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7 Stocks to Buy for a Year Full of Volatility and Rate Hikes

“This time, it’s different.” Often considered the four most dangerous words in finance (five if you don’t count contracted words as singles), the…

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This article was originally published by Investor Place

“This time, it’s different.” Often considered the four most dangerous words in finance (five if you don’t count contracted words as singles), the sentiment warns of ignoring historical lessons and plowing ahead without a care in the world. That’s why to my knowledge, no one has uttered them in the new normal. Still, not saying it doesn’t mean you shouldn’t consider shifting strategies for stocks to buy.

For instance, you’ll often hear real-estate brokers claim that you can’t compare the housing bubble of the 2000s decade with the current rally. The idea is that buyers today are not of the subprime quality that dominated the last crisis. Without the threat of losing their homes due to say, questionable decisions of acquiring adjustable-rate mortgages, housing-related stocks to buy could likely continue rising higher.

That is, except for one problem: many of those sector-specific stocks to buy are not doing well. While the acquisitive party themselves may be prime borrowers (or even cash buyers), the overall economy still stands on shaky ground. As the Wall Street Journal pointed out, U.S.-based collective corporate debt is over $11 trillion. Additionally, other headwinds such as soaring consumer prices could cause people to limit their purchases — and that’s exactly what happened.

It’s not inflation that entirely should take the blame. The novel coronavirus’ omicron variant has taken its toll on commerce. Yet, the Federal Reserve has seen enough data to be worried. Thus, it’s likely that this year will be one of aggressive and hawkish monetary policies. The rate hikes may come earlier and with perhaps greater gusto as inflation fears continue to shape politics. In turn, that’s a good sign to rethink your stocks to buy.

However, don’t get too comfortable that rising borrowing costs are the end-all, be-all. As I’ve warned in multiple InvestorPlace articles, money velocity is down near all-time recorded lows. That’s an indication that regular folks are deeply concerned about what lies ahead. Therefore, it’s a good idea to consider these historically resilient stocks to buy.

Perhaps more than any other period in modern market history, investors must remain vigilant and agile. While it’s good to have a well-grounded framework to base your ideas from, should events and narratives change, you want to be flexible with your stocks to buy. Nevertheless, these ideas may prove worthwhile if the Fed is serious about its hawkishness.

Stocks to Buy: Charles Schwab (SCHW)

Source: Isabelle OHara / Shutterstock.com

Ordinarily, I wouldn’t think about adding Charles Schwab on any list of stocks to buy. Don’t get me wrong — it’s a fine establishment, one of the most respected institutions in high finance. However, people tend to want a little pizzazz in their portfolio. Certainly, when people get up in the morning to check their tickers, financial services securities don’t exactly rank highly.

I can imagine folks getting a jolt similar to a caffeine boost from cryptocurrencies. SCHW stock, though? Not so much.

But as I alluded to earlier, the narrative has changed. Now, financial services firms may be among the most attractive stocks to buy. Primarily, the company serves many high-net-worth investors, who probably benefitted handsomely from the time following the spring doldrums of 2020. How could you not? A monkey throwing darts would have yielded some positive ideas.

However, it’s in times of great uncertainty — such as the present juncture — where financial advisors really earn their keep. It’s easy to pick bullish ideas in an extremely bullish bull market. Now pick ones that will keep the boat afloat in ambiguous waters. And that’s part of the reason why SCHW stock may be off to a good start this year.

Progressive (PGR)

A white car with the Progressive logo written across the doors in big blue lettersSource: Shutterstock

If I had to pick a more sleep-inducing sector than financial services as an investment, it would be insurance. Home insurance, auto insurance, whatever — it’s really boring. Again, it’s not about the business itself. As I mentioned in an article for Benzinga, the insurance industry has a rich history in the U.S. In fact, entrepreneurs established the first insurance firm in South Carolina to provide fire coverage.

If you want to go further back in time, in ancient Babylon, merchants signed bottomry contracts, which were loans that covered sea shipments. If an incident resulted in lost cargo, merchants did not have to repay the loan. Furthermore, the interest on this contract covered the insurance risk.

However, what about modern times? Well, insurance stocks to buy tend to have a linear relationship with interest rates: the higher the rates, the greater the growth. Obviously, you don’t want to invest based on arbitrarily defined short-term windows. However, I can’t help but notice that PGR stock is up nearly 5.5% year-to-date (YTD).

Fundamentally, it’s possible that as Covid-19 fades, companies will recall their workers. In turn, that would imply a greater need for auto insurance — benefitting Progressive.

Stocks to Buy: Kellogg (K)

stocks to buy kelloggSource: DenisMArt / Shutterstock.com

From boring stocks to buy to boring breakfasts, Kellogg really encompasses it all.

I love Kellogg and it’s a wonderful business. However, when one in four Americans say they never have time to make breakfast — and with nearly two-thirds sometimes getting so busy that they skip meals — the critics of K stock have some viable arguments regarding relevancy concerns.

However, with the new normal, Kellogg could hedge against the return-to-work idea I just mentioned. If the mass work-from-home experiment becomes permanent, then people will have more time to munch on Kellogg’s various scrumptious breakfast products. Worse comes to worst, you might be able to claim Amish identity and have your webcam turned off.

On a more guttural level, grocery shortages inherently and cynically provide a tailwind for Kellogg through enhanced demand. Plus, like many resilient stocks to buy, K stock features a higher-than-average dividend. So, all in all, investors should continue to keep this in mind for their portfolio of stocks to buy.

Coca-Cola (KO)

coca-cola (KO) bottles and cans. coke is a blue-chip stocksSource: Fotazdymak / Shutterstock.com

By now, we’re all familiar with the concept of retail revenge. But if you haven’t heard, it’s the collective opening of wallets as consumers essentially bid to make up for lost time and experiences. Furthermore, with the personal saving rate skyrocketing during the lockdowns for obvious reasons, Americans had a lot of money to spend.

While I’m not entirely clear how much of the pandemic savings are in consumers’ balance sheets, as a rate of personal income relative to cash outlays and taxes, spending has normalized back down to pre-pandemic norms. Cynically, this may bolster Coca-Cola under the thesis of cheap entertainment stocks to buy.

Naturally, mainstream media outlets have a tendency to shift the blame on the profligacy of American consumers. But the ultra-low money velocity suggests this idea may not be entirely accurate. Instead, it’s possible that big corporations have decimated wages to the point where it’s impossible for average Americans to get ahead. The widening wealth gap also provides confirming evidence.

And please — don’t give me this toxic positivity, hustle-culture garbage about working for your dreams. If it was remotely possible for everyone to 10X their income, everyone would do it. Instead, the reality is that people will penny-pinch while still seeking cheap thrills, which cynically bodes well for Coca-Cola’s addictive products.

Stocks to Buy: Duke Energy (DUK)

the duke energy logoSource: jadimages / Shutterstock.com

Speaking of hustle culture, one of the ways that you may be able to determine whether a trend is a fading fad or a viable construct is to check if the concept works in any other context. For instance, if hustling can generate 10X your current income, can hustling utility workers generate 10X more electricity than they already do?

The answer of course is no, and the reason is that we live in a world of finite resources. Certainly, it’s possible for some elements within a system to 10X their productivity. But that would also limit many other elements from achieving their 10X potential.

Believe me, the primary beneficiaries of toxic positivity are only the ones dumping said toxicity.

And that brings me to Duke Energy. Since it’s impossible for any utility firm to 10X their capacity through “grinding” — whatever that means — Duke Energy benefits as one of the core stocks to buy during times of uncertainty. Why? Because modern society can’t survive without energy.

Put another way, consumers will cut almost anything out of their budget before they cut utilities. And once you go there, your life can 10X but in the other direction.

Southern Copper (SCCO)

Piece of copper set against black backgroundSource: Coldmoon Photoproject/Shutterstock.com

Although some measure of volatility should be expected throughout 2022, the impact on the commodities market could be mixed. In particular, copper demand has soared since the spring doldrums of two years ago. Furthermore, while much of the trading in the spot market throughout last year has been horizontal in nature, what’s more important is that copper prices show no sign of fading.

Should this continue to be the case, Southern Copper could represent one of the stocks to buy during this uncertainty. Even with a questionable economic backdrop, the political powers in this nation are generally eager supporters of electric vehicles (EVs). Sure enough, copper is a “major component in EVs used in electric motors, batteries, inverters, wiring and in charging stations.”

Put another way, if you believe in EVs, then you also synergistically believe in copper. And of course, that lends itself to potentially higher prices of both SCCO stock and the underlying asset.

Finally, copper has become even more of a strategic asset now that China is competing aggressively with the U.S. in the EV space. Combined with its well-above-average dividend yield, SCCO stock makes for an interesting case among stocks to buy.

Stocks to Buy: Wheaton Precious Metals (WPM)

A gold bar along with some coins made of precious metals. gold stocksSource: allstars / Shutterstock.com

To be upfront, precious metals miners — or in the case of Wheaton Precious Metals, streaming companies — tend to perform best under inflationary circumstances. Under this scenario, the weakening dollar incentives investors to rotate some of their risk capital into assets commanding universal intrinsic value. That way, they can preserve their purchasing power, rotating back into fiat currencies once the opportunity is appropriate.

But to wager on WPM stock when the dollar might get stronger due to hawkish monetary policies? That seems awfully risky until you consider the precious metal complex’s other catalyst, the fear trade.

Recently, I’ve been reading reports about how thieves are digging through train cargo loaded with packages in downtown Los Angeles. Due to these activities, they’re also creating massive trash heaps around the railroad tracks. What’s more, other articles state that many folks are scavenging through the trash, occasionally finding items of value.

Let me be clear: there’s no excuse for lawlessness. At the same time, desperate economic measures are facilitating wholesale desperate actions. So I’m not necessarily quick to judge.

However, such actions may point to disturbing realities regarding our economy — meaning that WPM stock could be among the relevant stocks to buy this year.

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.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.

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Author: Josh Enomoto

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