The stock markets have been rattled in recent weeks. From coronavirus fears, rising inflation, and the anticipated interest rate increases in the U.S. to geopolitical concerns elsewhere, investors have had a lot on their plates to make sense of as they've watched the markets crash and stocks across sectors buckle under the pressure. Yet even amid the bloodbath, some stocks are still beating the market, like the three red-hot stocks we'll look at that could continue to outperform.
2022: A pivotal year for this auto giant
2021 was a stellar year for legacy automaker Ford (F 0.08%), as it stepped up its electric vehicle (EV) game and outlined plans to pump more than $30 billion into EVs through 2025. By 2030, Ford expects 40%-50% of its global vehicle volumes to be all-electric. Its plans sounded so alluring that they triggered a buying frenzy in Ford stock, and by the end of 2021, Ford shares had more than doubled.
Ford stock has lost about 8% in value so far in 2022 but has held up relatively strong in recent days despite the unnerving the market volatility. The market is evidently bullish about Ford, and that optimism isn't unwarranted -- demand for Ford's EV is beating the company's own expectations, after all.
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Ford has, in fact, kicked off 2022 on a solid note, having reported record deliveries for December and announcing plans to double production capacity of its electric F-150 Lightning pickup truck to 150,000 units per year, as well as ramping up production of its electric SUV, the Mustang Mach-E, over the next couple of years. Ford has already secured more than 200,000 reservations for the F-150 Lightning pickup and is expected to start deliveries of the much-awaited truck around spring this year. It also plans to start deliveries of its third EV, the E-Transit van, this year.
Ford but was already the No. 2 EV seller in 2021 -- second only to Tesla (TSLA 12.06%) -- thanks to robust demand for the Mustang Mach-E. With the F-150 Lightning pickup set to hit the roads soon, Ford is right on the growth track, and that should help drive its stock price higher regardless of what the market does.
Buffett's company should help you sleep well at night
Berkshire Hathaway (BRK.A -0.28%) (BRK.B -0.68%) stock generated twice the S&P 500's returns in 2021 and is still in the green so far in 2022 while the broader market has fallen nearly 9% as of this writing. It's a pretty boring stock, given the nature of Berkshire Hathaway's group of businesses that primarily include energy, railroads, utilities, insurance, and manufacturing -- but that boring nature is also what makes this stock the kind that can withstand market volatility.
Of course, having legendary investor Warren Buffett at its helm has its own appeal, and Berkshire Hathaway also owns large stakes in several publicly listed companies -- yes, those are the "Buffett stocks" investors watch so closely. A market correction can hit the value of Berkshire Hathaway's equity portfolio, but that would only be a temporary erosion of value and therefore wouldn't change the fundamentals of the company, which are as strong as ever. Most of Berkshire Hathaway's core businesses are resilient in nature and therefore have the potential to deliver strong returns to shareholders during a market correction or a recession.
All eyes are now on Berkshire Hathaway's fourth-quarter earnings report that's barely weeks away. The company's numbers last quarter reflected the financial fortitude and liquidity that Buffett has always prioritized -- it ended Q3 with $149.2 billion in cash and cash equivalents and short-term investments. Another strong quarter, and Berkshire Hathaway stock should be able to consistently beat the market.
This 6%-yielding stock's dividend is as safe as ever
In a down market this year, Kinder Morgan (KMI 0.27%) stock is up around 8.4% year to date, as of this writing. The energy infrastructure giant owns and operates nearly 83,000 miles of pipelines to transport natural gas, crude oil, gasoline, and more, and operates roughly 143 terminals that store and handle petroleum products, renewable fuels, chemicals, and other products. Kinder Morgan alone transports nearly 40% of all natural gas consumed in the United States.
Midstream oil and gas companies primarily handle storage and transportation and earn fees under long-term contracts, and they are therefore quite resilient to volatility in oil and gas prices. Kinder Morgan just delivered stable earnings growth for its fourth quarter, and that's just one of the reasons the stock is beating the market. Rising oil and gas prices is the other reason, and a sky-high dividend yield that's well supported by cash flows is yet another.
Kinder Morgan stock yields 6.2% right now, and the company has more than doubled its dividend per share since 2016. It expects to generate enough cash flows this year to not only support its yield but also increase dividend by around 3% while funding its expansion plans. Kinder Morgan should still have some spare cash, which should be put to good use and add further value to shareholders. That growth, alongside steady dividends and a high yield, should keep investor sentiment in Kinder Morgan stock high.
