U.S. Markets closed
  • S&P 500

    -7.75 (-0.21%)
  • Dow 30

    -125.82 (-0.43%)
  • Nasdaq

    +26.58 (+0.25%)
  • Russell 2000

    +6.63 (+0.40%)
  • Crude Oil

    -0.24 (-0.31%)
  • Gold

    +0.40 (+0.02%)
  • Silver

    +0.01 (+0.07%)

    -0.0020 (-0.2110%)
  • 10-Yr Bond

    +0.0860 (+2.22%)
  • Vix

    +0.34 (+1.05%)

    +0.0039 (+0.3624%)

    +0.0720 (+0.0498%)

    -81.10 (-0.42%)
  • CMC Crypto 200

    -22.57 (-4.92%)
  • FTSE 100

    -36.36 (-0.52%)
  • Nikkei 225

    +140.32 (+0.53%)

3 Great Stocks to Buy in August for Safety and Long-Term Growth

·4 min read

Today’s episode of Full Court Finance at Zacks tackles where the stock market and the economy stand to start August. The episode then focuses on three stocks—Humana, Merck, and Dollar Tree—that have proven they can climb during 2022’s falling market and operate businesses that are likely to withstand any economic downturn or possible recession.

The hot July jobs report that dropped Friday morning adds to the current economic uncertainty and striking divergence in data. U.S. GDP fell in back-to-back quarters to start the year, which can be common shorthand for a recession.

That said, it’s hard to be in a recession when the U.S. economy added 528,000 jobs in July to blow away projections and take payrolls back to their pre-pandemic levels. The impressive July jobs growth lowered the unemployment rate to 3.5%, and there are still millions of job openings in the U.S. These data points would seem to say that the U.S. is far from a recession.

On the other hand, formerly hot growth areas such as tech and housing are cooling rapidly. And even Walmart is laying off corporate workers as it faces slowing consumer spending. Many people are cutting back after an extended stretch of euphoric post lockdown spending, boosted by stimulus checks, a strong jobs market, and higher wages, all of which helped contribute to the current bout of 40-year high inflation.

There was a growing sense that the Fed’s aggressive rate hikes and their continued hawkish tone were doing their job, with the 10-year down to 2.67% on Thursday from its 3.5% peak in mid-June. The strong jobs print Friday sent 10-year yields back up to 2.85%. Some on Wall Street might be worried once again that the July jobs data will force Jay Powell and the Fed to continue raising rates at high clips.

Given all of the market and economic uncertainty, investors might want to focus on stocks that have been able to climb during 2022 and operate stable businesses built to withstand all types of economic environments. The first stock we look at today is health insurance giant Humana Inc. HUM.

Humana operates through three core segments: Retail, Group and Specialty, and Healthcare Services. The company topped our EPS estimates on July 27 and provided upbeat guidance to help it land a Zacks Rank #2 (Buy). Zacks estimates call for it to post double-digit revenue and EPS growth both this year and next. Humana is also part of a highly-ranked industry and its shares climbed 15% in the last year and 5% in 2022.

Next up is the $220 billion market cap pharmaceutical power Merck & Co. MRK, which topped our Q2 estimates on July 28. Merck’s portfolio includes oncology, vaccines, infectious diseases, diabetes, and beyond. Plus, its Covid-19 antiviral pill continued to perform well in Q2.

MRK raised its guidance to help it capture a Zacks Rank #2 (Buy) right now. And Merck’s roughly 3% dividend yield is even more impressive considering its 14% climb in 2022.

Dollar Tree, Inc. DLTR is a discount retailer focused on expansion. It also raised its prices for the first time in history from $1 to $1.25 to help it sell a wider range of merchandise. The higher prices also help fight back against inflation and improve margins, while maintaining some of the lowest prices in retail.

Dollar Tree steadily grew its revenue for decades and it’s poised to thrive as more Americans look to save money. DLTR has crushed the likes of Walmart and Target over the last 15 years and it’s up 65% in the past 12 months. Dollar Tree holds a Zacks Rank #2 (Buy), with it set to release its quarterly results on August 25.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Merck & Co., Inc. (MRK) : Free Stock Analysis Report
Dollar Tree, Inc. (DLTR) : Free Stock Analysis Report
Humana Inc. (HUM) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research