2022 has been a tough year for investors… or so I’m told.
But is that really the truth? And as an investors are you required to just “roll with the punches” when the Dow or S&P 500 trades lower?
I’m a bit frustrated with the financial media telling us that this is a “challenging market” or that investors are taking on losses.
Because the truth is, there are plenty of wonderful investment plays in today’s market. And if you’re a bit more selective with the stocks you choose, you can sidestep a lot of the frustration that the Wall Street media has been highlighting.
Today, I want to take some time to look at what’s working in our current market. That way you can focus on the best plays that can help grow (and protect) your wealth this spring.
Value for Shoppers = Value for Investors
Retail stocks can be difficult investment plays for investors to follow. After all, the retail industry is full of competition and it can be tough for these companies to keep customers engaged and coming back.
But retail companies that get this right can grow profits through good times and bad. And today, stocks of retail companies with reliable profits are shooting higher.
One of my favorite retail companies (as an investor and as a consumer) is Costco Corp. (COST).
[Trading Note: I’m currently invested in COST call contracts as part of our Speculative Trading Program.]
Costco is loved by customers because of low-cost deals for shoppers. In an inflationary environment, value becomes extremely important.
So even though COST faces higher costs for the merchandise it purchases, the company has enough scale to pass higher prices on to customers while still offering tremendous value. Investors love this advantage which is why the stock keeps trading higher.
A couple other retail names to consider are Tractor Supply (TSCO) — also in the Speculative Trading Program — and discount retailer Dollar General (DG).
Keep an Eye on Investment Plays in Materials
Inflation may be driving interest rates higher and causing tech stocks to pull back. But on the other side of the market, inflation actually helps companies that sell raw materials.
Copper is an especially important material in high demand. That’s because copper is needed for electric wiring which goes into every new home being built. Copper is also an important element for electric vehicles, data centers, and certain manufacturing processes.
As inflation drives the price of resources like copper, iron ore and steel higher, companies that mine and distribute these resources will profit.
One of my favorite natural resource producers is Vale SA (VALE). The Brazilian miner is the largest iron ore miner in the world, and also produces many other important resources.
[Trading Note: I used shares of VALE twice last quarter in our Put-Selling Income Model — and will likely use it again this spring.]
Other resource names to consider are Freeport McMoRan (FCX), and even fertilizer stocks like CF Industries (CF).
Defense Stocks May Have a Long Run Ahead
One final area to keep on your radar (no pun intended) is the defense / aerospace industry.
Thanks to Russia’s invasion of Ukraine, investors are now paying a lot more attention to defense stocks. The U.S. and allies in the developed world are willing to spend more on weapons systems, defense solutions and basic military supplies.
That’s great news for stocks like Lockheed Martin (LMT). The stock has surged higher this year and still only trades for about 16 times next year’s expected earnings.
One day soon, I expect the stock to pull back sharply on some news of Russia de-escalating its terrible war on Ukraine. When that happens, it may turn out to be a great buying opportunity.
Because even if Russia backs off today, the invasion was a wake up call to the world. And freedom-loving countries are more aware of the importance of protecting the sovereignty of friendly nations and preventing another situation like the Ukraine crisis from happening again.
I expect long-term defense spending to pick up. And that makes for a good long-term backdrop for stocks like LMT.
Clearly today’s stock market is full of play that are moving higher and handing investors profits. You just have to dig a bit deeper instead of focusing just on mega-cap stocks like AMZN, GOOG and MSFT.
I’ll do my best to point out the best opportunities as they arise. And I hope to hear how you’re doing along the way! Please send me an email ([email protected]) and check in.
Here’s to growing and protecting your wealth!