Much of investors’ focus now centers on the war in Ukraine, persistent supply-chain disruption and raging inflation.
That certainly makes sense with the war sending commodity prices sharply upward, China’s recent Covid restrictions putting even more strain on the beleaguered supply chain and consumer prices soaring 7.9% in the year through February, a 40-year high.
These factors have put downward pressure on the stock market, and the S&P 500 has slid 6% so far this year, despite a rebound in recent days.
But those negatives won’t last forever, say Chris Versace, Bob Lang and the Action Alerts Plus team.
“We are back to what is quickly becoming one of our favorite words for 2022: ‘duration,’" the duo writes. “The duration of the Russia-Ukraine war, the duration of supply-chain woes, the duration of inflationary pressures and the like will not only impact the Fed's monetary policy but also earnings expectations in the near-term.”
Once those factors wane, “we should start to see uncertainty in the market fade,” Versace and Lang said. With that fade in mind, they’re looking for stocks with long-term potential.
Among the ones they like are equipment rental company United Rentals (URI); ChargePoint (CHPT), which provides charging networks for electric vehicles; staffing company AMN Healthcare (AMN); system networking giant Cisco ((CSCO)); and semiconductor stalwarts Advanced Micro Devices (AMD) and Marvell Technology (MRVL).
Morningstar analyst Abhinav Davuluri likes AMD too. He gives the stock a narrow moat and puts fair value at $130, compared to its recent quote of $116.80.
“We think AMD benefits from intangible assets related to its x86 instruction set architecture license and chip design expertise,” he wrote in a commentary last month.
“We think the firm is well positioned to enjoy data center growth driven by the shift from on-premise to cloud computing. In the mature personal computer market, we think AMD will also gain share at Intel’s (INTC) expense in the coming years.”
