- Although the conservative approach is to heed the warning of the broader market meltdown, these ideas are going against the grain.
- Chefs’ Warehouse (CHEF): A likely beneficiary of the retail revenge and revenge traveling phenomena, CHEF is an intriguing name among stocks to buy.
- TreeHouse Foods (THS): A multinational food processing firm specializing in private labels, THS could continue rising higher due to its underlying essential business.
- Vita Coco (COCO): Maker of healthy coconut-infused water products, COCO has performed well as another essential goods play among stocks to buy.
- Campbell Soup (CPB): As consumer spending focuses on core essentials, CPB has become one of the best performing stocks to buy.
- Masonite International (DOOR): A beneficiary of the housing boom, DOOR intrigues as one of the stocks to buy, although investors should recognize the risks.
- Camping World (CWH): A highly risky name among stocks to buy, CWH currently enjoys relevance as airfare costs have spiked.
- Rent-A-Center (RCII): Possibly one of the recession-resistant stocks to buy, RCII theoretically allows customers flexibility under difficult circumstances.
- Dillard’s (DDS): A surprisingly robust name among stocks to buy, DDS has killed it so far this year as another beneficiary of retail revenge.
- Sonic Automotive (SAH): One of my best ideas among stocks to buy, SAH isn’t doing well overall this year, but has recently gained momentum for cynical reasons.
- Olin (OLN): A stout name among stocks to buy, Olin might continue to rise as gun control fears are spiking due to tragic firearms-related incidents.
Since the closing of the Friday the 13th session — which ironically saw robust gains across the major indices — investors had much news to digest, most of it being unpleasant. As a recent Reuters article mentioned, myriad headwinds have created a dour environment, particularly the vexingly high inflation rate. Still, those who are seeking viable stocks to buy are surprisingly not out of luck.
For one thing, this downturn in the market is unlike other bearish cycles in that the coronavirus pandemic caused some bifurcation in the economy. In other words, some sectors really took a beating while others — like hydrocarbon energy firms — have benefitted due in part to cynical mechanisms. Still, some stocks to buy increased in value because of their sudden relevance to current dynamics.
From an increased focus on necessities to people simply yearning for normalcy after two years of lockdowns and Covid-19 mitigation measures, there are quite a few stocks to buy that have recently gained momentum. And no, none of these ideas involve oil firms. You might even be shocked at some of these businesses.
Here are 10 stocks to buy that are gaining momentum in the market:
|The Chefs’ Warehouse, Inc.
|TreeHouse Foods, Inc.
|The Vita Coco Company, Inc.
|Campbell Soup Company
|Masonite International Corporation
|Camping World Holdings, Inc.
|Sonic Automotive, Inc.
Stocks to Buy: Chefs’ Warehouse (CHEF)
A gourmet foods and restaurant supplies provider Chefs’ Warehouse (NASDAQ:CHEF), was not what I had in mind regarding stocks to buy that were moving well against the grain of volatility. But sure enough, over the trailing month since the close of the May 13 session, CHEF has gained over 10%. What’s more, on a year-to-date basis, it’s up 11.3%.
In my view, Chefs’ Warehouse is a downwind beneficiary of the retail revenge and revenge traveling phenomena. With Covid-19 lockdowns becoming a thing of the past, consumers are eager to get out of the house and reclaim their normal activities — including going on that vacation that was forcibly put on the backburner.
Financially, the company is recovering well from the global health crisis, with revenue of $512 million in the first quarter (Q1) of 2022 up nearly 83% against the year-ago quarter.
TreeHouse Foods (THS)
A multinational food processing firm, TreeHouse Foods (NYSE:THS), is perhaps best known for making private label food and beverages across North America and Italy for retail grocery, food services and industrial customers. Because of its core business, inflation has certainly impacted TreeHouse. However, it can get around this problem as it’s also an essential business.
In some ways, inflation can actually benefit THS stock. With the cost of living remaining grossly elevated, more consumers will shift their spending to the grocery aisle as opposed to the restaurant table. Further, the company enjoys international exposure with its business in Italy, a country well known for its love of culinary pursuits.
In Q1 of this year, TreeHouse generated $1.14 billion in sales, up nearly 8% year-over-year. So far, investors like what they’re seeing with THS jumping 13% in the trailing month, making it one of the best-performing stocks to buy during that period.
Stocks to Buy: Vita Coco (COCO)
A manufacturer of coconut-infused water products, Vita Coco (NASDAQ:COCO) is a popular brand among the health conscious. Admittedly, COCO doesn’t initially appear to be one of the stocks to buy since it hasn’t had the best debut following its initial public offering. Per Google Finance, on a lifetime basis, COCO has dropped almost 26%.
Still, those who have a longer-term framework may want to consider advantaging the discount. As multiple publications have demonstrated, millennials and Generation Z gravitate toward healthier beverages. While they don’t eschew soft drinks altogether, they are more mindful of sugar intake than older generations.
Such a backdrop is a tailwind for COCO, making it one of the more intriguing stocks to buy. The market agrees, with shares gaining 6% during the trailing month despite wicked volatility in the benchmark equity indices.
Campbell Soup (CPB)
Normally, Campbell Soup (NYSE:CPB) would be considered a boring idea among stocks to buy in a bull market. While the jury’s still out, mounting evidence suggests that we’re about to enter a bear market — or at the very least a bearish phase. With that in mind, CPB suddenly looks a lot more attractive.
Wall Street also seems to think so, with the equity unit driving up 6.8% over the trailing month. When you broaden the comparison to the year so far, CPB impresses with a performance just under 13.6% up. Not including oil stocks to buy, CPB is one of the best names out there in the wild market today. Plus, the company has a respectable 2.9% dividend yield.
But unlike the fossil fuel industry, which is vulnerable to a collapse of consumer demand, Campbell Soup’s combination of necessity and accessibility makes it more recession resistant.
Stocks to Buy: Masonite International (DOOR)
Moving away from food-related stocks to buy, we arrive at Masonite International (NYSE:DOOR), one of the downwind beneficiaries of the new normal; specifically, the ridiculous housing boom. Masonite manufactures doors, hence the ticker symbol. It might come off as an odd business until you realize that the underlying element could enhance real estate values.
While sellers don’t have to do much in a market cycle that grossly favors them, any new additions could help jack up the price via a bidding war. Now, some portion of this catalyst may have died down because of the recent interest rate hikes along with signaled rate hikes down the road. But it’s possible that many new homeowners, having won their bidding wars, are looking to renovate.
Interestingly, DOOR is popular within the investment community, gaining 11.6% over the trailing month. If you can handle the risk — it is down 28% YTD — DOOR could work out as one of the contrarian stocks to buy.
Camping World (CWH)
If you truly want to ramp up the risk-to-reward profile for stocks to buy, Camping World (NYSE:CWH) may be to your liking. One of the best-performing equities during the early months of the Covid-19 pandemic, Camping World benefitted from Americans’ desire to vacation. However, the company’s core business of providing recreational vehicles helped keep those vacationers safe through social distancing.
Today, Covid-19 fears have generally faded, meaning that it’s no longer uncommon for people to enter business establishments sans masks. But another factor has now affected the travel industry — ridiculously high airfare. If that wasn’t bad enough, air rage has become an unfortunately recurring sight in the not-so-friendly skies.
Some folks might want to avoid the drama and hit the open road once again. Though CWH is down big so far this year, it has gained 7% in the trailing month, making it another possible candidate for contrarian stocks to buy.
Stocks to Buy: Rent-A-Center (RCII)
On paper, you can make the argument that Rent-A-Center (NASDAQ:RCII) is one of the recession-resistant stocks to buy. Yes, it’s involved in the retail sector, but here’s the thing: Rent-A-Center offers flexibility for its customers. For example, its website advertises approval for up to $5,000 in merchandise, providing use of furniture, appliances, electronics and computers without the commitment that a purchase entails.
Personally, I’m not entirely sure what the benefits are of renting such products, but I’m apparently in the minority. In 2021, the company generated revenue of $4.58 billion, up 63% year-over-year. Additionally, in Q1 2022, it posted sales of $1.12 billion, up 11.9% year-over-year. It would seem that many folks prefer renting especially during uncertain times.
RCII has also enticed Wall Street, with the security gaining 14% in the trailing month. However, be warned that it’s also down around 40% YTD.
One of the companies that enjoyed a complete reversal of fortune during the initial impact of the Covid-19 crisis, department store retailer Dillard’s (NYSE:DDS) suffered catastrophic damage. For a moment, all non-essential businesses were shuttered, leaving the discretionary retail industry reeling. But then, the subsequent retail revenge phenomenon helped drive up DDS stock.
The numbers are remarkable. Over the trailing month, DDS has gained 8.3% while on a year-to-date basis, it’s up 31.7%, making it one of the best-performing stocks to buy this year. Even better, the underlying company can justify its market premium through strong fundamentals, evidenced most recently by its blowout earnings report. The key takeaway is that Dillard’s earned $13.68 per share, well above the consensus estimate calling for $6.74.
Moving forward, Dillard’s might still be able to enjoy upside as the normalization of society may invite a return to the office. If so, people will be inspired to look their best, which would serve DDS well.
Stocks to Buy: Sonic Automotive (SAH)
When I was asked to contribute an idea for best stocks to buy for 2022, I went speculative — of course I did — and chose car dealership Sonic Automotive (NYSE:SAH). At the time, the market hadn’t totally melted down and war in Europe was a history lesson, not a current event. So, my thinking at the time was that people will still need to buy cars, especially as the vehicles on the road were rapidly aging.
Let me tell you that I’m not going to win this year’s award. However, at a loss of only 5.6% YTD — compared to the S&P 500 index losing 16% YTD — Sonic is surprisingly robust. Further, in the trailing month, SAH is up 7.7%. No, I’m not going to toot my horn because SAH has not been profitable. However, there’s a chance it could start clawing its way back above parity.
Given how circumstances are shaking out, it’s possible that companies can start recalling their workers. If so, people will need reliable transportation, boding well for SAH stock.
I’m going to end this list of stocks to buy on a very cynical note with Olin (NYSE:OLN). One of the companies that arguably is less popular than big oil firms, Olin’s core business of manufacturing and distributing chemical products isn’t controversial. Rather, it’s the corporation’s ownership of the Winchester brand of ammunition that may have some folks frowning on OLN stock.
So, anything related with firearms is bound to be a divisive issue. Personally, I look at it this way: guns are part and parcel of the American experience, deeply ingrained into the collective DNA. We have more firearms than people in this country.
Indeed, firearms sales skyrocketed during the initial outbreak of Covid-19 due to fears of violence and social unrest. Therefore, I see continued upside for OLN, which has gained 12.5% year-to-date.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.