With a possible recession looming on the horizon, the housing market cooling, the FED starting to tighten, and, of course, the ongoing war between Russian and Ukraine, many investors are beginning to wonder where to turn.
Some will tell you to simply keep buying companies which look cheap when compared to what their long-term potential is; a rationale based on two facts:
- A good company at a good price might perform regardless of what happens
- A cyclical based position will overperform in one scenario (like for example a recession), and perform poorly in a different setting (if, for example, the recession turns out to be just a brief slowdown in growth).
Obviously, we shouldn’t completely discard growth stocks, we all know that value focused stocks can perform better during times of higher rates.
Here are 3 picks going into next week.
Equinor Stock (EQNR)
Equinor, formerly known as Statoil, is a Norwegian powerhouse focusing primarily on offshore oil and gas production, while also maintaining operations in wind farms.
This super major supplies around 40% of Europe’s natural gas, announced a 5B share buyback for 2022, and seems to be trading at a discount.
This exposure to Europe’s natural gas market should be enticing on its own given sanctions over Russia, however, Equinor also has offshore oil wells which, given current oil prices, are likely to be very, very profitable.
EQNR is also moving steadily into renewable energies, investing in wind, carbon capture, and solar, but even if you consider this push as a net negative, that shouldn’t deter you from investing in thisinvesting this segment given the current commodity prices and geopolitical situation.
Equinor (EQNR) stock chart
Since 2006, the monthly stock chart presents a clear breakout up to a higher level.
ZIM Integrated Shipping Services stock (ZIM)
Even if the market starts getting turbulent, Zim looks like a steady bet given that shipping fees don’t tend to have the same volatility as commodity prices.
Moreover, one could argue that shipping faces less exposure to geopolitical and certain macroeconomic risks.
Lastly, its dividend policy is truly amazing!
ZIM’s dividend policy is structured in a way that it pays a quarterly dividend of 20% of net income for the first 3 quarters of the year and a special dividend on the Q4, meaning that the total payout can be up from 30 to 50% of Net Income.
With freight rates consolidating around the $9000 mark (twice from the same period last year), and with Shenzhen’s Port (the third largest in the world) going into lockdown, ZIM is looking like a great bet going forward.
ZIM stock chart
The daily stock chart of ZIM is showing that sellers sold on 17 March, at the resistance and top upper band of the channel shown below. ZIM stock price broke the channel to the downside but following a decline of over 40% from its all time high (ATH), a good buy area could be between the tactical low ($52.50) of 24 January and the most recent low of $54.10
Vermilion Energy stock (VET)
If you are determined to buy growth stock, look no further than Vermillion, the Canadian oil and gas producer.
As sanctions tighten around Russia and cutting off its natural gas is still an unresolved issue around the European Union’s table, VET’s outlook going into 2022 starts looking promising given its position as a natural gas producer which has direct access to European markets and production expansion prospects.
Vermillion (Vet) stock chart
VET stock is still in a clear uptrend following the COVID stock market crash, however, it might be temporarily extended, and may want to retrace and test the open of year 2020, close to $17. Investors may choose to scale in their Long position by buying VET stock in parts, for example, at $19, at $18, and at $17