Stocks finished last week mixed following the release of data that showed consumer inflation continued to ease in November. The Dow gained 0.9%. But the S&P 500 lost 0.2%, and the Nasdaq sank 1.9% as concerns about prolonged Fed rate hikes and the possibility of a recession in 2023 weighed heavily on investor sentiment.
The stock market is wrapping up its worst year in decades. But every cloud has its silver lining. Eventually, every bear market throughout history has represented an opportunity for patient investors looking to pick up shares in desirable names at bargain prices. The question isn’t “if” you should be looking for stocks to buy, but which stocks to buy. This list will cover three tickers to consider in the holiday-shortened week ahead.
As price increases slow down, consumers may spend more, providing a boost to some battered consumer discretionary names. Amazon (AMZN) tops our list of stocks to consider on peaking inflation as its share price has been nearly cut in half this year on higher inflation and rising rates.
Amazon is by far the world’s largest e-commerce company and, in 2021, surpassed Walmart as the world’s largest retailer outside of China. Without a direct competitor in the U.S., Amazon has experienced rapid growth through its third-party marketplace. The company operates 110 fulfillment centers worldwide, with 110 in the U.S.
Amazon’s business model has built-in advantages like its subscription service, Prime, and streaming platform. The service currently has more than 200 million subscribers globally and 163.5 million in the U.S. That figure is expected to continue to expand at a steady pace. According to a report by Statista, U.S. Prime members are expected to reach more than 176.5 million by 2025.
The e-commerce market may continue to suffer in the coming months amid recession fears. Nevertheless, the $9 trillion industry is expected to expand at a CAGR of 14.7% for at least the next four years. Considering the online shopping behemoth held five times the market share of its closest rival, Walmart. Its 38% leading market share means it will likely gain the most considerable advantage from the market’s growth.
Even though the tech sector, in particular, has been hit this year, Citi and Goldman Sachs both recently named the tech titan as one of their top picks for 2023, echoing the sentiment of many of Wall Street’s pros. Of 53 analysts offering recommendations for AMZN, 48 call it a Buy, and 4 call it a Hold. There are no Sell recommendations for the stock. A median price target of $136 represents a 46% upside from Friday’s closing price.
With shipping rates down from record levels, it’s unsurprising that many shipping stocks have been whacked hard this year, creating opportunity for investors looking for dividend stocks. According to the International Chamber of Shipping, 90% of global trade passes through the maritime shipping industry. This is a very volatile sector, but it’s essential to the world’s supply chain.
Anyone who has kept tabs on the global supply chain and shipping saga that’s been unfolding since the outbreak of covid is probably familiar with Genco Shipping (GNK). The company owns a fleet of 44 ships it leases for dry bulk transportation of goods like grain, coal, and iron ore. The going rate to rent one of Genco’s ships is no less than $27,000 per day, which provides some solid cash flow that the company uses to reward its shareholders.
Dry bulk shipping rates, along with GNK’s share price, have fallen in recent months. Still, as China recovers from recent lockdowns and seasonal demand is expected to be strong, it’s hard to see the pullback in share price as anything less than an opportunistic bargain. This is a very volatile sector, but it’s essential to the world’s supply chain.
GNK’s share price is up 6% over the past month. Although the company missed consensus EPS and revenue estimates in the third quarter, it remained consistent with its previously outlined value strategy. The company’s prudent cargo coverage in Q2 resulted in significant benchmark freight outperformance in Q3, allowing Genco to pass the savings onto its investors via a 56% quarterly dividend increase on a sequential basis. Over the last four quarters, the company has declared dividends of $2.74 per share, delivering on its commitment to return substantial capital to shareholders. GNK currently pays a 20% dividend yield.
Snowflake provides cloud-based ways for companies to better utilize their data over the internet. The company offers cloud-based data storage and analytics, generally termed “data-as-a-service.” Snowflake’s platform offers Data Cloud, an entire ecosystem that enables customers to consolidate and share data. They also provide a tailored version of their Data Cloud, explicitly aimed at the media and advertising industry.
Although Snowflake trades at a premium, it has the qualities investors look for in a potentially parabolic stock. The company provides customers with crucial tech infrastructure, and its share price has plunged 65% from its peak last year.
For the third quarter, Snowflake’s revenue surged 67% year over year in Q3, driven by the healthy growth in its customer base and increased customer spending. The company reported a 34% year-over-year spike in the total number of customers. Moreover, the number of customers who have spent more than $1 million on Snowflake products over the past year nearly doubled. The company’s pipeline of contracted future revenue that is yet to be realized also shot up 66% year over year to $3 billion. Snowflake should sustain such impressive growth, with addressable market management claims could be worth $248 billion by 2026.
Analysts are expecting 295% annual revenue growth over the next five years. However, investors will have to pay a rich 25 times sales to own SNOW shares. But that represents a considerable discount from last year’s price-to-sales-ratio of 97. Investors searching for high-growth-potential stocks may want to give SNOW some thought.
