Some investors believe that the current technology boom and artificial intelligence will power a gigantic bull market in the months and years to come. Other analysts are warning of high valuations and a potential bubble if markets get much more euphoric. In any case, it can be tricky trying to value high-flying stocks such as Nvidia Corp. (ticker: NVDA) in the current volatility.
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Outside of the momentum stocks, however, there are still plenty of clear bargains to be had in the market. Across numerous industries, there are firms that are still in value territory and can deliver compelling gains from their current prices. These are five of the best stocks to buy now:
— Discover Financial Services (ticker: DFS)
— NextEra Energy Inc. (NEE)
— Starbucks Corp. (SBUX)
— Public Storage (PSA)
— Keurig Dr. Pepper Inc. (KDP)
Discover Financial Services (DFS)
Capital One Financial Corp. (COF
) shocked the financial world in February. The credit card lender announced plans to acquire Discover in a gigantic $35.3 billion deal. It’s not clear if the deal will get regulatory approval. If it does, it should be a stroke of genius on Capital One’s part.
Capital One is one of the nation’s largest credit card issuers, while Discover owns a major payments network and brand. The two, combined, will have much greater marketing muscle and distribution. Capital One can issue tons of new Discover-branded cards through its channels, while Discover will be able to get more merchants to sign up for its payments system. In short, this could be the biggest competitive disruption to Visa Inc. (V) and Mastercard Inc. (MA) in a long time, and the combined Capital One/Discover could be a major financial sector winner. Discover shares are uniquely interesting here, as they should enjoy the buyout premium from Capital One and then will convert into COF stock once the acquisition closes.
NextEra Energy Inc. (NEE)
NextEra Energy is one of America’s largest utility companies. It operates Florida Power & Light, which has benefited from the fast-growing Florida economy. FP&L operates more than 33,000 megawatts of generating capacity, which serves roughly 12 million people across the state.
Where things get really interesting is with NextEra’s renewable energy business. NextEra has invested heavily in renewable assets such as wind and utility-grade solar. Because it invested early, it secured some of the best sites and deals for developing these renewable assets. Renewable power assets fell out of favor in 2023, however, and NEE stock was slammed amid the pessimism. While NextEra shares were typically high-flying, after the steep correction, they now sell at a much more reasonable 16 times forward earnings.
[READ: 10 of the Best Stocks to Buy for 2024]
Starbucks Corp. (SBUX)
While the U.S. economy continues to post strong numbers, there are cracks in consumer spending. Several years of high inflation have caused many people to start tightening their belts. Credit metrics are starting to worsen, indicating that U.S. consumers are under strain. And in international markets where Starbucks has invested heavily — such as China — economic conditions are sluggish.
All this has added up to a real grind for Starbucks over the past year, with shares falling about 7% over that period. That’s a dramatic level of underperformance against the broader stock market. But investors shouldn’t lose sight of the bigger picture. Starbucks is an affordable luxury that consumers love; the firm’s sales have held up during previous economic dips. In addition, Starbucks has a massive growth runway left in emerging markets such as Southeast Asia and Latin America.
Public Storage (PSA)
Public Storage is the leading real estate investment trust, or REIT, within the self-storage sector. Commercial real estate has been under fire over the past couple of years. Higher interest rates and pandemic-linked disruptions have had a brutal impact on assets such as offices and shopping malls.
Self-storage should be safe from those trends, however. In fact, self-storage tends to be quite immune to the economic cycle. That’s because when the economy turns downward, it often causes people to move for job opportunities, which is a common reason to rent a self-storage unit.
Investors dumped most REITs, including Public Storage, as interest rates soared. PSA shares are still down about 30% from their all-time high. This puts shares at just 16.6 times forward funds from operations while offering a 4.3% forward dividend yield as of Feb. 28.
Keurig Dr. Pepper Inc. (KDP)
Keurig Dr. Pepper was formed in 2018 with the merger of the Keurig coffee business with Dr. Pepper. In addition to Dr. Pepper, the beverage operations also include Canada Dry, Snapple, 7UP and Vita Coco.
While Keurig Dr. Pepper is not nearly as large as the other two American soft drink giants, it has carved out a solid niche for itself; the company generates nearly $15 billion in annual sales. In certain regional markets, such as Texas, Dr. Pepper has a particularly strong market position.
KDP stock has gotten caught up in the broader sell-off across the consumer staples space. Shares are down roughly 23% from their 2022 highs. This makes for a buying opportunity. KDP shares are now selling for less than 16 times forward earnings and offer a 2.9% dividend yield as well.
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5 of the Best Stocks to Buy Now originally appeared on usnews.com
Update 02/29/24: This story was published at an earlier date and has been updated with new information.
