Even after the mild recovery in the S&P 500 and Dow Jones Industrial Average these past two months, 2022 is serving as a stark reminder that stock market corrections can and do happen.
There are always plenty of reasons to sell: the market is crashing, housing is falling, interest rates are rising, China's economy is crumbling, and so on. A lot of times it sounds smart and you're tempted to sell all your stocks and sit on the sidelines, but don't do it. You're going to undermine your long-term profits.
Over the past 20 years through 2021, the stock market went up an average of 9.5% a year, but if you missed the 10 best days in the market, your returns would be nearly cut in half to 5.3% a year. Literally just sitting on your hands is the best action you can take.
Corrections are actually the perfect time to invest in high-quality stocks that are now offered at discount prices. We never know how far "down" is or when the reversal will happen, but bull markets always follow bear markets -- and it's important to be invested when it happens. The following three stocks are no-brainers to buy now without even pausing to think about it.
There are few brands as iconic as Apple (AAPL 0.49%). Its technology, innovation, and styling have attracted legions of diehard loyalists who willingly immerse themselves in the company's ecosystem. That by itself is one of the reasons Apple stock should be a top-of-mind choice for investors: Because it has a loyal following like few other brands, it has a target consumer ready to buy its next innovation, or even reiteration, giving it a steady stream of revenue for years to come.
Warren Buffett certainly thinks so, making Apple the largest holding in Berkshire Hathaway, or some 41% of all the stocks holdings he manages. I don't think you should necessarily follow that lead and make the tech stock such a dominant position in your own portfolio, but Apple is worth your attention.
Revenue is running at record highs, but Services and its recurring income streams are where Apple's future lies. It's the fastest growing segment, and the tech giant now has more than 860 million paid subscriptions across the services on all of its platforms, up 23% over the last 12 months. That's another reason why Apple is a no-brainer buy.
E-commerce leader Amazon (AMZN -0.16%) should also occupy a spot on this list if only because it has become so integral to how tens of millions of consumers regularly shop. Even during a technical recession, currency-adjusted sales jumped by double-digit rates to $121 billion. Sure, it's being impacted by rising inflation, energy, and labor costs just like every other retailer, but it's also able to achieve economies of scale unavailable to most other businesses.
Of course, it's not selling gadgets and groceries that make Amazon tick (or ring the register), but rather its cloud services operation, Amazon Web Services (AWS). Serving as the backbone for many businesses' online presence, AWS's revenue has risen by more than 30% over each of the first two quarters of this year. AWS is s further expanding its capabilities for leading-edge technologies such as streaming video, online gaming, and augmented and virtual reality. For example, the company is creating storage and database infrastructure closer to the customer, which allows for increased efficiency due to split-second data travel times.
Long the most profitable portion of Amazon's business, AWS also the cloud-infrastructure leader with a 33% market share, well ahead of runner-up Microsoft's Azure with a 21% share and Alphabet's Google Cloud at 8%.
No business is immune from macroeconomic influences, but Amazon's e-commerce and cloud services operations are on a skyrocketing trajectory, making it a winning investment for decades to come.
I'm completing the trio of no-brainer stocks to buy now with yet another company starting with the letter A: AT&T (T -1.24%). The telecom giant has been a staple of investor portfolios for decades and has long been considered one of the original widow-and-orphan stocks because of its stability.
It had gotten away from those roots for awhile with forays into entertainment and elsewhere. However, the spinoff and merger of its Warner Media division into Warner Bros Discovery brings its focus back home and narrows it to just its telecom business once more. It also gives it some $43 billion that it can use to pay down its debt as well as invest in its 5G networks that will provide the next leg up for growth. It represents the first upgrade to wireless download speeds in about a decade, and that will continue to drive the smartphone upgrade cycle (another boost for Apple, too).
AT&T was a crucial investment for so many because of its lucrative dividend, and while the spinoff caused it to slash its payout in half (and lose its status as a Dividend Aristocrat), it still yields some of the highest percentages of similarly-situated corporations of its size.
The dividend currently yields 6.1% annually, the ninth-highest of all stocks in the S&P 500, and after the cut, it's even safer than it was before. With a payout ratio of 43%, AT&T has plenty of room to cover the payment and grow the dividend in the future.
The telecom stock is a no-brainer buy for its growth potential and the income stream it produces.