperformed the S&P 500 by 74.3% and its sector by 49.3% in the past year. This is despite EPS and sales falling by 42.3% and 18.1% during the same period.
However, each of the company’s four reportable segments will benefit immensely from the broader economic recovery. With that in mind, this is the right time to buy this stock since there is still a lot of upside left to exploit.
On the date of publication, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience analyzing the stock market and was a former data journalist at S&P Global Market Intelligence.