The market is attempting to make a comeback.
And as I’ve been saying for the past few weeks, it’s time for “revenge investing,” a term that riffs off the “revenge travel” term that folks use to take the trips and vacations they’ve been denied due to COVID for the better part of nearly three years.
I use “revenge investing” somewhat facetiously, but there is truly something to it.
We’ve endured enough of the market’s gut punches this year, and now, as we – potentially, hopefully – begin to turn the corner and leave the lowest lows behind, it’s time to make pointed, intelligent investments.
Below, you’ll find two stocks that have made my watchlist for 2023 – and beyond.
Both capitalize on a megatrend we’ve discussed in Smart Money and my other services, which simply implies that no matter how the market moves, the trend remains supreme, and these are two of the stocks I believe will benefit.
Without further ado…
Laguna Beach Millionaire Believes This May Be How the Rich Got Richer During Pandemic
Buy? Hold? Sell? Hardworking Americans are panicking over what to do with their money. One stock market legend says you should take these steps.
Watchlist Stock No. 1: Paramount Global
Even in genuinely tough economic times, folks are reluctant to forgo “affordable luxuries.”
They would rather eliminate “date nights” in a nice restaurant rather than go without an occasional Starbucks latte… or their favorite movie-streaming service. But don’t try telling that to the folks who have been dumping Paramount Global (PARA) shares.
The stock has tumbled 50% during the last six months, even though the media giant released its highest grossing film of all time, Top Gun: Maverick, over the summer.
At the current quote, I believe Paramount has become a compelling and undervalued speculation – and a few noteworthy investors seem to agree with me.
Warren Buffett’s Berkshire Hathaway Inc. (BRK-A) recently spent $2.6 billion to buy an 11.3% stake in the company. Buffett paid about $37.70 a share.
Prior to his purchase, Paramount’s Chairwoman, Shari Redstone, bought about $3 million worth of stock at $28.38 a share. And prior to that, CEO Bob Bakish bought $500,000 worth of stock at $35.84.
Paramount, one of Hollywood’s most famous film studios, is the owner of many other famous media brands, like CBS, Nickelodeon, and Showtime. Collectively, these media brands create a formidable competitive moat that surrounds what is fast becoming an impressive citadel of streaming services.
Although many investors view Paramount’s streaming services, Paramount+ and Pluto TV, as also-rans, these also-rans are sprinting ahead of most of the competition.
Netflix Inc. (NFLX), for example, lost subscribers for the first time ever during the first quarter of this year, and then lost even more during the second quarter. But over the same timeframe, Paramount+ added a whopping 10.5 million subscribers to lift its total to 43.3 million.
Pluto TV, for its part, added 2.1 million monthly average users (MAUs) during the second quarter to raise its total to 69.6 million MAUs.
I believe Paramount is in the early stages of what could become a powerful growth phase. Even if that growth materializes more slowly than I anticipate, the stock offers ample downside protection at its current quote.
WARNING: Cash Holders About to Get Hit Hard
While the financial media keeps the masses distracted by the bear market, one Silicon Valley Insider is warning of a far bigger “Divergence” event about to blindside millions of Americans. It came during the height of the Black Monday crash in 1987, Dot-Com Crash in 2000, and the 2008 Financial Crisis. And it’s back again in 2022. Get the facts and get out of cash while you still can!
Watchlist Stock No. 2: TotalEnergies SE
The Paris-based TotalEnergies SE (TTE) is literally a one-stop “energy transition” powerhouse – part “Old Energy” and part “New Energy.” Both parts are significantly undervalued, relative to comparable companies. In fact, it’s one of the world’s biggest renewable energy companies.
The company formerly known as Total – rebranded to TotalEnergies in 2021 – operates in every major facet of the energy industry, from oil and gas to renewables like solar, wind, and green hydrogen.
Unlike most other major oil companies, TotalEnergies’ interest in renewable energy is not a recent or fleeting dalliance. It has been investing billions of dollars over many years to develop a diverse and fascinating portfolio of renewable energy assets.
For example, in 2011 Total purchased a majority stake in SunPower Corp. (SPWR), a leading U.S. manufacturer of solar panels and related products.
Total held that investment through thick and thin – mostly thin. After Total paid $23.25 a share for 60% of SunPower, the stock tanked almost immediately and spent most of the next decade trading at about half that level.
But Total maintained its long-term investment and cooperation with SunPower, and it is finally paying off. Today, TotalEnergies’ renewable energy assets produce about 18% of the company’s total revenues. No other major oil company has come close to making a commitment of that size.
The first runner-up would be London-based Shell PLC (SHEL), which generates about 11% of its revenues from renewables. Elsewhere in the world, including here in the United States, renewables rarely contribute more than a rounding error to oil company income statements.
Additionally, in the renewable energy space, TotalEnergies is quickly incorporating green hydrogen into the mix, and doing so in a big way.
One year ago, the company joined forces with L’Air Liquide ADR (AIQUY), Vinci SA ADR (VCISY), and other large international companies to create the world’s largest investment fund dedicated to clean hydrogen projects. The 1.5-billion-euro fund will target green hydrogen projects along the entire production chain.
Then, just three months ago, Total upped its commitment to green hydrogen by announcing a partnership with India’s Adani Group to invest $50 billion over the next 10 years to produce green hydrogen and develop an entire ecosystem around it. An initial investment of $5 billion will develop four gigawatts of wind and solar capacity, about half of which will feed electrolyzers that produce hydrogen. The venture could expand to 1 million tons of annual green hydrogen production by 2030, driven by 30 gigawatts of clean power.
Although TotalEnergies’ massive investment in renewables entails some risk, so would a failure to do so. If, in fact, the world is transitioning away from fossil fuels toward renewables, oil companies will have to do the exact same thing to maintain their long-term viability and growth potential.
Total is embracing that mission with gusto, or as they might say in the company’s native tongue, avec élan.
Regards,
Eric Fry
P.S. You have the first two stocks on my watchlist for 2023, but there are several more that go far beyond being on a watchlist – so much so, that I think they have the potential to bring huge profits for savvy investors who take action now. I’ve already recommended them to my readers of Fry’s Investment Report, and if you’re ready to “take revenge” on the bear market, go here now to learn how you can get my full suite of recommendations.
On the date of publication, Eric Fry did not have (either directly or indirectly) any positions in the securities mentioned in this article.
