In October, value-minded investors can find opportunities with some research.
Historically, it’s a slow season for investors, evidenced by past market crashes. Yet, we have plenty of hope ahead, as I shared my ideas in September. Now, we’re back with three more and will focus on various industries in upcoming articles.
As we enter the fourth quarter, it’s crucial to keep an eye on 2023’s investment opportunities. In October, I have my sights set on three stocks that I believe are compelling buys. Let’s dive into the reasons these three companies remain stocks to buy, for long-term investors seeking stable and consistent returns.
Chevron (CVX)
Chevron’s (NYSE:CVX) CEO, Mike Wirth, expressed optimism about crude prices reaching $100 per barrel in a recent Bloomberg TV interview.
Despite CVX stock being down 4% this year, it has gained 10% as oil prices rose. Also, Chevron distributed a record $7.2 billion to shareholders in Q2, comprising dividends and stock buybacks, following its strong 2022 financial performance.
Chevron, with 37 years of consecutive dividend growth and a 3.54% yield, has gained 10% recently, nearing a positive year. Warren Buffett retains a significant stake in Chevron despite some prior sales by his hedge fund. With oil over $90 per barrel, CVX’s stock trades around $170, potentially undervalued with a price-earnings ratio of only 10.8-times.
Chevron, with its stability and 3.5% dividend, provides a smoother ride in uncertain times. While energy stocks have struggled in the past decade, Chevron had a mighty 2022. The outlook for 2023 looks promising with OPEC reducing output.
Meta Platforms (META)
Despite its social media dominance, Meta Platforms (NASDAQ:META) is venturing into AI. With the introduction of Llama and Llama 2, they clearly compete with OpenAI’s ChatGPT. The open-source strategy aims to attract developers by offering transparency and customization.
Meta’s recent Connect 2023 event unveiled the Quest 3 VR headset and smart glasses collaboration with Ray-Ban. Despite a 149% year-to-date (YTD) increase, the stock remains 8% below its 52-week highs and 20.3% lower than the average analyst target of $361.65.
Meta’s Q2 ad revenue rose 12% year over year (YOY) to $31.5 billion, partly due to e-commerce marketers. Analysts predict ad spending growth with expanding U.S. e-commerce revenue. Morgan Stanley (NYSE:MS) foresees EPS reaching $20 next year, driven by Reels, Click to Message, and ads. They maintain a $375 price target and an “overweight” rating. In addition, META stock has a low forward price-earnings ratio of 18.6-times.
McDonald’s (MCD)
McDonald’s (NYSE:MCD) makes the list of “sin stocks” due to its indulgent offerings, but it’s a guilty pleasure that many turn to for comfort.
While not a screaming value, MCD shows steady long-term revenue growth and consistent profitability. Analysts rate it a strong buy with a $332.96 price target, indicating over 24% potential growth.
From its humble beginnings, it now boasts over 38,000 locations in 100 countries. Recent financials show a 14% Q2 sales increase to $6.47 billion and a remarkable 94% net income surge YOY to $2.31 billion. Also, McDonald’s entices investors with a 2% dividend yield and plans to raise royalty fees for new U.S. franchisees from 4% to 5%.
McDonald’s recession-ready plan involves offering budget-friendly choices like Germany’s McSmart menu and the U.K.’s Saver Meal deals. Even in economic downturns, this commitment to affordability solidifies its reputation as a cost-effective dining option, enhancing its recession resistance.
On the date of publication, Chris MacDonald has a LONG position in META, MCD. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
