For many of us, 2022 was supposed to be the year of normalization as we emerged from the coronavirus pandemic. Unfortunately, circumstances didn’t quite work out that way, necessitating an unexpected pivot for the best stocks to invest in for the second half of 2022.
First on everyone’s mind is Russia’s invasion of Ukraine. Although the conflict may seem galaxies away from our relatively privileged existence, the overriding reality is that we have been thrust into a radical paradigm shift, one where might makes right. Such a disruption to the modern global order naturally creates ripple effects, necessitating changes for the stocks to invest in.
Second, economic fissures that started catalyzing from the initial impact of the Covid-19 crisis force another possible rebalancing in our portfolios. Higher prices of everything means that investors will need to take a cynical approach with some of the best stocks to invest in for the second half.
Finally, a host of social issues have risen to the forefront again. And this too may force investors to respond by bringing attention to stocks to invest in that they previously may not have watched.
Recently, oil and natural gas giant Shell (NYSE:SHEL) made headlines when it announced the development of the Holland Hydrogen I facility, which management declared would be Europe’s largest renewable hydrogen plant. With fossil fuels becoming a thorny issue due to the Russian invasion of Ukraine effectively shelving a significant portion of hydrocarbon supplies, Shell’s diversification brought back positive momentum for SHEL stock.
However, Shell is one of the stocks to invest in for the second half of 2022 not because of the hydrogen angle — though it is intriguing — but for the core fossil fuel business. While the ramped up focus on sustainable energy sources like green hydrogen is compelling, the reality is that such infrastructures will take time to develop. In the meantime, Shell has a global economy to feed.
While energy prices are admittedly declining in recent sessions due to economic slowdown fears, the coming winter months will likely drive prices back up. Therefore, it makes sense to consider the discount in quality sector players like SHEL.
Lockheed Martin (LMT)
Several months into its “special military operation,” Russia has failed to secure its main objective of decapitating Ukraine’s government in Kyiv and presumably setting up a puppet state loyal to the Kremlin ala Belarus. Fortunately for the sake of free democracies in Europe, the Ukrainian resistance has been heroic and fierce. Nevertheless, it doesn’t mean that the Russians will just give up.
Sadly, this sets up a scenario where the conflict in eastern Europe may last for years. Cynically, this narrative is going to help Lockheed Martin (NYSE:LMT). Among the biggest news in the fighting is U.S. shipments of the High Mobility Artillery Rocket System (or HIMARS) to Ukraine, which allows its forces to strike at Russian targets from farther distances.
Given the resourcefulness and effectiveness of Ukrainian soldiers, it’s quite possible that HIMARS could enjoy a significant PR boost. Naturally, this would help its developer, Lockheed Martin. Therefore, LMT is one of the stocks to invest in as it may play a pivotal role in protecting democracy in Europe.
NuScale Power (SMR)
Because of their severe underperformance, investors should be wary of any publicly traded company that entered the arena via a reverse merger with a special purpose acquisition company (or SPAC). That goes for NuScale Power (NYSE:SMR), a nuclear power technologies firm. However, both the company’s groundbreaking innovations along with realities in the energy equation point to SMR being a positive SPAC oddity.
Primarily, NuScale specializes in small modular reactors or SMRs. Thanks to their distinctly smaller profile, they help minimize costs, improve quality and reduce construction schedules. As well, SMRs can be built on lands that could not otherwise accommodate traditional nuclear powerplants (owing to their larger physical footprint).
Geopolitically, countries like Germany have shut down much of their nuclear capacity. Unfortunately, such moves also raise dependency on questionable partners like Russia. Over the long run, SMRs could help change nuclear power’s controversial reputation, perhaps giving NuScale a leg up on the competition. For that reason, SMR is one of the stocks to invest in for the second half.
Intrepid Potash (IPI)
Another factor in the conflict in Europe is the disruption to global food supply chains. According to a CNN report, “Russia’s war in Ukraine could push up to 49 million people into famine or famine-like conditions because of its devastating impact on global food supply and prices, the United Nations has said, in the latest dire warning over food insecurity.”
One of the major agricultural consequences of the military conflict is the sharp rise in fertilizer prices. According to the United Nations, “Russia is the world’s No. 1 exporter of nitrogen fertilizer and No. 2 in phosphorus and potassium fertilizers. Its ally Belarus, also contending with Western sanctions, is another major fertilizer producer.”
Cynically, disrupted supplies and soaring demand presents a bullish case for Intrepid Potash (NYSE:IPI).
To be fair, IPI is not an easy narrative. Over the trailing month, shares have tanked 35%. However, pure societal and economic necessities over the next several months may provide upside catalysts for IPI, one of the stocks to invest in.
As America marched back from the devastation of the Covid-19 pandemic, a dark realization set in: The steadily brewing mental health crisis has careened out of control. It’s painfully obvious that both government agencies and community leaders need to get a hold of this dilemma before further damage erupts. That’s why Talkspace (NASDAQ:TALK) may be one of the best stocks to invest in for the second half.
While many of us have written about feel-good narratives in the equities sector — the so-called environmental, social and governance (or ESG) plays — Talkspace in my opinion is a company investors can be truly proud to support. By providing an online therapy platform, the company allows people who are struggling with various issues to reach out to compassionate individuals, thereby productively solving social challenges.
To be fair, Talkspace is on the riskier side of the equities spectrum. At the time of writing, shares are trading hands below $2. Plus, TALK has dropped 20% on a year-to-date basis. Still, because of the burgeoning mental health crisis, Talkspace is incredibly relevant.
Korn Ferry (KFY)
A management consulting firm, Korn Ferry (NYSE:KFY) offers myriad services to enterprise-level clients. In particular, it specializes in guiding organizations to make the right hiring choices. Currently, because companies are competing for willing laborers, there doesn’t seem to be much relevance for Korn Ferry. However, I anticipate this narrative to change.
It comes down to basic common sense. In rational markets, economically desirable elements — such as employers of high-paying jobs — will command greater value than elements that are not so rare, like job applicants.
Well, once normalization hits the labor force — or a recession hits — jobseekers will be forced to act desperately. In the coming deluge of applicants, overwhelmed companies must find and hire the right talent. Korn Ferry can easily help in this process, making KFY one of the hidden-gem stocks to invest in.
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.