5 Top Stocks to Buy in July 2023

July 4, 2023

Best stocks buy

At the start of the year, it would have been hard to imagine how stock markets could do even remotely well in 2023 after all the negative news about interest rates and inflation.

However, June continued a strong run for the US stock market – the world’s largest – as the benchmark S&P 500 Index gained 6.5% over the month and the Nasdaq-100 Index saw gains of 6.6%.

For the first half of the year, the S&P 500 Index is up 15.9% while the tech-heavy Nasdaq is up a whopping 31.7%.

Even with all those gains, it’s been a market rally that everyone has been waiting to stumble. That’s due to widespread expectations that the US economy is headed into a recession in the second half of 2023.

So, with that in mind, here are five very different stocks that investors can buy and hold, for the long term, in July 2023.

1. AMD

The AI craze has seen one certain large chip company nearly triple in 2023 alone. One semiconductor company that hasn’t been able to post those sorts of gains is Advanced Micro Devices Inc (NASDAQ: AMD), better known as just AMD.

However, AMD shares have benefitted from the AI wave and its stock price is still up a robust 91% so far in 2023.

While its latest Q1 earnings saw the company record revenue of US$5.3 billion, down 9% year-on-year, there’s consensus that earnings and revenue numbers for large chip companies have now bottomed out.

Indeed, AMD management is guiding for flat quarter-on-quarter growth for Q2 2023 while also projecting a stable non-GAAP gross margin of 50%.

There’s potential upside too, from this, given the recent launch of chips designed specifically for data centres and cloud computing.

The 4th Gen EPCY processor from AMD will help with workloads in modern data centres while the firm also unveiled an AI Platform strategy that looks to develop scalable AI solutions for clients via deep industry software collaboration.

2. Nike

The “Just Do It” slogan is almost instantly-recognisable as the motto of sportswear giant Nike Inc (NYSE: NKE).

With its strong brand and marketing prowess, the company is a solid stock to hold in times of uncertainty.

Nike recently released its Q4 fiscal year 2023 (Q4 FY2023) earnings last week and the company reported revenue of US$12.8 billion, up 5% year-on-year but an increase of 8% year-on-year on a currency-neutral basis.

While gross margin was down, the big positive for Nike was that Nike Direct – its B2C model where it sells directly to consumers – saw revenue of US$5.5 billion, up a healthy 15% year-on-year.

An added bonus is that the company also pays out a quarterly dividend of US$0.34 per share, giving Nike stock a dividend yield of 1.3%.

3. Oracle Corp

Many investors may have forgotten about large software firm Oracle Corp (NYSE: ORCL), given its notable involvement in the tech bubble of 2000.

More recently it has been involved in cloud computing and that heavy investment is starting to pay dividends.

In June, the firm reported its FY2023 full-year earnings and the company’s revenue for the year reached an all-time high of US$50 billion, up 22% year-on-year in constant currency terms.

Oracle’s growth was spearheaded by its cloud applications and infrastructure businesses, which grew at a combined blistering rate of 50% year-on-year, in constant currency terms.

Some deals, such as a US$28 billion deal to buy cloud-based health records business Cerner, have helped Oracle grow in certain niches.

The company has also secured the cloud contract that allows them to host the American operations of social media giant TikTok.

Oracle shares are up nearly 40% so far in 2023 and the company pays a dividend, with its stock yielding 1.4%.

4. Thermo Fisher Scientific

When times are good, many investors forget about healthcare stocks like Thermo Fisher Scientific Inc (NYSE: TMO).

The company is a medical devices, specialty diagnostics and lab equipment behemoth. It’s also a stock that can continue to perform (relatively) well if there’s indeed a downturn in the US economy.

That’s because its key divisions, such as Life Sciences Solutions and Specialty Diagnostics, are ones that produce key testing or analytical devices for hospitals and healthcare specialists all over the world.

Indeed, Thermo Fisher Scientific’s revenue split in its latest quarter was; 55% from North America, 24% from Europe, 18% from Asia-Pacific and 3% from Rest of the World (ROW).

While revenue was lower in Q1 2023 by 9% year-on-year to US$10.7 billion, the firm’s core organic revenue growth was 6% year-on-year.

With its involvement in biopharma and how its equipment will be needed in the decades ahead – no matter what happens in markets – Thermo Fisher Scientific is a healthcare giant that’s worth holding for the long term.

5. McDonald’s

Finally, we have the golden arches of McDonald’s Corp (NYSE: MCD), one of the world’s largest fast-food chains.

One of the beautiful things about the business model of McDonald’s is that it’s a franchise model, meaning the company doesn’t actually own and operate the majority of its stores.

Instead, it takes a cut of overall revenue for franchisor having the rights and use of the McDonald’s brand and menu.

As a result, the firm is highly profitable. In Q1 2023, comparable sales for McDonald’s increased nearly 13% year-on-year, an incredible performance in the current market environment.

McDonald’s also pays a dividend and is in fact a Dividend Aristocrat – meaning it has paid a rising dividend for over 25 consecutive years.

At its current share price, McDonald’s yields 2% and it’s a business which could hold up well in a recession as people decide to go for cheaper options when eating out.

Look at the long term

For investors who have a long-term investing horizon, we should make sure we make fully-informed decisions about our investments.

As a result, it’s key to remember that diversification helps when choosing stocks. With AMD, Nike, Oracle, Thermo Fisher Scientific, and McDonald’s, investors have a solid stable of five stocks.

Many of these companies also pay a dividend which can be paid out, even if earnings fall from here. When thinking about investing, it’s always important to focus on the individual businesses and not the headlines about the economy.

 

Disclaimer: ProsperUs Head of Content & Investment Lead Tim Phillips owns shares of Advanced Micro Devices Inc and Thermo Fisher Scientific Inc.

Tim Phillips

Tim, based in Singapore but from Hong Kong, caught the investing bug as a teenager and is a passionate advocate of responsible long-term investing as a great way to build wealth.

He has worked in various content roles at Schroders and the Motley Fool, with a focus on Asian stocks, but believes in buying great businesses – wherever they may be. He is also a certified SGX Academy Trainer.

In his spare time, Tim enjoys running after his two young sons, playing football and practicing yoga.

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