As the world pushes through the second half of 2022, the financial market continues to navigate through a series of macroeconomic stresses and challenges. Although this does make investment a generally riskier venture, it does not stop financial traders from seeking out the next golden opportunity. With the state of the markets this complicated, it really comes as no surprise considering that investors are presently struggling to identify the best stocks to buy as of today, during August 2022, and which they should steer clear from. To make matters worse, the recent bear market spectacle has most stocks, even market giants, trading significantly below their prices of a year ago. This further adds difficulty in distinguishing winners from losers.
In this spirit, we bring forth a list that covers five optimal stocks that you could consider adding to your portfolio for August 2022. These stock recommendations are ideal considering the present market conditions and cover a range of different industries of the economy, whilst offering unique strengths in terms of their investment value.
Up first we present the software champion, Palantir Technologies Inc, (NYSE: PLTR). Palantir Technologies is most well-known for providing high-capability software tools and platforms to American intelligence agencies, whilst assisting in counterterrorism operations. Palantir holds a very dominant position, as one of the government’s favorite contractors. Its services are used by critical US security agencies which include FBI, CIA, NSA, and DOD. Similarly, its software remains critical to the functioning of the UK’s National Health Services, and the US-based Food and Drug Administration. This crucial role in so many critical domains makes the stock largely recession-proof. This is especially since 55% of its clients in 2021 consisted of government agencies.
The market typically perceives as being a controversial stock, primarily due to it still being in its pre-profit phase. For this reason, the stock took a severe beating when the market entered into a bear category. In the eight months that followed October 2021, PLTR had plummeted by a shocking 80%. Since May of 2022, however, PLTR has been observed to have entered its recovery mode. There is no telling how high this stock will fly by August, indicating a clear buy opportunity
Buy the Dip
The sharp drop Palantir experienced is part of what makes the stock so attractive. The plummet does not match up to the strong growth prospects inherent to the company, which means a price correction is imminent. Those that identify this early on are likely to benefit quite substantially. The most obvious indicator for this is the fact that PLTR fell 55% in the last 12 months, yet its recent quarterly revenue figure indicates an over 30% year-on-year growth. Moreover, during the same period, its overall customer count grew by an impressive 86%.
Palantir is a high-growth company, which is why its unprofitability is not a major concern as of yet. Once the company begins turning in profits, the rise will be exceptional. Market panic has made the stock, perhaps the best investment opportunity for upcoming times.
Lithia Motors Inc
Next up on our list is the Oregon-based automotive dealership group, Lithia Motors Inc (NYSE: LAD). Lithia Motors is yet another example of a high promise stock, the price of which the market drove down in its panic-induced frenzy.
Lithia is a company that is on an epic growth trajectory, as indicated by both its financial rise as well as its aggressive acquisition strategy.
The company has embarked on its acquisition-driven expansion since 2021 when it had invested over $2 billion in the purchase of 77 retail stores. This year, the company further added nine Lehman Auto World stores, along with two Esserman International stores in Miami, Florida. This aggressive growth strategy is part of Lithia’s strategic goal of attaining $50 billion in annual revenue by 2025.
Moreover, Lithia Motors’ financial results further indicate it is well on its trajectory towards its lofty target. In just the first quarter of 2022, the company reported revenues of almost $7 billion, which came at a 55% increase since the prior year.
For a company climbing at such a rapid and exponential rate, demand for its stock should be surging. However, this is not the case. LAD’s price fell by over 21% in the last 12 months, despite such strong fundamentals. The valuation of the stock alone makes this a screaming buy. Those that buy and hold LAD for August can expect a rocketing growth surge as panic dissipates from the market.
Alexandria Real Estate Equities
Up next, we present the S&P500 urban office REIT, Alexandria Real Estate Equities, Inc., (NYSE: ARE). Given the present market circumstances, a REIT is almost a must-have for your August 2022 portfolio. ARE in particular is a stock that is well-positioned to climb throughout the rest of 2022, and potentially beyond that too.
Alexandria Real Estate is a REIT that leases its urban office real estate to agricultural tech and life science tenants. At present, its portfolio consists of 42 million square feet of rentable space, in some of the most high-value real estate areas of the United States. It holds the bulk of its properties in New York, the Sans Francisco Bay Area, San Diego, and North Carolina. Moreover, at least 50% of the REIT’s rental income comes from either high market capitalized publicly trading companies or those that are investment-graded. This points to the strength of ARE’s balance sheet, as well as the quality of its tenants. Moreover, in a market defined by inflationary price hikes and the fears of a recession, an asset-backed stock such as ARE is probably the best route to take.
Another aspect inherent to ARE that makes it quite an attractive buy is its dividend structure. The REIT pays out 57% of earnings as dividends, as would typically be expected of a large real estate player. Its dividend yield amounts to an impressive 3.2%, and the dividend payment has been consecutively increased for the last 12 years.
ARE boasts extremely stable earnings and robust overall fundamentals. Considering its price has fallen by 22% in the last year, now seems like a great time to buy this stock for one’s investment portfolio.
Leggett & Platt
The fourth stock on our list is that of the home furnishing industry’s giant, Leggett & Platt (NYSE: LEG). In addition to furniture products, LEG also plays a crucial role in vehicle components, which gives it a diversified product mix. Some of its customers include Walmart, Home Depot, Ford, and General Motors. The company’s aerospace and hydraulic cylinder segments have each been seeing steady growth in recent years.
In addition to its product diversity, Leggett & Platt is also diversified in a geographic sense. Its primary market is the United States, yet it also holds a significant presence in Europe, Mexico, Canada, as well as in China. Consumer markets typically stand largely exposed to macroeconomic stresses and wider volatilities, yet LEG remains safe owing to its strategic market diversification. It is partly due to this reason the company had maintained its dividend king status even during the worst economic circumstances, such as the Covid-19 outbreak.
LEG achieves growth both organically and through strategic acquisitions. The last five years saw the company’s revenue climb by a compound annual growth rate of 6.5%. Moreover, LEG’s dividend payments not only yield an impressive 4.6% at present but have also been consistently raised without fail for the last 51 years. The stock represents stability and is precisely what an investment portfolio should buy in August 2022, and hold throughout the remainder of the year.
The final stock on our list, yet far from being the least is the global energy and petrochemical giant, Shell plc (NYSE: SHEL). Petrochemical companies presently find themselves in the middle of an identity crisis, with the world in a transition mode towards clean energy. Last year, the largest EU pension fund, ABP dumped about $17.4 billion worth of fossil fuel assets, owing to the unsustainability of the industry amidst a worsening climate crisis.
In the wake of this, Shell has taken a revolutionary approach and is positioning itself to lead the global green energy empire of the future. It is heavily investing in restructuring its business model, whilst aiming to operate 500,000 EV charge stations by the next three years. This exposes the company to a booming EV market which could bring in growth as high as 17.5% per annum. Even more impressive is Shell’s plans to develop Europe’s largest hydrogen plant, in the wake of the continent’s energy security program. This sustainable energy move could bring in the company an annual hypergrowth rate of 54%, continuing through to 2030.
Shell is an extremely financially successful enterprise that has the means to transform itself for the future. Its balance sheet reports almost $40 billion in working capital, which could see the company soar as a green energy champion, in a transition that could see fossil fuel players dying out. Moreover, Shell also enjoys a century-old globally renowned brand, which is sure to give the giant a much-needed boost in its new ventures.
The long-term value of Shell remains extraordinary, which is why the stock stands as being too good to overlook. This growth potential makes the stock an immediate strong buy for August 2022.
2022 has proven largely tumultuous for those invested in the stock market. When stocks collectively entered into a bear category, even corporate giants felt the pinch. With supply chains continuing to face disruption as a result of the sanctions on Russa, investors are understandably concerned as to where the opportunity lies. The stocks mentioned in this article are each well suited to deliver gains, amidst the present circumstances, and are thus best stocks to buy as of today, August 2022 stock portfolio.