Whether you want defense or offense, these stocks deliver.
In 2022, it has definitely been a “risk off” year as most of the worst-performing companies are in aggressive corners of the market like technology and top performers include slow-and-steady energy infrastructure companies, utilities and consumer stocks. But as the old saying goes, past performance is no guarantee of future returns. So as we close out the year and look to what could perhaps be a new and different environment in 2023, it may be worthwhile to reassess your holdings and decide which strategy you want to rely on most — growth or value. Regardless of how you decide, the following list offers a few options for everyone.
Growth Stock – Sigma Lithium Corp. (ticker: SGML)
You might think that even growth stocks are having a tough time in 2022. Well, Sigma is perhaps the biggest proof to the contrary, with an amazing year-to-date gain of more than 200%! That’s because SGML is a lithium miner at the center of an important trend: electric vehicles. Lithium is a critical part of high-tech batteries that go into EVs, so there’s huge demand right now. Furthermore, because of persistent inflationary pressures we’re seeing lithium prices march steadily higher and drive even bigger Sigma profits. In August, the $3.3 billion Brazilian mining company announced it would be doubling its near-term production of battery-grade lithium and has a bright outlook even as we close out an admittedly challenging year elsewhere on Wall Street.
Value Stock – Walgreens Boots Alliance Inc. (WBA)
Walgreens is a quintessential value play for several reasons. It boasts a generous 5.3% dividend, and has a recession-proof model selling consumer staples and prescription drugs. It’s also trading at a significant discount right now, with the company valued at just 25% of the total revenue it generates. Wall Street is discounting this stock because it’s in the middle of a multiyear strategic initiative to emphasize higher operating margins, customer loyalty and other key operational metrics. It’s early innings, but the approach appears like it could be paying off. At the end of the WBA fiscal year in August, the company said it topped $2 billion in annual cost savings a full year ahead of schedule. Shares have underperformed the S&P 500 this year, but there could be real value here for investors who are patient enough to buy and hold.
Growth stock – Rambus Inc. (RMBS)
Amid a global semiconductor shortage, Rambus stands out as one of the best stocks in the sector thanks to a positive year-to-date return even as other technology stocks have melted down in 2022. A midsized chipmaker, RMBS is small and specialized — and after red-hot third-quarter earnings at the end of October, including beats on the top and bottom line and record quarterly sales, the stock just hit a new 52-week high. Rambus is also building for the future with its recent acquisition of data center hardware specialist Hardent, and has a bright outlook even as many other technology companies are fighting against a continued slump as we close out the year.
Value stock – Medical Properties Trust Inc. (MPW)
Medical Properties Trust is a roughly $7 billion “net lease” hospital owner that controls about 430 facilities across nine countries. It is important to note this is a real estate firm, however, not a health care provider. Rather, it signs long-term deals with hospital operators to provide services — as well as cover the taxes, insurance and upkeep on this portfolio of properties. That’s all on top of rent, too, which makes for an incredibly reliable business model. MPW’s 29-cent quarterly dividend adds up to a huge 10% yield right now, in part because one of its main tenants just declared bankruptcy in 2022 and Wall Street turned decidedly bearish. However, the company has increased its dividend for eight consecutive years and has a lot of underlying value that could drive long-term returns.
Growth stock — Apple Inc. (AAPL)
With a market value of about $2.2 trillion, Apple is hard to ignore as one of the best growth opportunities for next year if and when Big Tech gets back on track. Sure, the stock has slumped about 20% this year, but it has outperformed other large-cap peers like Microsoft Corp. (MSFT) and Amazon.com Inc. (AMZN) that are down about 30% and 40%, respectively, in 2022. Apple has continued to grow its top line despite consumer challenges, market saturation and supply chain issues across the year. And furthermore, it continues to move beyond hardware with more than one-fifth of total revenue now coming from its services arm that includes subscription-based plans. In September, AAPL ended its fiscal 2022 with more than 900 million subscribers across these services, which is sure to fuel future growth on its best-in-class platforms.
Value Stock – Kraft Heinz Co. (KHC)
Kraft Heinz is an entrenched $45 billion consumer stock with one of the best product portfolios in the world. If you’re worried about big-picture economic trends, then consider the fact that grocery shoppers will continue to load up on Heinz Ketchup, Kraft Macaroni and Cheese and other similar items even as they cut back on travel or eating out. With a yield that’s more than twice that of the S&P 500 index and a roughly flat return year to date as other stocks are down 15% or more, this is a stock that clearly has value and staying power. It just posted great third-quarter earnings that topped expectations on revenue and profits a few weeks back, thanks to the fact it can raise prices on high-quality brands to offset inflationary pressures. Not every company can do that, but a brand powerhouse like Heinz can.
Growth Stock – McDonald’s Corp. (MCD)
You may not think of the Golden Arches as the kind of company you should be chasing right now given the shaky consumer situation and the pressures of rising prices for ingredients. But McDonald’s just posted very impressive third-quarter results, marking its ninth consecutive quarter of sales growth. This stock adapted and evolved after the pandemic, and a strong management strategy has allowed it to sidestep the current inflationary challenges. What’s more, as the restaurant chain has historically been reliant on cost-conscious diners, a bit of belt-tightening may actually benefit MCD stock if things stay uncertain for the next several months. Shares are up slightly year to date in 2022 and are trading near all-time highs.
Value Stock – Kellogg Co. (K)
Though best known for its breakfast cereals, consumer giant Kellogg also is behind brands including Eggo waffles, MorningStar Farms meatless entrees, Pringles chips and more. After a few years of declining or flat sales, the maker of iconic brands like Rice Krispies and Pop Tarts embarked on a mission to reinvigorate the brand back in 2019 and that approach has paid off big time. Kellogg supports a generous 59-cent quarterly dividend that adds up to a yield north of 3%, and based on 17 consecutive years of dividend increases there is a great chance those paydays will only move higher in the future. Kellogg has delivered double-digit gains year to date amid the current risk-off environment, and continues to look like a solid value play as we close out the year.
4 growth stocks, 4 value stocks to buy now:
— Growth Stock – Sigma Lithium Corp. (SGML)
— Value Stock – Walgreens Boots Alliance Inc. (WBA)
— Growth stock – Rambus Inc. (RMBS)
— Value stock – Medical Properties Trust Inc. (MPW)
— Growth stock — Apple Inc. (AAPL)
— Value Stock – Kraft Heinz Co. (KHC)
— Growth Stock – McDonald’s Corp. (MCD)
— Value Stock – Kellogg Co. (K)
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4 Growth Stocks, 4 Value Stocks to Buy Now originally appeared on usnews.com
Update 11/10/22: This story was previously published at an earlier date and has been updated with new information.
