So far in 2023, Singapore investors have seen pretty solid returns. That’s particularly true for those of us invested in US stocks.
Continually falling rates of inflation and the likelihood that the US Federal Reserve (Fed) have finished hiking interest rates have spurred more optimism.
However, in August that market optimism stalled as the benchmark S&P 500 Index declined 1.6% and the Nasdaq-100 Index fell 1.5%.
With some lingering concerns over how long interest rates will stay elevate, markets are starting to worry that a consumer recession in the US will take hold in the back half of 2023.
So, in this sort of environment, where should we be placing our investments? Here are five top stocks to buy for September.
1. Meta Platforms
One prime example of a company that has rebounded strongly this year is Meta Platforms Inc (NASDAQ: META), the parent company of Facebook, after it endured a sharp decline in 2022.
This was in line with the recovery in earnings as revenue jumped by 11% while net income grew 16%.
This resurgence suggests Meta is well-positioned for growth, with the potential to expand monetisation across services like WhatsApp, Reels, and Messenger and to boost its average revenue per user (ARPU) outside core markets, especially in the Asia-Pacific region.
However, challenges persist with unprofitable Metaverse operations (although it has committed to not burn as much cash in this area) and privacy-related regulatory concerns.
2. Intel
The prospects for Intel Corporation (NASDAQ: INTC) are looking up amid a broader semiconductor downturn due to heightened US-China tensions.
The company’s proactive move to build a US-based foundry ecosystem positions it as a reliable alternative to the incumbent giant Taiwan Semiconductor Manufacturing Co Ltd (NYSE: TSM) (TPE: 2330), especially considering the geopolitical tensions in Taiwan.
Notably, Intel’s significant pre-payment for its upcoming 1.8nm fab, possibly from a major chipmaker, underscores industry confidence in the company’s foundry initiatives.
Moreover, Intel’s future roadmap to compete with TSMC – as well as its increasing traction in the AI accelerator market – further highlight its growth potential.
Intel’s strategic pivot and advancements suggest it has potential as a turnaround story and long-term holding, particularly for those of us concerned with geopolitical risks or looking for a diversified chip manufacturing alternative to TSMC.
3. Lululemon
The yoga wear and athleisure brand Lululemon Athletica Inc (NASDAQ: LULU) recently showcased impressive Q2 2023 results, exceeding Wall Street’s expectations, with strong international growth and record margins.
Key highlights included an 18% revenue increase to US$2.2 billion and a whopping 52% sales growth rate in its International segment, driven primarily by a 61% sales surge in Greater China.
Economies of scale are further propelling the company’s financial health, with its gross profit margin reaching an all-time high of 58.8%.
With robust growth rates, high profit margins, and a strong brand presence, Lululemon stands as a compelling investment, even if it demands a premium valuation.
4. Microsoft
The area of AI, gaming and the cloud are coming together nicely for Microsoft Corporation (NASDAQ: MSFT).
The company offers investors both growth opportunities due to its pioneering role in AI and defensive traits, marked by the tech giant’s consistent profitability.
The company exemplifies financial resilience, boasting a significant trailing-year operating margin of 41.8% and a net margin of 34.2%.
Its groundbreaking AI endeavours also hint at further growth potential.
As for dividends, Microsoft, while only offering a modest forward yield of 0.83%, has shown itself to be a reliable payer as evidenced by its two decades of consistent dividend growth.
The company’s conservative payout ratio of just under 25% further ensures the dependability of these dividends.
5. Pepsi
During economic downturns, investors prioritise stability.
That’s what PepsiCo Inc (NASDAQ: PEP) delivers as it’s a suitable defensive play during recessions.
Beyond its famed soda brand, PepsiCo’s portfolio also includes other drinks and food staples like Gatorade, Lay’s, and Doritos, ensuring steady revenue even in tight financial times.
While its stock performance has trailed the S&P 500 over the last decade with average annual gains of 12.1% (versus12.6% for the index), it has a consistent and growing dividend.
For those eyeing dividends, PepsiCo is a true goldmine with a 10-year compounded annual growth rate (CAGR) of 8.1%.
Building a resilient portfolio without sacrificing growth
As the market presents a whole host of challenges and opportunities in 2023, investors would do well to strategically calibrate their portfolios.
That means prioritising growth, defensive strengths, and diversification.
The five stocks above offer a robust blueprint to achieve this, ensuring not only capital preservation but also potential capital appreciation too.
Disclaimer: ProsperUs Head of Content & Investment Lead Tim Phillips doesn’t own shares in any companies mentioned.
