Rising interest rates have made stocks a lot less appealing over the past year. However, blindly selling all of your stocks as the bear market drags on is a bad idea -- especially if you don't plan to retire anytime soon. Over the long run, a basket of well-diversified stocks has historically outperformed cash, bonds, and other assets by a wide margin.
So instead of dumping all of your stocks, be more selective with your investments. Today, let's take a look at three stocks that are still no-brainer buys in this choppy market: e-commerce giant MercadoLibre (MELI -1.01%), consumer staples king Procter & Gamble (PG 0.54%), and discount retailer Dollar General (DG -0.59%).
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MercadoLibre
MercadoLibre, the largest e-commerce company in Latin America, deserves more love from growth-oriented investors. In 2022, its revenue rose 49% to $10.5 billion, its total number of unique active users grew 6% to 148 million, and its net income jumped nearly sixfold to $482 million -- even as it faced tough year-over-year comparisons to the pandemic.
Its three largest markets -- Brazil, Argentina, and Mexico -- all grew their gross merchandise volumes (the value of all goods sold on its marketplace) by the high double-digits throughout the year. As economies of scale increased, its margins expanded as well. Its fintech ecosystem, which houses its integrated digital payments platform Mercado Pago, expanded to 44 million unique active users by the end of the year.
MercadoLibre is already one of the fastest-growing e-commerce companies in the world, but it could still have plenty of room to grow. According to Americas Market Intelligence, the e-commerce markets of Brazil, Argentina, and Mexico could still grow at compound annual rates of 22%, 32%, and 24%, respectively, between 2021 and 2025.
Analysts expect MercadoLibre's revenue and earnings to grow 23% and 53%, respectively, this year. It might not seem like a bargain at 81 times forward earnings, but it still looks cheap relative to its top-line growth at 4 times this year's sales. Investors who can stomach some near-term volatility should take a chance on this underappreciated e-commerce stock.
Procter & Gamble
Procter & Gamble's sprawling portfolio of consumer staples houses 65 well-known brands -- including Tide, Pampers, Tampax, Charmin, Bounty, Gillette, Oral-B, Head & Shoulders, and SK-II. Its broad diversification and brand recognition enable it to generate consistent growth through economic downturns, while its reliable dividend -- which it's raised for 66 consecutive years -- makes it a solid long-term play for conservative income investors.
P&G's organic sales and core earnings per share (EPS) rose 7% and 3%, respectively, in fiscal 2022 (ended last July). For fiscal 2023, it expects its organic sales to rise 4%-5% as its core EPS increases 0%-4% -- even as it absorbs the impact of a strong dollar, higher commodity prices, and elevated freight costs. It's also countering inflation with incremental price hikes.
P&G currently pays a forward dividend yield of 2.6% and trades at 24 times forward earnings. It's not historically cheap, but its reputation as a safe haven stock for uncertain times justifies that slight premium. It might not beat the S&P 500 if a new bull market starts -- but it's the ideal stock to buy and hold if you believe the bear market will drag on this year.
Dollar General
Another solid stock to own during a bear market is Dollar General (DG -0.59%). It isn't a true "dollar store," which actually sells everything for a dollar, but it sells most of its products at lower prices than larger retailers. Unlike its rival Dollar Tree, which also owns Family Dollar and primarily targets urban areas, Dollar General opens most of its stores in rural areas that are underserved by big superstore chains.
Dollar General is one of the few brick-and-mortar retailers that continued to open new stores as the "retail apocalypse" consumed its weaker peers. Its revenue rose 1% in fiscal 2021 (ended last January), as its new store openings offset a 2.8% decline in same-store sales, while its EPS dipped 4%. That pressure was mainly caused by tough comparisons to its accelerating sales growth throughout the pandemic in 2020.
But based on Dollar General's preliminary fourth-quarter report, its same-store sales rose 4.3% in fiscal 2022 and its EPS grew 4.5%-5%. For fiscal 2023, it expects its same-store sales to rise 3%-3.5% as its EPS increases 4%-6%. That stable forecast suggests it will remain a safe haven for investors as inflation continues to drive consumers toward deep discount retailers. Its stock is still reasonably valued at 18 times forward earnings, and its forward yield of 1% is a nice added bonus -- even if it doesn't attract any serious income investors.
