With the stock market off to one of the worst starts to a year in recent memory, the idea of adding new positions in February might be met with some hesitancy among many investors. It will undoubtedly be interesting to see if equities can finally bottom and how the market digests the recent Fed meeting and the prospect of rate hikes in March. Combine these headlines with the fact that we are heading into the heart of earnings season, and you have a recipe for a fascinating month ahead.
While there are plenty of complex factors at play in both financial markets and the economy at this time, that doesn’t mean investors should avoid seeking out stocks trading at attractive levels. The truth is that volatility can create some fantastic buying opportunities, and when sentiment gets extremely washed out, it can be the ideal time to load up on intriguing stocks for the long term.
That’s why we’ve put together the following list of the top 3 stocks to buy in February so that you can approach this month with the confidence needed to take full advantage of whatever the market brings.
1. Apple
If there’s one stock that investors should be watching closely for February, it’s Apple (NASDAQ:AAPL). The multinational tech company has such a massive weight in the market indexes that it will provide vital signs about where we could be heading next.
Regardless of how shares trade in the short-term, long-term investors should view the recent weakness in Apple as an opportunity to add shares of one of the best companies in the world at prices well off of 52-week highs. The company’s smartphones, personal computers, tablets, wearables, and accessories are some of the best-selling consumer electronics products in the world, and it’s easy to envision a future where these devices continue flying off of the shelves.
Apple continues to deliver quarter after quarter of staggering growth, which is a big reason why it has become the most valuable company globally by market capitalization. The company just announced its Q1 earnings which saw Apple beat consensus estimates on EPS and revenue, which tells us that the company has been able to navigate supply chain issues well. Apple’s Q1 revenue of $123.9 billion was a record and represented year-over-year growth of 11%, and the company expects to set another record for the March quarter.
2. Zim Integrated Shipping
Next up is an appealing shipping stock that has been benefitting from the aforementioned supply chain issues. Israel-based ZIM Integrated Shipping (NYSE:ZIM) operates a fleet and a network of shipping lines offering cargo transportation services on all major global trade routes. Shipping companies like Zim have been busy helping the international trade market return to normal following the pandemic, mainly since big companies like Alibaba (NYSE:BABA) rely on it for logistics technology. Shipping rates have gone up significantly, which is showing up in this company’s earnings.
Zim Integrated Shipping generated its highest ever quarterly net income of $1.46 billion in Q3, up 913% year-over-year, and boosted its forward guidance for the year, which are both signs of a company that is poised to continue delivering shareholder value. It’s also worth mentioning that the stock offers an attractive annual dividend yield of 16.83%, which is certainly appealing given inflation concerns.
3. Deere
Since technology stocks face the most risk in February given rising bond yields, it makes sense to look at a high-quality cyclical name like Deere & Company (NYSE:DE). The stock has been consolidating for almost an entire year and could be gearing up for a breakout if the market can find a bottom. Deere is the world’s largest producer of farm equipment and a leading producer of construction equipment. That means it’s a company that should benefit from U.S. federal infrastructure spending and high crop prices. Supply chain constraints should also ease up in the coming months and help meet rising customer demand for new and used equipment.
The company will report its Q1 earnings on February 18th, which could be a catalyst that helps shares break out of the current price range. Last quarter, Deere delivered Q4 EPS that increased by over 70% year-over-year, which is a good sign that the company’s business is heading in the right direction after the pandemic. Finally, a dividend yield of 1.13% and a forward P/E ratio of 16.75 make this precisely the type of stock to look at in a challenging market environment where value might remain more in favor than growth for months to come.