With the holiday-shortened sessions behind us, investors should roll up their sleeves and look for stocks to buy this week. Although the benchmark S&P 500 index remains in negative territory for the year, many market participants anticipate that the bottom is in. In the trailing month, the index is up 4%.
While the jobs report due out at the end of the week is expected to show the Federal Reserve is making progress in cooling the labor market, the central bank still has more work to do. Most traders expect the Fed to raise rates by another 50 basis points at its Dec. 13-14 meeting. Therefore, investors should consider how another rate hike may impact certain publicly traded securities over others while also focusing on stocks that could move higher near term based on headlines.
Below are seven stocks to buy this week.
Stocks to Buy This Week: Raytheon Technologies (RTX)
Shares of Raytheon Technologies (NYSE:RTX), a leading defense contractor, saw a surge in demand following Russia’s invasion of Ukraine and the subsequent resistance effort. It’s not so much about the conflict itself, but rather the effectiveness of Raytheon’s underlying defense systems such as Javelin, which has helped Ukraine defend itself.
Reports indicate that Ukraine’s counterattack will continue through the winter. Strategically, this makes sense as Russia’s supply lines would be stretched whereas the Ukrainians are fighting on their home turf. In October, Raytheon said it would increase Javelin production due to increased demand from Ukraine and elsewhere. This narrative will likely bolster RTX stock.
A Cowen analyst just called RTX a “best idea” for 2023. He expects defense spending to ramp up in coming years and also predicts higher commercial aerospace aftermarket sales in 2023 amid heightened demand for air travel.
On a year-to-date basis, RTX represents one of the few publicly traded securities outside of the energy sector that is in positive territory, up 12.6%.
Cheniere Energy (LNG)
Russia’s military aggression combined with skyrocketing inflation have caused energy stocks like Cheniere Energy (NYSE:LNG) to come roaring back to life in 2022. After shares of the liquefied natural gas producer and transporter gained nearly 70% this year, investors are surely wondering whether the momentum will continue.
In the trailing month, LNG is down a little more than 2%, so it’s unlikely to deliver the outstanding gains seen during the first half of the year. Nevertheless, this is no time to dismiss the stock. Russia continues to use its vast critical commodities base to blackmail the West. Cynically, this is a net positive for Cheniere.
Outside of geopolitics, there’s another reason to consider LNG as one of the stocks to buy this week. It will benefit from increased demand for natural gas during the colder winter months, along with higher prices expected this season.
Stocks to Buy This Week: Intuit (INTU)
One of the coronavirus pandemic’s most striking effects was the workplace paradigm shift. The work-from-home revolution has blurred the lines between independent contractors (i.e., the gig economy) and corporate employees. In the months and years ahead, more people are likely to forgo the corporate rat race in favor of the more flexible gig life, which should benefit tax-preparation software provider Intuit (NASDAQ:INTU).
As The New York Times pointed out, from February 2020 to June 2022, mobile app Steady recorded a 31% increase in the share of workers on the platform with 1099 income. A 1099 is the tax form independent contractors typically receive versus a W2 that corporate employees get.
Those who took the contractor plunge this year will likely need tax help, which adds relevance for Intuit as we head into the 2022 tax filing season. As well, many companies have expressed doubt about work-from-home initiatives becoming a permanent fixture. The ensuing revolt among worker bees could expand the gig economy. In turn, this makes INTU one of the stocks to buy this week and for several months to come.
IBM (IBM)
In the pre-pandemic paradigm before its business overhaul, many investors ignored the upside potential of IBM (NYSE:IBM). Frankly, that’s because there was none. While Big Blue made a name for itself during the physically tethered era of innovation, other technology firms made the pivot to digitalized solutions such as cloud computing. Unfortunately, IBM stock suffered relevancy issues until its leadership team wised up.
Today, IBM offers a much more attractive profile compared to its tech peers, thus making it one of the stocks to buy this week. While other players found themselves exposed to highly cyclical industries, IBM benefitted from a holistic approach. From artificial intelligence to cybersecurity and even to blockchain applications, the company managed to be everything for everyone.
Since the start of the year, IBM has gained more than 9%, far better than many of its tech rivals. In addition, the company offers a generous passive income stream with a forward yield of 4.5%.
Stocks to Buy This Week: Five Below (FIVE)
With global recession risk on the rise, now may be a good time to consider Five Below (NASDAQ:FIVE). The specialty discount chain separates itself from other dollar stores through greater product variation. Usually, you can buy stuff for a dollar for a reason – and not a good one. With the company selling goods up to $25, shoppers can find meaningful discounts on higher-quality items.
Fundamentally, the trade-down effect should prove valuable for FIVE as one of the stocks to buy this week. Facing economic headwinds, consumers will naturally reduce their spending. However, they won’t go cold turkey. Instead, they will keep trading down until they reach an effective balance between fulfilling wants and financial stability. In other words, Five Below stands somewhere in the middle between a top-tier retailer and a true dollar store.
FIVE stock is down 22% YTD. However, near-term momentum is strong, with shares gaining 26.5% in the past three months and 9.1% in the past month.
H&R Block (HRB)
Business-wise, tax consultancy firm H&R Block (NYSE:HRB) rings very similar to Intuit. As you might suspect, one of the reasons for its inclusion as one of the stocks to buy this week centers on the gig economy. Speaking from personal experience, the tax profile for independent contractors and corporate employees can be wildly different. Therefore, it’s worthwhile to seek professional guidance the first time around.
Additionally, I expect the increased popularity of cryptocurrencies, along with the implosion of popular crypto exchange FTX, to cause more people to turn to tax pros this year. For those who have cashed out, this creates a taxable event in 2022. And employing a professional may be a lifesaver should the Internal Revenue Service have additional (probing) questions.
The crypto turmoil is likely to boost demand for H&R Block’s services, as well as its stock, which is up 84% year to date.
Stocks to Buy This Week: IMAX (IMAX)
Given the wild run that cinema operators have been on over the past few years, any hesitation with IMAX (NYSE:IMAX), the specialized movie projector company, is justified. IMAX needs a healthy box office to survive and for people to be willing to pay a premium for IMAX-integrated films.
IMAX also needs a healthy market for blockbusters, as you don’t really need special projectors to broadcast romcoms. Fortunately, e-commerce giant Amazon (NASDAQ:AMZN) is apparently interested in spending $1 billion a year on theatrical film releases. It’s just speculation, but I have a feeling Amazon will direct the bulk of its funds to summer blockbusters, not romcoms.
If so, this may be exactly what IMAX needs to regain its mojo. While shares are down about 11% for the year, they’ve gained nearly 18% in the trailing month. Therefore, if you’re a speculator, you might want to consider IMAX as one of the stocks to buy this week.
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.