During hard times, quality and resilience come on top. The broad market remains unsure of its future course. However, a few reliable stocks currently appear to be too overpriced or undervalued. Here is a closer look at four stocks to buy this week.
1. Stocks to Buy: TSMC
Yes, there is still a shortage of semiconductors. However, not every brand in the industry will necessarily experience this issue. Some semiconductor businesses have benefited from it greatly. One of the winners is Taiwan Semiconductor Manufacturing Company (TPE:2330).
Taiwan Semiconductor, also known as TSMC, is a contract chip maker. Businesses that develop their own semiconductors but do not want to incur the costs of constructing their own production foundries, produce semiconductors. Nvidia, Qualcomm, and Apple are just a few of its clients.
Taiwan Semiconductor is becoming more and more popular among big names in the sector as the semiconductor industry struggles to obtain adequate essential components. The top line is expected to increase by 30% this year, which will result in a corresponding increase in earnings per share.
But what makes this stock to be on the list of stocks to buy right now is what’s probably going to happen over the course of the following year. Analysts anticipate that TSMC will continue to thrive despite the predicted decline in chip shipments brought on by the deteriorating economy. Both Needham and Bernstein predict that the company will grow in the upcoming year. Recently, Needham analyst Charles Shi stated that he believes TSMC will be able to buck the industry downturn thanks to its near-monopoly position in 3- and 5-nanometer chips, both of which are anticipated to ramp significantly in 2023.
2. Stocks to Buy: Merck
Merck is on the stocks to buy this week. Not one of the pharmaceutical companies involved in the frenzy to create a COVID-19 vaccine was Merck (NYSE:MRK). The business manufactures molnupiravir, which is showing promise as a disease treatment.
Merck decided to keep a large portion of its attention on its pre-pandemic innovations, such as extending the applications for its cancer-fighting Keytruda and carrying on with its work on a promising pipeline. The business estimates that its cardiovascular medications, which are presently in clinical testing, might eventually provide $10 billion in annual sales. However, in the midst of the pandemic, these tales failed to pique the interest of investors. The stock has essentially traded sideways since late 2019 as a result. But if the struggle against COVID-19 becomes less urgent, the market’s attention might easily return to chances for longer-lasting drugs. There are a lot of them at Merck.
Beyond cardiovascular medications, the Food and Drug Administration recently granted the company’s anticoagulant MK-2060 a fast-track designation, and Merck is currently working with Orna Therapeutics on RNA-based therapeutics.
The stock hasn’t yet been ignited by these and other attempts. However, if the economy and market as a whole continue to deteriorate, Merck’s level of resilience (not to mention its present dividend yield of 3.1%) becomes highly tempting.
3. Stocks to Buy: Amazon
Amazon is on the list of stocks to buy. In 2022 the market has taken a beating, and Amazon (NASDAQ:AMZN) has equally been affected. In fact, given Amazon’s enormous market cap, a good number of this decline is attributed to it. The company’s already precariously thin profit margins on its e-commerce division have been significantly reduced by sky-high gas prices and rising personnel costs, and investors are pricing this pain in.
Currently, the fact that e-commerce hasn’t been Amazon’s primary source of income for a very long time is mostly being neglected. That distinction is Amazon Web Services (AWS). Even in the fiscal year of 2019 before the pandemic, two-thirds of Amazon’s operating profits came from AWS. Additionally, the cloud computing division’s bottom line has increased by about twofold since then, and more such growth is anticipated.
Amazon is now losing money when it sells tangible things online, but it doesn’t really matter anymore. The company discovered a new way to capitalize on the enormous quantity of traffic that its online marketplace attracts each day, and last year it made a staggering $31 billion in high-margin ad revenue. The top line is therefore anticipated to increase by 11% this year before picking up speed to climb by more than 15% the following year.
4. Stocks to Buy: Genuine Parts Company
Genuine Components Company (NYSE:GPC) is a retailer of car parts, on your list of stocks to buy this week. It’s a fascinating sector. While shoppers might put off a trip to the mall or a vacation if they feel their finances are tightening or their jobs are in peril, car repairs are almost never an option. The demand for automobile parts was unaffected even by the pandemic.
Genuine Parts Company (better known as NAPA Auto Parts) was able to increase its top line by 14% in 2021. Despite such a difficult period, operating profitability held steady as well. This year, sales are expected to increase by 14%, which will once more boost earnings to a comparable level. It proves that the majority of buyers can’t wait for their cars to be repaired.
The real kicker: Genuine Parts Company currently distributes a 2.3% dividend. For many years, it has increased its quarterly dividend payment, which it has done for the past 66 years.
Featured Image- Megapixl @ Michaelvi
Author Jowi Kwasu