If you've got an end-of-year bonus or some extra cash right now, you may be doing one particular thing: investing in gifts or holiday purchases. But there's another area begging for your attention and promising rewards over the long term, and that's the stock market.
Many stocks are trading at record lows these days. The bear market and general economic situation have weighed on their performance.
Solid companies won't stay at these levels forever. That means right now is the perfect time for you to get in on these promising long-term stories. So, if you have $1,000 to spare -- or even less -- here's where to invest it before the end of 2022.
Why invest now?
Of course, you may be thinking, "Why should I invest now when the market has done so poorly?" As I've written before, bear markets are one of the best times to invest. That's because you have the opportunity to buy top players for a song. And you'll have the chance to benefit at a maximum when these companies eventually rebound.
We don't know when the market or individual stocks will rebound, so today, it's best to prepare your portfolio for both an ongoing bear market and the next bull market. I favor dividing up your $1,000 to include at least one of each: dividend stocks, stocks with momentum right now, and potential recovery stories.
Let's talk about dividend stocks. They're welcome in my portfolio at any time. But I especially love them during market downturns. That's because even if a stock itself delivers a poor performance during a given period, it still offers you passive income.
Target (TGT -0.36%) is a perfect example. The retail giant is heading for an 35% decline this year. That's as higher inflation weighs on its margins and on its shoppers' wallets.
But, as a shareholder, you'll still benefit from Target's $4.32-per-share annual dividend. That's at a yield of 2.84%.
The company also is a Dividend King. That means it's raised its dividend for at least the past 50 years. This is positive because it shows dividend growth is important to Target. So, it's likely to continue rewarding investors this way.
Beating the market
Stocks with momentum are a way to defy the current bear market. These are companies that have managed to beat the broader market this year and have reason to continue gaining. Axsome Therapeutics (AXSM 2.79%) has done just this. The biotech company has advanced almost 110% this year. That's as it commercialized its first two products.
Axsome could increase further over time for two reasons. First, it's starting to generate revenue from those first two products. Second, there's a good chance Axsome will launch other products in the next couple of years. It plans to submit a migraine candidate for regulatory approval next year. And it recently reported positive phase 3 trial data for a candidate treating Alzheimer's disease agitation.
Therefore, even if the bear market persists, your portfolio may benefit from a position in Axsome.
Finally, recovery stories are a way to prepare for the next bull market. They're likely to take off when the general market environment improves. One to consider is Teladoc Health (TDOC 3.31%). The stock has dropped 70% this year -- and it's trading at its lowest ever in relation to sales.
TDOC PS Ratio data by YCharts
At the same time, this telemedicine giant has narrowed its net loss. And revenue and visits continue to climb in the double digits. This sort of player could skyrocket in a bull market -- and carry your portfolio with it.
With this plan, your $1,000 investment today may pay off in the near term and over time. Dividend stocks and stocks with momentum should help you weather the bear market storm. Stocks ripe for recovery may help your portfolio take off when the next bull market starts. And many of these players are trading at bargain prices today.
All of this means right now is a great time to put your money to work.
