Despite U.S. inflation, America’s economy is still the best house on the worst block. According to the latest data points, consumer prices surged more than 7% in January, the highest gain since February 1982, per a CNBC report. Despite the obvious jitters, it is important not to forget about stocks to love.
In reality, it is during bear markets where people can potentially accrue the greatest wealth. Should the equities sector tumble, you may be able to pick up incredible discounts. And with the most recent inflation data — something that caught many analysts off guard — it is well within reason that a correction could occur. Rather than worry about it, it is time to consider certain stocks to love.
For one thing, CNBC noted that the “hotter-than-expected inflation reading prompted St. Louis Fed President James Bullard to call for accelerating rate hikes — a full percentage point increase by the start of July.” With such aggressive calls for the U.S. Federal Reserve (Fed) to intervene decisively, you can expect investors to rotate out of risk-on assets, presenting opportunities in stocks to love for patient speculators.
At this point, some might argue that the Fed can’t raise rates indefinitely since the loss of valuation in equities will anger Wall Street. However, as I mentioned in my interview with CGTN America anchor Sean Callebs, inflation could actually be worse without the Fed’s commitment to popping various asset bubbles as many businesses — driven by competitive concerns — are actually absorbing price increases. Thus, certain stocks to love may see valuation cuts.
I also mentioned that if there is any lesson to be learned from the last time we saw inflation this high, it is that a commitment to normalize consumer prices (irrespective of political pressure) is necessary. Thus, a downturn in the market could occur, which would be beneficial in the long run for these stocks to love.
We are, of course, heading into an uncertain future. Not only must investors contend with a shift in Fed policy, but geopolitical tensions with Russia and China are ratcheting higher. Ultimately, it is vital that you conduct your due diligence before partaking in these stocks to love.
Here are my top 7 picks for stocks to love:
- Microsoft (NASDAQ:MSFT)
- Ford (NYSE:F)
- ASML Holding (NASDAQ:ASML)
- Rockwell Automation (NYSE:ROK)
- 10X Genomics (NASDAQ:TXG)
- Olaplex (NASDAQ:OLPX)
- Planet Labs (NYSE:PL)
Stocks to Love: Microsoft (MSFT)
Let’s start with a little reality. In all likelihood, you’re not going to get rich with Microsoft shares. That time has long since passed. However, the company continues to be an integral part of everyday life — whether you’re talking about the new or old normal.
For instance, with the company’s Microsoft Teams platform, worker bees suddenly thrust into the grand telecommuting experiment were able to mitigate the impact of the pandemic relatively well. Better yet, Teams basically makes investments in function-specific software businesses redundant. Whatever you want to do in the digital realm, you can do through Microsoft’s massive corporate umbrella, making it one of the stocks to universally love.
Further, the company continues to innovate despite its ability to rest on its laurels. As an example, recent rumors suggest that Microsoft will open up an Xbox store, potentially sparking radical changes in its business model.
If that wasn’t enough of a shift to suggest that this isn’t your father’s MSFT, our own Louis Navellier has argued that Microsoft offers considerable relevance regarding the metaverse, or the next evolution of internet connectivity. With so many hands in different businesses, MSFT is easily one of the stocks to love.
Admittedly, mentioning Ford on this list of stocks to love is a bit self-serving because, for full disclosure, I own F stock. However, I also think it is an example of putting aside one’s emotions when making investment decisions. When it comes to vehicles, I’m into European styling and technology. I’ve never bought an American car in my life and I don’t intend to start anytime soon.
But man, do I love F stock! When the iconic automaker revealed that it was going to release its electric-powered Mustang Mach-E, I strongly felt that it had a winner on its hands. For starters, it presented a necessary change of pace from what Tesla (NASDAQ:TSLA) was selling.
Sure, plenty of gearheads didn’t like that the Mach-E bore the Mustang name, particularly because it is an SUV. But the harsh reality is that the old school Mustang crowd is aging out. It is time to consider appealing to the new generation’s automotive tastes.
It turns out, the Mach-E has been incredibly popular, so much so that demand for the GT version of the vehicle led to Ford suffering from production headaches. Ultimately, that is a good problem to have for one of the best stocks to love.
Stocks to Love: ASML Holding (ASML)
Specializing in semiconductor lithography or the ability to produce patterns on silicon at scale, ASML has always been one of the most relevant stocks to love. However, with the unique disruptions that the coronavirus pandemic caused, ASML absolutely stormed into the limelight. Back in the doldrums of 2020, shares were trading hands at around $220. As I write this, they’re at around $627.
However, it is also fair to point out that ASML is down around 26% year-to-date (YTD). Part of the selloff is due to the aforementioned rotation out of risk. Another part is growing concern that the global chip shortage could turn into a chip glut. Such a circumstance would obviously deflate the semiconductor bubble, devastating those who make hefty bets on ASML.
As a counterargument, the Dutch semiconductor firm’s chief executive officer stated that there is no immediate danger of oversupply. If anything, the company would prefer a careful expanding of capacity, considering that ASML is “struggling to expand production to meet demand from major customers,” per a Reuters report.
Personally, I think there is a bit more for ASML to fall. However, if we get a sizable discount, this would be one of the stocks to love you definitely don’t want to ignore.
Rockwell Automation (ROK)
As you might deduce from its corporate name, Rockwell Automation specializes in industrial automation and information technology solutions. The company is incredibly relevant, with its systems accelerating efficiencies in diverse industries, ranging from aerospace, automotive, mining, power generation — even entertainment.
Still, relevance doesn’t always translate to market performance. After a blistering run since the March doldrums of 2020, ROK is experiencing a corrective phase. It also doesn’t help that this phase has coincided with the Fed potentially shifting its monetary policy to an aggressively hawkish one. Still, if you have a long-term time horizon, ROK is one of the stocks to love.
In 2020, the global industrial automation market reached a valuation of $175 billion. Experts project that by 2025, the size of this segment should hit approximately $265 billion. Further, data from Fortune Business Insights suggests that industrial automation could command a market size of $355.44 billion by 2028.
Of course, the steep drop that ROK has suffered this year isn’t encouraging. You may want to wait a bit for shares to fully work through the volatility. Once they do, though, the potential upside would be quite enticing.
Stocks to Love: 10X Genomics (TXG)
An American biotechnology firm that designs and manufactures gene sequencing technology used in scientific research, 10X Genomics essentially provides the medium for innovators to spark potentially groundbreaking and transformative medical inventions. Per its website, 10X powers life-science research “with single cell, spatial, and in situ products.”
Despite its relevance, Wall Street is simply not having any of it. On a YTD basis, TXG is down almost 40%. In the trailing six months, it has shed 42% and in the trailing year lost nearly 51%. Admittedly, its price action remains weak, with the stock charting what looks to be a bearish pennant formation.
So please, hear me out: I don’t think it is wise to go heavy on TXG at this moment. Still, if it incurs another sizable drop — let’s say to around the $70 level — it may be a bargain worth picking up.
Primarily, if there is a silver lining with the pandemic, it is that it normalized the concept of advanced medical solutions. Therefore, biotech firms will be looking to leverage new technologies to promote even more profound innovations, thus taking 10X Genomics along for the ride.
An expert in hair care solutions, Olaplex is admittedly one of the riskiest stocks to love. However, it could play a significant role in the return to normal once the perniciousness of the Covid-19 threat fades into the rearview mirror. For one thing, Olaplex may offer a solution to a socially awkward situation. As I mentioned in my coverage for Benzinga:
Though a seemingly inconsequential consideration based on its mundane nature, the underlying power of OLPX stock is the sheer importance of hair care to women, Olaplex’s core consumer demographic. Per a revealing report from The Wall Street Journal, Birmingham, Alabama–based dermatologist Corey L. Hartman stated that “Up to 40 percent of women experience noticeable hair loss before the age of 40, with as many as 80 percent seeing hair loss by the age of 60.”
Further, the Wall Street Journal stated that for women, “hair loss can take a particularly harsh toll, as it’s often seen as a sign of impaired physical or mental health.” Indeed, both scientists and sociologists confirm that societies consider hair loss in men to be far more acceptable than in women. While no one is suggesting that Olaplex is the end-all be-all to this problem, the company does provide hair-thinning solutions.
To be fair, OLPX has been shaky since its public market debut. However, if you’re optimistic about a full return to normal, you may want to add this to your speculative stocks to love.
Stocks to Love: Planet Labs (PL)
On paper, the burgeoning space economy is where you theoretically should find the most compelling stocks to love. According to information compiled by the U.S. Chamber of Commerce, some expert projections call for the sector to reach a valuation of $1 trillion by 2040. Such a tally would make the segment one of the biggest economies in the world right now.
However, projections are like anatomical exit pathways — everybody’s got one. Plus, if you dig into the projections, you’ll notice that there is a sizable gap between the low and high end of the spectrum. So, if you want to participate in this arena, it might be better to start with companies that already have a track record of delivering value, such as Planet Labs.
A daily satellite data provider for businesses, governments, researchers and journalists, Planet Labs was particularly useful for the New York Times, which leveraged Planet Labs’ imaging services to track how North Korea illicitly acquires oil. To me, this is a much more reasonable business model than rocketing billionaires into space.
Still, by making its market debut via a reverse merger with a shell company, Planet Labs is awfully risky. Thus, it is one of the stocks to love if you can handle the heat.
On the date of publication, Josh Enomoto held a LONG position in F. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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.