Four consecutive down weeks for the S&P 500. One of the stock market’s worst Januarys on record. Are we having fun yet?
Among other things, volatility’s function is to separate the patient from the impatient, and shake weaker hands out of the proverbial tree. At the same time, volatility provides investment opportunities with excellent reward-to-risk profiles.
Of course, the mainstream media’s “Markets in Turmoil” graphics are specifically designed to get you watching – not to help you build wealth and preserve your capital. Personally, I’m choosing to lean into the volatility instead of fearing the fear.
With that in mind, here’s a handful of stock picks for investors with a tolerance for turmoil. No risk, no reward, as they say.
Based in Deerfield Illinois, Caterpillar (CAT) is a construction and mining equipment giant that’s recognized practically everywhere in the U.S. Anywhere near $200, CAT stock is an absolute bargain.
On Friday, Caterpillar reported fourth-quarter 2021 adjusted earnings per share of $2.69, which surpassed the analysts’ consensus estimate of $2.22 by a margin of 21%. Moreover, the company’s bottom line improved 27% over the prior-year quarter.
Yet, CAT stock fell 5% after that impressive earnings report because Caterpillar’s management acknowledged that demand from China is likely to slow down this year. That may be the case, but it’s not a sufficient reason to worry about a financially sound business like Caterpillar.
Caterpillar’s P/E ratio is quite reasonable at 21.49, and the company pays a decent annual dividend yield of 2.09%. So, why not excavate some profits and give CAT stock a try?
Cupertino, California-headquartered Apple (AAPL) is among the most recognizable names in the technology domain. CEO Tim Cook has effectively continued Steve Jobs’ legacy as a pioneer in electronics and computing, the cloud and much more.
With a P/E ratio of 30, Apple isn’t as pricey an investment as you might expect it to be. The company only pays a 0.55% annual dividend, but the stock’s price appreciation ought to be more than enough to make up for that.
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In a much-anticipated event, Apple just reported first-quarter fiscal 2022 earnings of $2.10 per share, beating the analyst consensus estimate by 11.1% and marking a 25% year-over-year increase. Not only that, but the company’s net sales increased 11.2% year-over-year to $123.95 billion, beating the consensus estimate by 4.92%.
Clearly, Apple is bucking the anti-tech trend in the current market environment and overcoming supply-chain issues with ease. For an investment that lets you sleep soundly at night, it just doesn’t get much better than AAPL stock.
Are you hungry for some tasty dividend payouts? If so, then enjoy the steady returns that legendary fast-food chain McDonald’s (MCD) should provide in 2022.
MCD stock tends to hold up comparatively well during market downturns and economic crises. This makes perfect sense, as families will want to consume inexpensive, filling food when finances are tight.
Don’t get me wrong – McDonald’s isn’t immune to rising inflation, which has led to higher food costs and wage increases. Despite those headwinds, McDonald’s just revealed that its comparable-store sales were up 10.8% on a two-year basis. Plus, the company had its fastest U.S. growth rate on record, with McDonald’s global sales volume rising 21% to $112 billion for the full year of 2021.
This market correction has brought McDonald’s P/E ratio down to a very reasonable 25.31. Besides, the company offers a 2.22% delicious dividend yield, so now’s a great time to order up some shares of MCD stock.
Is it possible for a technology stock to have a P/E ratio of just 9.04, and pay a dividend of 2.69%? Yes, it is indeed possible and microprocessor manufacturing giant Intel (INTC) is proof positive that tech stocks can also be value plays.
For INTC stock to trade at $46 is senseless – and an opportunity for contrarians who understand that the world desperately needs semiconductors. Practically every gadget, plus the vehicle you drive, relies on microchips, and Intel is a premier provider of them.
For the fourth quarter of 2021, Wall Street’s analysts expected Intel to earn only $0.90 per share on sales of $18.3 billion. However, Intel absolutely crushed it in Q4, earning $1.09 per share and delivering sales of $20.5 billion.
Still, INTC dropped sharply because Intel’s quarterly sales grew by “only” 3% year-over-year. Wall Street might be hard to impress, but this doesn’t mean that you have to miss out on a rare buying opportunity with a premier processor provider.
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