3 Promising Stocks to Buy Hand Over Fist


  • You can be more aggressive in your investing strategy when you find promising stocks that offer resilience in a downturn.
  • MercadoLibre (MELI): The Latin American e-commerce and fintech stock is rapidly expanding in all its primary markets.
  • Digital Realty Trust (DLR): This cloud computing REIT can cash in on a $4.4 trillion opportunity over the next decade.
  • Genuine Parts (GPC): The aftermarket auto parts retailer has significant tailwinds at its back, driving growth higher.
stocks to buy hand over fist - 3 Promising Stocks to Buy Hand Over Fist

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Thinking of stocks to buy hand over fist may seem foolish considering all the debt-ceiling drama or the possibility of the U.S. economy plunging into a recession. After all, willy-nilly investing isn’t a smart move no matter what the economic conditions are.

Yet, targeted investments can still make sense. Even big bets on some stocks can be smart if the companies hold huge potential regardless of market conditions.

Looking for such opportunities to ride out the storm can be a great way for investors to begin their research. The following three promising stocks stand out as no-brainer stocks to buy. Because they can help insulate your portfolio in a downdraft, they are ones you should consider grabbing with both hands.

MercadoLibre (MELI)

MercadoLibre (MELI) homepage on a smartphone
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MercadoLibre (NASDAQ:MELI) is a fantastic stock to buy for U.S. investors concerned about a recession. The Latin American e-commerce and fintech giant has no exposure to our economy. It is wholly focused on Central and South American markets.

Although an argument can be made that as goes the U.S., so goes the world, that’s not quite the case. MercadoLibre is experiencing accelerating growth. First-quarter gross merchandise volume (GMV), or the value of all goods sold on its online platform, rose 43% on a currency-adjusted basis to $9.4 billion. Total payment volume (TPV), or all the payments processed through its fintech platform Mercado Pago, nearly doubled to $37 billion.

As much as e-commerce seems a mature industry stateside, in Latin America, e-commerce volume is forecast to grow 25% through 2025. And in MercadoLibre’s primary markets of Argentina, Brazil and Mexico, Americas Market Intelligence forecasts the industry will expand 32%, 22% and 24%, respectively.

At 56 times next year’s estimates, MercadoLibre’s stock may not seem cheap, but its profit margins are rapidly expanding. Gross margins exceeded 50% in the first quarter, and operating margins hit 11%, or almost double the year-ago rate. That makes the “Amazon (NASDAQ:AMZN) of Latin America” one of the top promising stocks to buy hand over fist today.

Digital Realty Trust (DLR)

A hallway with server racks on either side in a data center
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Cloud computing services are another inexorable force for long-term growth. Future Market Insights forecasts revenue for the global market growing from $564 billion in 2022 to some $4.4 trillion in 2033. That’s more than a 20% compounded annual growth rate (CAGR).

Digital Realty Trust (NYSE:DLR) ought to be able to capitalize on that opportunity. Not your typical cloud computing stock, the real estate investment trust (REIT) is one of the biggest owners of data centers in the world. In fact, it has 314 data centers across 28 countries. It boasts approximately 38.8 million square feet of rentable space. 

Data centers essentially serve as the backbone of the internet. They provide the nerve center for everything that occurs in the cloud and online, from e-commerce to Internet of Things devices accessing their network. Data centers provide the warehousing for the servers and networking equipment in a secure environment. As companies continue to transition their data to the cloud, they’re going to need Digital Realty Trust to house it.

Moreover, CEO Andy Power says the release of ChatGPT has ushered in a new focus on artificial intelligence. He told analysts it “could spawn a wave of adoption and a proliferation of use cases and ultimately drive demand for compute infrastructure at scale.”

Digital Realty also offers leases that are longer than standard commercial leases. Its average remaining lease term is five years. Therefore, it has a level of assurance that its revenue will be stable over time in uncertain environments. For investors, it offers peace of mind.

Genuine Parts (GPC)

A stack of auto parts
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In contrast to MercadoLibre and Digital Realty, the third stock to grab onto with both hands may seem more mundane. Genuine Parts (NYSE:GPC) owns a 9,600-store retail chain that primarily operates under the NAPA Auto Parts banner. It also runs an industrial replacement parts and supplies distribution business that serves repair shops, service stations, fleet operators, and automobile and truck dealers.

The auto industry is hurting. Sales fell 8.2% in 2022 to just 13.7 million units. That’s the lowest number since 2011, as automakers are giving fewer incentives, average new car prices are at a record $46,382, and rising interest rates make buying a new car more expensive.

Used cars aren’t much better. While prices are off from their record highs last year, prices rose 4.4% in April. That follows nine straight months of decline. So amid rampant inflation, high financing costs and elevated gas prices, customers are opting to keep their old cars in working order.

That’s reflected in Genuine Parts’ financial results. It had record sales of $22.1 billion last year, up 17%, with adjusted earnings rising over 20% to $8.34 per share. That continued in the first quarter as the auto parts retailer generated a record $5.1 billion in sales, a 9% increase. Meanwhile, profits soared 24.4% to $2.14 per share.

Arguably the best reason to buy GPC stock is its dividend. It has made a payout for 75 consecutive years and raised the dividend every year for the last 67 years. That makes it a Dividend King, a stock that has increased its payout for 50 years or more. With the dividend yielding 2.2% annually, investors should feel comfortable buying this stalwart stock.

On the date of publication, Rich Duprey held a LONG position in GPC stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Article printed from InvestorPlace Media, https://investorplace.com/2023/05/3-promising-stocks-to-buy-hand-over-fist/.

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