With the major equity indices finally ending in positive territory for the trailing five days last week, enthusiasm for stocks to buy this week increased substantially. Nevertheless, it’s important to remind ourselves that the benchmark S&P 500 remains 22% below parity. Therefore, with so many challenges ahead, it’s prudent to focus on the most relevant ideas.
While some room exists for experimentation, your stocks to buy this week should align with strong narratives. For instance, part of the reason why investors felt encouragement last week centered on brewing speculation that the Federal Reserve may ease up on its hawkish monetary policy. However, the harsh reality is that myriad other factors exist, such as historically high prices and geopolitical instability. Thus, a conservative approach may be best.
Further, for stocks to buy this week, investors may need to let go of certain ideological reservations. Stated differently, the downturn in broader equity valuations leave few viable options. Therefore, you have to take what the market gives you.
Beggars can’t be choosers. And that’s probably a succinct way to sum up the stocks to buy this week.
Stocks to Buy This Week: Progressive (PGR)
Easily one of the top ideas to consider for stocks to buy this week based on fundamental realities, Progressive (NYSE:PGR) represents one of the largest insurance carriers in the U.S. It’s best known for its auto insurance products, with the company featuring the corporate mascot Flo. Effectively, Progressive enjoys both inelastic demand and a hostage audience.
Most states in the U.S. require drivers to carry car insurance. Therefore, the company benefits from inelastic demand. Irrespective of pricing, people will still carry a minimum required amount of financial coverage. And because it’s mandated almost everywhere, drivers have no choice but to pay up.
Not surprisingly, then, PGR has gained 21% so far this year — almost the inverse of the S&P 500.
To be fair, Gurufocus rates PGR as modestly overvalued. While I can appreciate this mathematical assessment, again, you must consider the fundamentals. Whatever happens in the economy, car insurance is virtually a must-have. Therefore, PGR represents one of the best stocks to buy this week.
Ollie’s Bargain Outlet (OLLI)
If you’ve been following the theme of stocks to buy this week, then you probably guessed that Ollie’s Bargain Outlet (NASDAQ:OLLI) would eventually pop up. As a chain of discount closeout retailers, Ollie’s commanded historical popularity because most folks appreciate saving a buck. However, with economic turmoil on the horizon, OLLI gained much greater relevance.
Fundamentally, the case for OLLI isn’t rocket science. Early in the coronavirus pandemic, the Fed decided to expand its balance sheet through bond buybacks. Essentially, this raises the price of bonds, which lowers the interest rate. Unfortunately, the consequences of this action brought on inflation.
Now, the Fed wants to reduce the size of its balance sheet, which creates higher interest rates. That would be deflationary, which then imposes concerns about the viability of the labor force.
Either way, consumers face troubling circumstances, thus bolstering discount retailers like Ollie’s. Therefore, I believe OLLI to be one of the best stocks to buy this week, despite Gurufocus’ warnings of it being a possible value trap.
Stocks to Buy This Week: Raytheon Technologies (RTX)
One of the more controversial stocks to buy this week, Raytheon Technologies (NYSE:RTX) nevertheless deserves serious consideration. For one thing, the market really responded well to RTX last week. On Friday, shares of the defense contractor increased 1.5%, while for the week it gained over 5%. For context, the S&P 500 gained 2.3% last week.
So, why did Raytheon perform so well for the business week ended Oct. 21? The answer centers on Russian aggression in Ukraine. Specifically, Moscow ordered waves of drone attacks on Kyiv and other cities. Such brazen assaults draw attention toward aerial defense systems. Well, Raytheon offers significant leadership and innovation in this arena.
Certainly, RTX represents a company to keep close tabs on in the weeks ahead.
NuScale Power (SMR)
Speaking of Russia’s invasion of Ukraine, one of the devastating consequences of the crisis centers on energy dependencies. With the Kremlin making the decision to cut hydrocarbon outflows to Europe in retaliation for the region’s support of Ukraine, the action left many countries scrambling for answers. Invariably, political leaders focused on renewable energy, but that can only go so far. And that brings up NuScale Power (NYSE:SMR).
A nuclear energy specialist, NuScale plies its trade in small modular reactors (SMRs). Hence the ticker symbol. SMRs bring a physically smaller footprint to the table, enabling the development of nuclear facilities in previously inaccessible areas. As well, SMRs allow the decentralization of power, bringing energy supplies closer to the source of demand. Therefore, this innovation can potentially enable currently economically unviable initiatives such as desalination.
At the moment, NuScale does not represent a profitable business. However, it’s not purely aspirational, as the company features decent strengths in the balance sheet. Specifically, it carries zero debt. With troubling days ahead, SMR is smart speculation for stocks to buy this week.
Stocks to Buy This Week: Exxon Mobil (XOM)
Following Russia’s reckless geopolitical excursion, one of the cynical beneficiaries of the crisis was Exxon Mobil (NYSE:XOM). As one of the world’s biggest hydrocarbon power players, XOM soared due to inflation and conflict-sparked shortage concerns. Although 2022 brought on many uncertainties, Exxon clearly represents a net beneficiary. On a year-to-date (YTD) basis, XOM has gained almost 75%.
It could be due for more. True, President Joe Biden’s administration recently authorized the release of 15 million barrels from the Strategic Petroleum Reserve. However, according to Jay Hakes, the former head of the Energy Information Administration, it might not be enough to lower gasoline prices.
“We’re talking about fairly small potatoes here with putting 15 million barrels into the market, and I think the market was probably expecting that to happen anyway,” Hakes told NPR.
Therefore, I don’t think investors need to play games with stocks to buy this week. Per experts, energy prices are unlikely to decline for consumers. That’s bad for us but great news for the oil industry and its stakeholders.
Onto the riskier side of stocks to buy this week, investors ought to consider streaming giant Netflix (NASDAQ:NFLX). Of course, I understand the hesitation here. For one thing, the market losses are ugly. Since the start of this year, NFLX has hemorrhaged over 51% of equity value. As well, subscriber losses point to eroding relevance of at-home entertainment platforms.
At the same time, NFLX represented one of the biggest winners last week, gaining a staggering 23%. While it doesn’t quite make up for earlier devastation, Netflix brings opportunity for new speculators. Fundamentally, the company brought the goods for its third-quarter earnings report, beating on the top and bottom lines. As well, global streaming paid memberships grew 4.5% on a year-over-year (YOY) basis.
It’s very possible that the entertainment ecosystem may be returning to the living room. While concepts such as revenge travel impose pressure on NFLX, consumers may be wanting to save a buck. Pound for pound, streaming services provide escapism at very reasonable prices.
Stocks to Buy This Week: Disney (DIS)
While we’re on the same subject of streaming services, I’m going to close out this list of stocks to buy this week with Disney (NYSE:DIS). What’s good news for Netflix may bring great tidings for the Magic Kingdom. Specifically, I’m thinking about the company’s massive and enviable content empire. Not only does Disney own its classics, it also bought the Star Wars and Marvel Comics franchises.
Essentially, ownership of these two global juggernaut franchises empowers Disney to print cash. We’re talking offshoot content series such as the extremely popular “The Mandalorian.” As well, Disney enjoys merchandising opportunities that Netflix simply doesn’t have. Though the framework presents risks, the potential pivot of entertainment back to the living room augurs well for DIS.
As an added bonus, Gurufocus labels DIS as significantly undervalued. So far this year, DIS has lost 35% of equity value. However, last week, Disney gained almost 6%, reflecting brewing optimism over the entertainment landscape’s pivot.
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.