Feeling Fed fatigue? In the last year, stocks have been highly reactive to the Federal Reserve’s monetary policy shifts, which have overshadowed other economic factors. For many in the financial markets, the resulting volatility caused a fair share of ulcers that investors may be looking forward to moving past.
With the Fed’s decision last week to hold rates steady, it appears there’s now some clarity around where interest rates will be for some time. Assuming nothing big breaks (many thought the regional banking crisis was it last year), investors have to gauge how to play the market. And if something does break, which stocks won’t break investors’ bank accounts?
Here are three stocks to buy that I think fit the profile, given these recent developments.
Nvidia (NVDA)
Nvidia (NASDAQ:NVDA) achieved record data center revenue, surging 171% year-over-year, driven by strong demand from major tech giants for its high-performance chips.
Despite recent stock pullbacks, concerns of fading AI enthusiasm, and potential short-term weakness, NVDA might rally again. AI’s future impact, as per sell-side predictions, could significantly boost NVDA’s profits in the coming years, making it a key chip stock. TradeSmith’s volatility index for NVDA stands at 45.51%, indicating high risk.
Nvidia’s technology finds practical applications, like WPP’s content engine using Nvidia Omniverse and the partnership with Snowflake for chatbot and data tasks. As cloud providers upgrade for AI and accelerated computing, Nvidia’s cost-effective and efficient solutions make it a valuable AI stock.
This isn’t a cheap stock by any means. But for those seeking to invest before interest rates potentially come down again (likely next year), NVDA stock is at least one to keep on the radar.
JPMorgan Chase (JPM)
JPMorgan Chase (NYSE:JPM), a banking titan, boasts a year-to-date return of roughly 7%, solidifying its status as a top financial services stock. In Q2 2023, the company reported a remarkable net income of $14.5 billion, surpassing market forecasts, with diluted earnings per share at $4.75.
The bank’s net income margin stood at an impressive 35%, well above its usual 25%. Zacks awarded JPM stock a top “Momentum Style Score of A,” and in Q2, it attracted significant institutional interest, with 1,808 institutions increasing their stakes and 1,641 reducing theirs. Despite these positive factors, its forward price-earnings ratio remains low at 10-times.
Additionally, JPMorgan has found a way to capitalize on regional bank vulnerabilities, particularly related to 2025 commercial mortgage maturities that may trigger defaults. That has rightly prompted investors to put their capital to work in top-tier institutions like JPMorgan.
Lithium Americas (LAC)
Lithium Americas (NYSE:LAC) presents a hidden gem in the growth stock universe despite a 31% dip over the last year.
LAC, indirectly tied to the electric vehicle (EV) industry, is set to unlock value by splitting its U.S. and Argentina businesses. The Thacker Pass project and a major lithium discovery in Oregon-Nevada border volcanoes offer substantial cash flow potential.
The drop is mainly linked to short-term lithium price fluctuations. However, this offers a prime chance to invest, as LAC stock is positioned for significant gains. The company’s split into two entities is approved and could unlock value soon.
For those bullish on the potential for commodity prices to rise (as the U.S. dollar potentially declines when interest rates peak), this is an intriguing play. At its current valuation, I think LAC stock is among the best ways to play the long-term secular bull trends in the EV market.
On the date of publication, Chris MacDonald did not hold (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.
