For those looking for solid ideas regarding stocks to buy this week, Federal Reserve chair Jerome Powell provided excellent material. In his annual Jackson Hole, Wyoming, policy speech, Powell stated that higher interest rates will persist for a while. Clearly, the Fed’s main concern is inflation. Under this framework, the economy can’t rise until inflation is dealt with.
Moreover, the Fed chair pledged that the central bank will “use our tools forcefully” to address rising consumer prices. It’s exactly what you think it means. More importantly, the market operated on the same page as you and everyone else. The major indices all pinged red, with the benchmark S&P 500 shedding 3.4% while the Nasdaq dropped 4%. Nevertheless, the pain brings some opportunities for stocks to buy this week.
Essentially, investors should consider public firms tied to businesses that may benefit from rising rates, such as insurance companies. Or they should look at energy and utility plays that generally remain resilient under fire (because people need their services). While the stocks to buy this week may be somewhat cynical, remember: you got to do what you can during these rough times.
|CGA||China Green Agriculture||$6.66|
Another word that unfortunately caught the market’s attention was pain. Basically, Powell promised some of it because that’s what rising interest rates do. And if you know that interest rates are going to rise, you might as well buy yourself some Progressive (NYSE:PGR).
Generally speaking, according to Investopedia, “an insurer’s profitability typically rises and falls in concert as interest rates increase or decrease.” Further, this concept enjoys a track record. “Historical analysis shows that the overall trend is for the insurance sector to increase profitability when there are rising interest rates.”
Another factor bolstering PGR as one of the stocks to buy this week is relevance. No matter what happens in the economy, drivers need some form of insurance to financially protect themselves. With dangerous driving on the rise following the Covid-19 pandemic, car insurance has never been more pertinent.
On paper, rising interest rates should help control inflation, which would then mean lower profits for companies like Chevron (NYSE:CVX). Still, I consider CVX to be one of the stocks to buy this week because prices may rise in the near future. That’s not my opinion. Instead, energy industry experts warned consumers not to get too comfortable with the current respite.
In addition, I see two fundamental factors bolstering CVX and its ilk. First, circumstances in Ukraine will likely worsen before they improve. The beleaguered nation appears to be planning a counteroffensive to take back occupied territories, spelling more global tensions with Russia. With the winter coming up, expect the Russians to play hardball with the energy market, meaning higher hydrocarbon prices.
Second, investors should expect more people to return to the office. With a possible recession on the horizon, nobody wants to stand out for the wrong reasons. That spells increased oil demand, making CVX one of the stocks to buy this week.
General Motors (GM)
These days, electric vehicles (EVs) are all the rage. Further, the geopolitical circumstances mentioned above help bolster the concept of EVs. Essentially, more EVs may translate to lesser dependencies on adversarial nations (though I personally disagree with that point). After all, China wants to dominate this sector.
However, as great as EVs may be, one headwind exists that tempers extreme bullishness: Their wildly surging cost. The average transaction cost for new EVs stood at nearly $63,000 earlier this year. With the erosion of the dollar’s purchasing power, this circumstance will likely worsen by the end of 2022. But that’s also the reason investors should consider General Motors (NYSE:GM) as one of the stocks to buy this week.
Here’s the bottom line: GM offers a compelling mix of electric and combustion-powered products. From the all-electric Blazer to the Silverado, GM will compete aggressively with established EV leaders. On the combustion end, the eighth-generation Corvette continues to perform impressively.
Kelly Services (KELYA)
Billed as a global leader in workforce management solutions, Kelly Services (NASDAQ:KELYA) doesn’t necessarily feature the highest reputation among white-collar workers. That’s because Kelly has a broad reach, including staffing for industrial and warehouse jobs. Other staffing agencies tend to focus on specific white-collar trades, such as accounting.
Nevertheless, this reputation might be beneficial in the new normal, making KELYA one of the stocks to buy this week. Back in the aftermath of the last recession, I came across a rather rude remark to an online posting for a white-collar office job: Pick up a shovel! The remark stayed with me because, during recessionary cycles, people must do what they can to survive.
Further, tech layoffs continue to expand. Sure, most of the job cut announcements come from startups. However, several big names have announced pink-slip distributions. With good jobs getting axed, the rise in desperation could cynically benefit Kelly Services.
Sempra Energy (SRE)
When faced with troubling economic circumstances, investors may find refuge in utility firms. It’s an obvious concept but worth repeating. In a digitalized economy, you cannot afford to lose power (literally). Therefore, households will sacrifice just about anything to avoid getting the boot from the utility firm. Honestly, if things get that bad for everyone, we’re doomed anyways.
Further, Sempra Energy (NYSE:SRE) draws additional intrigue to the above narrative because of its geographic location. Serving many neighborhoods in southern California, Sempra is tied to the biggest American economic powerhouse. The Golden State’s GDP stands at nearly $3.4 trillion. If California were its own country, it would easily rank in the world’s top 10 economies.
In other words, if a recession materializes, Californians will be among the least impacted. Of course, I’m referring to averages, not individual cases.
Now, I know that many people have grievances, some regulatory in nature, with Sempra and I’m not dismissing that. Still, with a recession possibly ahead, you might as well consider SRE as one of the stocks to buy this week.
Crown Castle (CCI)
Another cynical idea to consider for stocks to buy this week is Crown Castle (NYSE:CCI). A real estate investment trust (or REIT) and a provider of shared communications infrastructure in the U.S., Crown Castle can fundamentally ride out whatever the economy throws at it. Commanding a network of over 40,000 cell towers and fiber optics covering roughly 85,000 miles, it’s simply too relevant to ignore.
Better yet, telecom-related companies can pass off their costs to their customers. Unlike the discretionary retail sector, people don’t always need the latest fashion or gizmos and gadgets. However, they do need to be connected. Even for those who have been laid off, lacking connectivity could worsen their situation.
To be fair, CCI presents a healthy mix of opportunity and risk. On the positive side, the company commands excellent growth and profitability metrics. However, its forward price-earnings ratio is on the high side. Still, as a company that can potentially weather both inflation and deflation, CCI intrigues as one of the stocks to buy this week.
China Green Agriculture (CGA)
If you’re looking for a speculative idea among stocks to buy this week that could be interesting in the months ahead, you may want to consider China Green Agriculture (NYSE:CGA). Specializing in the production and distribution of humic acid liquid compound fertilizer throughout 27 provinces in China, CGA presents a relevant profile.
However, many investors will likely be distracted by a couple of conspicuous headwinds. First, CGA already jumped nearly 36% on Friday. That might suggest that future upside may be limited, though, in the after-hours session, CGA gained more than 7%.
Second, Gurufocus considers the stock to be “significantly overvalued.” Naturally, the recent surge in price doesn’t help.
Fundamentally, though, the global food supply chain disruption got everyone to rethink their priorities. Additionally, semiconductors aren’t the only critical commodities in short supply. With shortages of fertilizer weighing on global markets, CGA presents a very relevant (though cynical) profile.
On the date of publication, Josh Enomoto 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.