- While major indices are down, there are still some hot stocks outperforming the broader market.
- Chevron Corporation (CVX) is Warren Buffett’s favorite energy stock.
- AbbVie Inc. (ABBV): Wells Fargo says this pharma stock can run 36% higher.
- PepsiCo, Inc. (PEP): A dividend king, this consumer staple stock is diversified enough to perform well in both good economic times and bad.
It’s not all bad out there. Despite major indices continuing to fall around the world, there are some hot stocks that are managing to outperform the broader market. Some sectors, such as energy, are managing to thrive collectively even as other areas of the stock market, such as technology, falter. Many of the best performing stocks currently remain undervalued and have room to continue running higher, according to Wall Street analysts. While it will take some effort on the part of investors to research and find the opportunities, they are out there if people are patient, diligent, and know where to look.
Here are three hot stocks that are just getting started:
| CVX | Chevron Corporation | $167.59 |
| ABBV | AbbVie Inc. | $151.59 |
| PEP | PepsiCo, Inc. | $172.80 |
Hot Stocks: Chevron (CVX)
Oil producer stocks have been one of the few bright spots this year. The S&P Global Oil Index is up 11% year-to-date and has risen 27% over the past 12-months as the price of crude oil has spiked above $100 a barrel. Oil stocks are up across the board this year as the price per barrel is being held aloft by the ongoing war in Ukraine and supply concerns around the world. And among oil stocks, Chevron (NYSE:CVX) has been a standout. CVX stock is up 42.8% year-to-date at $167.59 a share. That compares to a loss of 15% for the S&P 500 Index so far in 2022.
Chevron stock is not only benefitting from the elevated price of crude oil. It has also gotten a big lift from news that Warren Buffett has taken a major position in the company’s shares. Buffett’s holding company, Berkshire Hathaway (NYSE:BRK-B), increased its stake in CVX stock to $25.9 billion in this year’s first quarter from $4.5 billion at the end of 2021. Chevron is now the fourth biggest equity holding in Berkshire Hathaway’s portfolio. Buffett loading up on Chevron stock is seen as a major vote of confidence in the oil company’s future.
AbbVie (ABBV)
Biopharmaceutical company AbbVie (NYSE:ABBV) is another stock that has bucked the market downturn. Year-to-date, shares of ABBV are up 11.9% at $151.59. And even with that rise, a number of analysts continue to feel that the stock remains undervalued. Analysts at Wells Fargo (NYSE:WFC) recently stated as much following the drug company’s latest earnings report and forecast that the stock could rally 36% from current levels. That’s encouraging news for shareholders of Chicago-based AbbVie, which is behind the blockbuster medication Humira that treats a range of ailments, including Crohn’s Disease and Rheumatoid Arthritis.
AbbVie’s first quarter (Q1) results were mixed, but seen as largely negative owing to the fact that a few of the company’s more developmental drugs are moving at a slower pace than expected. Overall, the company’s Q1 revenue came in at $13.54 billion, up 4.1% from a year earlier. Its earnings per share (EPS) amounted to $2.51, up 26% from $1.99 in the same period of 2021. However, investors didn’t like the fact that AbbVie reported lower sales of its cancer drug Imbruvica, as well as Humira, and consequently the share price fell 10% the day after the earnings print. Plus, AbbVie lowered its annual EPS guidance from a range of $14 to $14.20 to $13.92 to $14.12.
Still, many analysts say investors should see the pullback in ABBV stock after its Q1 earnings as a “buy the dip” opportunity.
Hot Stocks: PepsiCo (PEP)
While it hasn’t been able to avoid the stock market downturn in recent months, food and beverage giant PepsiCo (NASDAQ:PEP) has held up better than most securities this year. Through four months of the year, PEP stock is down just .21% at $172.80 a share, while the Nasdaq exchange that it is listed on is down 21% on the year and is officially in bear market territory. Over the past six months, or since the market began to fall last November, PEP stock is up 5%. In the last 12 months, the stock has gained 20%. Sales of the company’s soft drinks and snacks have held up well even as PepsiCo has been forced to raise prices to offset the impacts of inflation.
PepsiCo is also a good stock to own in troubled times as it is a dividend powerhouse. In February of this year, PepsiCo raised its annualized dividend 5% to $4.30 a share from $4.09. The latest increase marked 49 years of consecutive dividend increases from PepsiCo. Additionally, PepsiCo is a more diversified company than its main rival Coca-Cola (NYSE:KO) and other beverage companies. In addition to its signature Pepsi soft drink, the company also makes Frito Lay chips and Quaker breakfast products, such as oatmeal. All and all, PepsiCo is a reliable stock to own in good times and bad.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
