The broad market itself might still be undecided regarding its current direction. A handful of solid stocks, however, just look too beaten-down or too hot to pass up at this point. Here's a closer look at four of these top names to consider soon -- as in this week.
1. Taiwan Semiconductor Manufacturing Company
Yes, the semiconductor shortage is still with us. It's not necessarily a problem for every name in the sector, though. For some chip companies, it's been a boon. Taiwan Semiconductor Manufacturing Company (TSM -0.73%) is one of those beneficiaries.
In simplest terms, Taiwan Semiconductor (or TSMC) is a contract chip manufacturer. It makes semiconductors for outfits that design their own but don't want to take on the expense of building their own production foundries. Apple, Qualcomm, and Nvidia are just some of its customers.
And with the chip industry struggling to find enough crucial components, a bunch of key names in the business are increasingly turning to Taiwan Semiconductor for help. That's why this year's top line is projected to grow 30%, driving similar growth in per-share earnings.
It's what's likely to be coming next year, however, that makes this stock such a must-own now. Despite a weakening economy expected to sap chip sales, analysts expect TSMC to keep growing all the same. Needham and Bernstein both see growth for the company in the year ahead, and recently Needham analyst Charles Shi said, "We believe TSMC's near-monopoly position in 5-nanometer [chips] and 3-nanometer, both of which are expected to ramp meaningfully in 2023, will help the company defy the industry downcycle."
2. Merck
Merck (MRK -0.38%) wasn't one of the pharmaceutical names swept up in the mania to develop a COVID-19 vaccine. The company makes molnupiravir, which is proving to be a fairly effective treatment for the disease.
Merck opted to maintain most of its focus on its pre-pandemic developments, like expanding the uses of its cancer-fighting Keytruda and continuing its work on a promising pipeline. As an example, its cardiovascular drugs currently in trials could eventually generate $10 billion worth of annual revenue, the company believes. These stories just didn't excite investors in the middle of the pandemic, though. That's why the stock has basically moved sideways since late 2019.
With the fight against COVID-19 losing urgency, however, the market's focus could readily turn back to longer-lived drug opportunities. And Merck has plenty of them.
Beyond cardiovascular drugs, the company's anticoagulant MK-2060 was recently granted a fast-track designation from the Food and Drug Administration, and Merck is now collaborating with Orna Therapeutics on RNA-based therapies.
These and other efforts haven't stoked the stock's fires yet. If the economy and overall market continue weakening, though, the sort of resiliency Merck can offer (not to mention its current dividend yield of 3.1%) becomes quite compelling.
3. Amazon
It's been a fairly poor year for the overall market, and Amazon (AMZN 0.41%) has been no exception. In fact, given Amazon's massive market cap, this year's marketwide weakness can largely be attributed to the company's 26% year-to-date slide. Sky-high gas prices and soaring employee costs have taken a big bite out of the company's already paper-thin profit margins on its e-commerce operation, and investors are pricing the pain in.
What's largely being overlooked right now is that e-commerce hasn't been Amazon's breadwinner for a long, long time. That honor belongs to Amazon Web Services (AWS). Even in pre-pandemic fiscal 2019, AWS accounted for two-thirds of Amazon's operating income. And the cloud computing arm's bottom line is nearly twice as big now as it was then, with more of the same sort of growth in the cards.
In the meantime, while Amazon is losing money right now by selling physical goods online, it's mattering less and less. The company generated a whopping $31 billion in high-margin ad revenue last year, finding a new way to leverage the massive amount of traffic that its online marketplace draws every day. So this year's top line is expected to grow 11% before accelerating to a growth pace of more than 15% next year.
The company can afford for its e-commerce operation to lose money when it's making so much more in other ways.
4. Genuine Parts Company
Lastly, add auto parts retailer Genuine Parts Company (GPC 0.53%) to your list of growth stocks to buy this week.
It's an interesting industry. Whereas consumers might skip a trip to the mall or postpone a vacation when it feels like money is getting tight or jobs are in jeopardy, car repairs are rarely optional. Not even the pandemic stifled demand for car parts.
Genuine Parts Company (you might know it better as NAPA Auto Parts) managed to do almost as much business in a challenging 2020 as it did in 2019, and then managed to pump up its top line by 14% in 2021. Operating profits remained solid during that trying time as well. Sales are on pace to improve 14% this year, once again pumping up its profits to a similar degree. It's a testament to the fact that for most consumers, car repairs can't wait.
And that's increasingly so. Thanks to a combination of inflation and broken supply chains, Kelley Blue Book reports the average price of a new car in the United States reached a record-breaking $48,300 last month...assuming you can find one you like. Between the cost and sheer scarcity of attractive used cars, a bunch of people are willing to spend good money just to keep their current cars running for as long as possible.
The kicker: Genuine Parts Company currently pays a dividend of 2.3%. It has paid a dividend every quarter for decades, and has raised it every year for the past 66 years.
