It didn’t make many big news channels, but back on January 1, 2023, the government released $391 billion.The destination: a select group of companies whose stocks could see double-digit gains this year.
Stocks to Buy Now
5 Best Stocks to Buy Now for 2023
The stock market is way down over the past year – the NASDAQ Composite is off nearly 30% and the S&P 500 is down almost 20% as of early December 2022.
The Federal Reserve continues to raise interest rates into a weakening stock market and softening economy. Fed Chair Jerome Powell confirmed the pace of interest rate hikes is set to slow in 2023, but that’s a far cry from stopping the hikes or loosening policy.
The Fed means to stop inflation in any way it can, and if that means hurling the United States (and, let’s face it, most of the world) into a recession, then that’s just what it will do.
Investors feel like their backs are against the wall, and for good reason; we’re already in a bear market in the United States… and the recession technically hasn’t started yet.
But going to cash would be a mistake – if only because that cash will lose nearly 10% of its value every year. Putting your faith in the Big Tech darlings that led the bull market would be an even bigger mistake. Those companies are in an increasingly deep hole as the interest rates they pay on their insane debt becomes lethal.
The smart move to make for 2023 is still in the stock market – not at the companies that make headlines, but the companies that make the things none of us can live without. The companies that make the “stuff” society needs for daily life.
These kinds of companies historically thrive during even the harshest recessions because none of us can live without what they do or make.
I’m talking about energy, semiconductors, and pharma. I’m talking about companies that pay big dividends and those that actually thrive amid runaway inflation.
Here’s what we recommend buying now to boost your wealth during what’s coming…
The Five Best Recession-Proof Stocks to Buy for 2023
Best Recession-Proof Stock to Buy Now: McKesson Corp (NYSE: MCK)
Plenty of companies are down 50% from their highs, but McKesson Corp. (NYSE: MCK) stock will end 2022 up roughly 50% - and it could continue to rally through 2023.
In late 2022, McKesson announced an agreement to extend its partnership with CVS Health to “distribute pharmaceuticals to mail order and specialty pharmacies, retail pharmacies and distribution centers through June 2027.”
Whether the economy is boom or bust, people need medical care, and McKesson is responsible for a lot of it; they deliver around 33% of pharmaceuticals used on this continent. Pharmaceuticals, health tech, and medical supplies. In fact, according to Fortune, McKesson is the seventh-largest corporate in the United States.
The company was always a big player in vaccine distribution, but it became the government’s top distributor for COVID-19 vaccines, delivering around 1 billion doses.
None of this is lost on smart investors like Warren Buffett and Ray Dalio. Buffett owns close to $1 billion worth of MCK as of mid-2022, while Dalio’s Bridgewater owns nearly $80 million worth of shares.
They’re onto something: We suggest doing the same. Buy McKesson Corp (NYSE: MCK) at market and hold throughout 2023.
Best Energy Stock to Buy Now: Kinder Morgan Inc. (NYSE: KMI)
Energy continues to be one of the best plays in 2023. While the global economy, pressured by recessions and impending recessions is slowing down, the world still needs more and more oil. China, which just abandoned its economically restrictive “zero COVID” policy, is expected to need another 3.3 million barrels of crude per day as it revs back up to baseline. In the United States, President Biden has effectively set a floor for oil prices stating that, if prices fall below a $72 target, it will replenish its Strategic Petroleum Reserve.
That’s why we like Kinder Morgan Inc. (NYSE: KMI). The company operates the largest volume of diesel storage in the United States and is poised for a significant level of upside should the President announce strategic reserve requirements for exporters and U.S. refineries.
As one of the largest midstream energy companies in North America, they’re seeing strong operating fundamentals. Distributable cash flow grew by 11% year over year to over $1 billion and its backlog of lower carbon energy services, such as renewable natural gas, are seeing strong demand.
With a high dividend yield of 6.4% and trading below its pre-pandemic cash flow ratio, KMI stock should return an outsized profit versus the broader market – even if the country slides into recession.
So, investors should: Buy KMI at market and hold for at least 12 months to capitalize on rising energy demand.
Best Tech Stock to Buy Now: NXP Semiconductors NV (NASDAQ: NXPI)
Netherlands-based NXP Semiconductors NV (NASDAQ: NXPI) is one of the best-positioned semiconductor companies on the market because they’ve been so prudent in watching the current demand environment. NXP supplies chips and technology to the automotive sector, all kinds of light and heavy industry, “Internet of Things” businesses, and telecommunications, just to name a few.
They’ve enjoyed growth in most of those categories, especially automotive, which was up 24% year-over-year in its third quarter 2022. That division brings NXP more than half its revenue. While NXP did not release 2023 guidance, there is clearly demand for its products. In its main end markets, automotive and core industrial, its “non-cancellable non-returnable order book continues to surpass 2023 supply capability.”
Given the company’s current demand strength and its stock price, it could be in a strong position to rally in 2023. NXP currently trades at a P/E of 16.91 and offers a 1.99% dividend. The stock is trading at a discount to the Nasdaq which is at a 23.67 P/E ratio, giving the company an attractive discount to its home index.
So: Buy NXPI stock at market and hold for the next 12 months as semiconductor demand accelerates.
Best Dividend Stock to Buy Now: Dorchester Minerals LP (NASDAQ: DMLP)
Stock investing isn’t all about buying low and selling high for a profit – although that is the foundation of all good investing. In times like these, it’s important to seek out passive income to supplement what’s already under so much strain. The key to securing financial stability in a rocky market is to seek out quality companies with strong financials that will pay you handsomely to own their stock.
Dividends, as they are known in the investing world, are often looked down on or ignored. Not every company offers a dividend, but when they do, it’s usually a pittance. The average payout – at least for companies on the S&P 500 index – is between 2%- 5% of the company’s share price… pennies on the dollar.
But you can do better than that – much better than that, in a lot of cases. We’ve found stocks and ETFs that yield dividends better than double the average, around 10%.
Dorchester Minerals LP (NASDAQ: DMLP) is one.
Don’t let the name fool you; Dorchester isn’t a mining company. It specializes in oil and gas land royalties, meaning that it owns fossil fuel interests in 574 countries and 25 states which it leases to interested drilling companies.
It’s helpful to think of Dorchester as an energy landlord. With demand for fuel as high as ever and no appropriate infrastructure to meet it, this company is in a good position to profit as oil and gas producers expand drilling operations in the rich Bakken and Permian shale basins.
Dorchester enjoys heart-stopping profit margins. With $116 million in revenue and $94 million in profits in the trailing 12 months, this company has scored an 81% profit margin. That is almost unheard of. With that much money heading to the bank, this company has $88 million in cash – more than enough money on hand to deal with its debts (a mere $2 million) and plenty to distribute to its shareholders. And, as a limited partnership, it must by law pass those profits on to its shareholders.
At the time of writing, Dorchester Minerals L P has an 10.24% dividend yield against an official inflation rate of 7.1%.
Our recommendation then: Buy DMLP at market and hold for the next 12 months to collect increasing amounts of passive income.
Best Inflation Protection Stock to Buy Now: W.P. Carey Inc. (NYSE: WPC)
Inflation continues to persist – and if it seems like the Federal Reserve and the government don’t have a handle on it… it’s because they don’t.
Inflation is running near 40-year highs in the United States right now, and it could very well get worse from here. In fact, it probably will. But you don’t have to take it lying down.
Now, conventional wisdom holds that you should go to cash and get out of Dodge, but that’s exactly the wrong move to make. Why? The inevitable money-destroying nature of inflation. If you move into cash, you’re likely to lose at least 38% of your spending power over the next years.
Every $500,000 you have will be cut to $310,000… every $100,000 you have will be slashed to $62,000… and on and on. You might as well set your money on fire for all the good it’ll do. And that’s more or less what will happen if you follow the conventional wisdom.
W.P. Carey Inc. (NYSE: WPC) bucks that conventional “wisdom” because it looks more attractive the hotter inflation gets.
Based in New York, W. P. Carey is a REIT (real estate investment trust) that specializes in investing in net lease commercial real estate – primarily in the U.S. and Northern and Western Europe.
The company ranks among the largest net lease REITs with an enterprise value of approximately $22 billion and a diversified portfolio of operationally critical commercial real estate that includes 1,336 net lease properties covering approximately 157 million square feet as of March 31, 2022. For nearly five decades, they’ve invested in high-quality single-tenant industrial, warehouse, office, retail, and self-storage properties subject to long-term net leases with built-in rent escalators.
What makes W. P. Carey really stand out to me is that approximately 60% of its rent is indexed to inflation. That makes it one of the best direct plays on inflation.
Historically, the company has generated its revenue by way of its pure-play equity REIT operations – as well as an asset management business. The latter – its asset management business- has been generating reduced fees, and the company is in the process of liquidating the remainder of its final asset management fund by the end of this year.
In addition to unwinding its sluggish asset management business, the company is in the process of increasing its concentration into industrial/warehouse properties – away from office properties.
That’s a really shrewd move because industrial production and warehousing have to be performed on-site, but office work can be done sitting at your kitchen counter – as we learned from the COVID pandemic. This REIT’s top-flight management have boosted year-on-year quarterly revenue by 204% and they pay a forward dividend yield of 5.05%.
The bottom line: About 60% of W. P. Carey’s rental revenue is indexed to inflation, which makes it a direct play and a no-brainer.
How to play it: But WPC at market, and pocket a 5% dividend over the next year.
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