The market may or may not be ready to rally. The S&P 500 (^GSPC -0.46%) roared back to life a couple of weeks ago, quelling a steep seven-week sell-off and offering new hope for higher highs. Stocks have been content to simply sit on the fence ever since then. In this kind of environment, remaining on the sidelines is an easy decision to make.
Don't let the lethargic environment fool you, though. A handful of stocks are doing well without the broader market's help. And more than that, some of these names are poised to keep performing even if the indices aren't. Here's a rundown of four of my favorite stocks to pick up before this week is over.
1. Lamb Weston
You're more familiar with Lamb Weston (LW -1.21%) than you might realize. In fact, there's a pretty good chance you've enjoyed its chief product just within the past few days. This company is one of the restaurant industry's top suppliers of frozen French fries, though it also sells potato-based products in grocery stores. Roughly 80 million servings of its fries are consumed every single day.
Yes, the inflation bug has bitten this company too -- in fact, that's one of the reasons why the stock has been choppy since the middle of last year. Despite a forecasted 9.5% top-line improvement for 2022, analysts expect a 10% dip in per-share profits. Lamb Weston is adapting, though. So much so that earnings are expected to improve 44% next year to $2.82 per share. That puts it back within sight of its pre-pandemic profitability.
Perhaps the most compelling argument for owning a piece of the potato products company right now, however, is that it's rather resilient to economic turbulence. Everybody's got to eat, and French fries are a cheap mainstay of most people's diets.
2. AutoZone
It's curious. Cars being built today last longer than ever before, because nearly every aspect of their design and construction has been perfected. To this end, the average age of the car traveling the United States' roads now stands at a record-breaking 12.2 years, according to S&P Global Mobility. It's a testament to their incredible quality.
Given this trend of ongoing improvement, it would be easy to assume that the need for auto parts stores like AutoZone (AZO -1.45%) is waning rather than growing. This theory, though, misses a couple of key realities, as shown by the fact that AutoZone managed to grow its top and bottom lines in 2019, 2020, and 2021 as if the pandemic wasn't even happening.
Data source: Thomson Reuters. Chart by author.
One of these realities is that it's now cheaper and easier than ever to keep a car in good working order with just the occasional repair, compared to the sky-high cost of replacing it with a new one. Kelley Blue Book reports that the average purchase price for a new automobile eclipsed a whopping $47,000 last year.
The second reason AutoZone does so reliably well is that, despite the advent of ride-hailing services like Uber and Lyft, the number of cars in the U.S. generally continues to grow. CEIC indicates the number of registered automobiles in the United States alone reached a record 279.5 million in 2019 before the pandemic's logistical challenges put the brakes on this growth in 2020. Even so, the figure is expected to keep growing once the auto industry fully regroups.
3. Palo Alto Networks
The fear of economic headwinds could push some companies and many consumers to tighten their purse strings. There's some institutional spending, however, that simply can't be cut. Cybersecurity is one of those must-haves: The cost of fixing a data breach and dealing with its fallout is almost always greater than the cost of preventing it in the first place. To this end, Mordor Intelligence estimates that the cybersecurity market will grow at an average annualized pace of 13% through 2027, exceeding $300 billion by the end of this timeframe.
Image source: Getty Images.
That's good news for a bunch of companies in the business, but the cyberdefense business has its clear leaders. Palo Alto Networks (PANW -1.71%) is not only one of them, but arguably the best of the best. Aside from being profitable on an operating basis (whereas many of its rivals aren't), it's also growing firmly. Revenue is projected to be up nearly 10% this year, driving more than a 20% improvement in non-GAAP earnings.
4. Enphase Energy
Finally, add Enphase Energy (ENPH 0.62%) to your list of strong growth stocks to buy before the week is up.
Enphase Energy is a solar power technology name, though it doesn't make solar panels. Rather, it makes the technology that optimizes the use of the electricity produced by other manufacturers' panels. Its IQ8 Microinverter and IQ Battery collectively solve the biggest problems with solar power, seamlessly handling the switch from on-grid to off-grid usage, and automatically changing the operating mode when the sun's not shining.
These logistical issues have been one of the industry's biggest impediments to sweeping solar adoption, but with the Enphase solution now available, the company's broke records with its 2021 top line of $1.4 billion, which nearly doubled 2020's revenue. Sales are expected to improve another 50% this year, and while that pace is expected to slow to only 31% next year thanks to a tougher year-over-year comparison, 31% growth is still plenty impressive.
The kicker: Not that investors should worry too much about political matters, but President Biden just suspended tariffs on solar panels imported into the United States from countries that are home to the world's biggest foreign panel makers, including China. The suspension is controversial, but notably temporary, and is only effective for 24 months. Still, it's an important two-year stretch that could let Enphase Energy highlight all that its technology can do.
