As we hit the halfway point of 2023, the economy is in turmoil. Inflation is high, de-dollarization is imminent with the forming of BRICS, interest rates and mortgage rates are rising, and the unemployment rate is going up. A recession is looming, and there is nothing that we can do. Amid this economic downturn lies a hidden, but grand opportunity. Opportunity to look where no one else is looking and capitalize on stocks that will take off in the next coming years. This article is an objective guide toward potential stock market and investment success in the near future, I hope that you can use it to your advantage.
Stock Market Strategy
There are steps for choosing stocks that are beneficial to you. First, looking at the overall market is key. Research suggests that 75% of stocks move in step with the market, so investing when you think the market is on an uptrend or going to go up is key. Second, you have to decide what strategy you want to pursue. There are three types of investors: Income oriented investors that focus on buying stocks that provide good dividends, conservative investors that aim for wealth preservation with a low tolerance for risk, and capital appreciation investors that take on risk for larger gains. Next, decide what sector or area you want to go into. What interests you? What do you think is going to rise and expand in the next year? After this, you must review the foundation of the stock and check the charts. Often it is a good time to buy a stock when it is currently low, and you think it will rise, or when it is rising, and you think it will continue to rise. With so many potential factors, no wonder it’s difficult to invest in the right stocks to make money. This article is here to help you navigate the confusing world that the stock market resides in. Hopefully, it will help you invest and make money for yourself.
Stocks are unpredictable. They go up in price per share when the demand of the stock is higher than the supply and in reverse, they go down when the supply of the stock is higher than the demand. Stocks that have a high demand are key. Whether it’s because of innovation, excitement surrounding the company, a potential merger with another company, or some other change, a stock price will go up. One goal of investing in stocks is to figure these markers out before others do and raise the price of the stock. As I mentioned before, hopefully, this article helps you do that.
The first thing I am going to dive into are industries in the U.S. economy that have the potential to grow. Here are 4 of the top 12 growing industries in the U.S. right now according to indeed.com.
1. Information Technology
3. Drink Manufacturing
4. Personal services
Investors want industries that are not just growing now but will boom over the next few years. These industries are usually driven by innovation and tech improvements, two factors that drive the American economy and allow for profit in it today. Looking at this list, information technology stands out as a potential boom industry that can expand with increased technological innovation in the near future. As society progresses, more people will need IT tech support to update their software and systems, therefore increasing the industry and the stocks around it. Drink manufacturing is another interesting industry that is predicted to grow a lot. More and more people are in higher demand for different drinks, both alcoholic and non-alcoholic. Let’s look at another list, this time from Merill Lynch. They list 5 sectors to watch: fuels, aerospace and defense, agriculture, nuclear and renewable energy, and precious metals. These are very interesting industries to watch as geopolitics get muddled in the many conflicts currently occurring across the world. The two that I am focused on out of these are the defense and precious metals industries. As I mentioned before, there are many conflicts occurring across the world. More countries will be increasing defense spending, even those that aren’t currently in conflict. Secondly, gold and other precious metals provide a perfect tool to hedge against inflation, and as inflation rises and economic conditions become more uncertain, precious metals will become more valuable. In addition to this, minerals are essential for electric vehicles and the need for lithium could increase by 40 times over its current demand if the electric vehicle industry continues to increase. With all of this being said, there is one boom that I will specifically look at in this article, and that is the AI boom. With the introduction of ChatGPT, companies everywhere are scrambling to keep up with new AI improvements and innovations. This is a perfect time to hop right into this stock industry. As AI continues to develop, new companies will use it to grow and expand, which increases their stock.
Three Investment Types
We will be focusing on stocks that fall under the three investment types: searching for dividends, being conservative, and searching for growth stocks with risk. The growth stocks that are detailed will come from industries that have the potential to boom over the next few years, more conservative options will come from safe industries that haven’t had too much variation over the years, and dividend stocks will come from many factors that will be explained below.
Growth Stocks to Invest in
First, let’s look at growth stocks. We already looked at some potential industries that could boom in the near future, so now let’s look at some stocks that have the same potential, specifically in the up-and-coming AI industry boom. What stocks have the potential to resemble NVIDIA, the AI chip company that has skyrocketed over 500% in the last 5 years? Let’s find out.
- Advanced Micro Devices (NASDAQ: AMD) $111.32- AMD just unveiled new instinct MI300 chips that will be used for speeding up generative AI processing. At the moment, NVIDIA is the leading AI chip company, but AMD is right behind them and could make a serious run soon. Microsoft is rumored to be working on a chip with AMD, and whatever the truth to that is, the rumors will increase the share price of the stock because a deal like that could have AMD overtake NVIDIA as the number one AI chip company. This is a stock that is a little risky but could potentially skyrocket and provide huge payouts.
- Bank of America (NYSE: BAC) $29.02- Bank of America is a very interesting stock to look at. It seems like a classic bank with not a lot of risk and reward, but AI is changing that. McKinsey consulting group estimates that generative AI could impact the banking industry by up to $340B. Bank services and products will be improved, transactions will be more efficient, and the company’s digital transformations will be accelerated and apparent. There will be many banks that benefit from these changes, but with Bank America at a steep discount right now, it looks like a good investment. Analysts at CNN predict a high estimate of $49, a 168% price increase.
- CrowdStrike Holdings Inc. (NASDAQ: CRWD) $150.79- CrowdStrike Holdings is an IT company that specializes in cybersecurity. According to Yahoo Finance, there are 72 hedge funds holding stake in CRWD and at the end of the 1Q, their stake in the company was $2.4B. CRWD has also recently announced new AI powered indicators of attack models. These new models combat advanced adversary tradecraft by using machine intelligence to stop breaches. With all of this new technology, CRWD is a stock that could boom with extensive AI technology and innovation. It is risky as there is a lot of competition with an unpredictable market, but this is a stock that could rise in a short amount of time.
Conservative Stocks to Invest in
Now, let’s look at some more conservative stocks of large companies. These stocks won’t be a huge risk and will help you diversify your portfolio while creating a stream of passive income.
- Microsoft Corp. (NASDAQ: MSFT) $332.47- This stock is relatively less risky than the others I mentioned above, but it still has lots of potential to grow and skyrocket upward. With a market capitalization of $2.3 Trillion right now, second to only APPL, Microsoft has a firm grasp of the industry and market. Microsoft has this position, but they are not settling and have purchased a huge part of OpenAI, parent of ChatGPT. With a stable foundation along with an innovative team, Microsoft remains to be one of the best investments in 2023.
- Apple Inc (NASDAQ: APPL) $188.08- Look at everyone around you. What phone do they have? Most people will realize that the iPhone has taken over. Same with the MacBook, and same with the Apple Watch. Apple technology is everywhere, and it seems like that’s the way it will be for the foreseeable future. Tech companies everywhere have tried to overthrow Apple with new and innovative technology and Apple has stood strong. With a stock that has continually gone up over the last year (50.38% YTD), Apple is a good investment for the future.
Dividend Stocks to Invest in
Finally, let’s look at dividend stocks to invest in. These stocks will pay out a certain amount to shareholders, which is an easy and efficient way to make money investing in a company. For this column, we are going to turn toward Dividend Aristocrats, stocks that have increased their dividend every year for at least 25 years. I am going to be looking at these because they are safe and consistent. A high dividend doesn’t always indicate a good thing for a company as it could be due to falling stock, but these that we will go over are as consistent as they come. This is a list of the top 7 dividend aristocrats from nerdwallet.com.
|Stock Symbol||Company||Dividend Yield|
|WBA||Walgreens Boots Alliance, Inc.||6.62%|
|O||Realty Income Corporation||5.09%|
|IBM||International Business Machines Corporation||4.97%|
|BEN||Franklin Resources, Inc||4.46%|
|FRT||Federal Realty Investment Trust||4.44%|
Source: Finviz. Data is current as of July 5, 2023, and is for informational purposes only.
These 7 stocks are perfect if you are searching for dividend stocks as a way to make passive income. They don’t have too much risk and will provide solid payouts.
Defense and precious metal stocks
Lastly, I mentioned above that I would touch on defense and precious metal areas. These are two areas that are not related at all except for the fact that they can both provide good returns. With lots of conflict and global turmoil, countries are investing in their defense. This makes defense stocks a good low risk investment that could make you some money. Precious metals, on the other hand, are great to hedge inflation. In an uncertain economy, inflation is rising, and investors want something that is relatively safe. Check out our article on gold and other precious metals if you want to go into that area.
Patience is Key
Overall, investing in stocks can be unpredictable, erratic, uncertain, and stressful, but patience is key. Don’t overreact to any small changes in the market and keep your cool during stressful situations. Fear, greed, and impatience are three things that can negatively influence your trades. You have to learn how to control yourself and your emotions in order to be successful. Hopefully, this article will help guide you in which stocks to purchase, but at the end of the day, it is your decision. Best of luck on the market!
Column by Adin Friedland
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