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7 hot stocks to buy that are definitely worth the love

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I often skim through the most frequently traded to buy stocks to see where the Sharpe stock is, because that’s where the opportunity to generate alpha lies, right?

Looking at last quarter’s volume stats, I noticed that investors have rediscovered their love for mega-cap stocks with famous names like Ford, Apple, and more. open the way.

I find this very exciting as it allows us to more accurately predict potential multi-baggers, as there is more symmetry in the available information than among meme stocks.

As I embarked on my seven stock picks, I ensured that the three-month average volume of each exceeded 15 million per day and, secondly, I looked for a mix of value, momentum and growth stocks . Here are seven stocks that I think are worth the love.

  • Ford (NYSE:F)
  • Apple (NASDAQ:AAPL)
  • Bank of America (NYSE:BAC)
  • Microsoft (NASDAQ:MSFT)
  • Barrick Gold (NYSE:GOLD)
  • AT&T (NYSE:J)
  • American airlines (NYSE:AAL)

Stocks to buy: Ford (F)

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The automotive industry has received significant support recently as consumer spending has remained robust.

Perhaps the company that has benefited the most in the industry is Ford with the release of its F-150 Lightning outperformance estimates.

The impressive sales growth of the F-150 Lightning gives an indication of what lies ahead for Ford’s full line of e-vehicles, subsequently boosting investor confidence.

Stock is hot right now. Ford’s trade above its Moving averages over 10, 50, 100 and 200 days, meaning the stock is likely to cross at a brisk pace.

We are also looking at an undervalued stock here; Ford is currently trading below its fair market price, with its price-to-sales and price-to-cash flow ratios trading at discounts of 37.17% and 50.42%, respectively.

In my view, Ford stock will remain popular for most of the year with no indication that cyclical consumption will decline. It is a high quality asset with little risk involved.

Apple (AAPL)

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Warren Buffet recently grabbed Apple shares, which now make up 42.78% of Berkshire Hathaway’s public equity portfolio.

It’s easy to see why Buffet is supporting the stock. The company has established itself as a dominant force in hardware and software product offerings.

It’s going to be extremely difficult for competitors to remove Apple from its throne, especially given the $34.94 billion in cash on its balance sheet, which allows it to spend a $5 billion surplus on R&D per year.

Apple has produced a 14.44% sales/R&D ratio last year, which suggests that it is still evolving.

Apple is trading above its 50, 100 and 200 day moving averages. There’s no indication it will have a bad 2022, making it one of the best stocks to buy for investors of all kinds.

Stocks to buy: Bank of America (BAC)

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Bank of America has been the most frequently traded financial stock over the past three months, with an average daily volume of 46.678 million.

I’ve held the stock for most of the last year and may reinvest in it this year once additional cash becomes available.

I think the stock will benefit from the interest rate hikes expected this year, as its loan book, which offsets 45.81% of its revenue mix, is likely to skyrocket.

Bank stocks tend to perform well in higher rate environments because they have the opportunity to earn higher spreads in debt markets, which in turn provides their stocks with an improved risk-return profile.

The stock is undervalued with a growth price/earnings ratio of 0.21, well below the threshold value of 1.00. Additionally, Bank of America shares formed a momentum pattern as they traded above their 50-, 100-, and 200-day moving averages.

Bank stocks should do well this year, and Bank of America is my pick.

Microsoft (MSFT)

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There is no doubt that Microsoft was going to be one of the best stocks to buy this year as an FAAMG member, but it is expected the acquisition of ActivisionBlizzard (NASDAQ:ATVI) will most likely send its trading volume into the stratosphere.

Microsoft’s acquisition of Blizzard will be worth $68.7 billion, making it the largest gaming presence on the planet.

There is a very specific way to redeem Microsoft from now on.

First of all, it is essential to understand that the acquiring company in such a transaction will generally lose value in the market before the transaction closes, but it will likely return and exceed once the transaction closes.

Based on the data, I can conclude that Microsoft is rightly trading above its fair book value based on the difference between its return on equity of 19.09% and its cost of equity of 6.46%.

The acquisition of Activision Blizzard will provide key growth synergies that could potentially further increase return on equity and perhaps also reduce the cost of equity; this could translate into justified growth in the tech giant’s book value and, subsequently, its stock market value.

I would remain invested in Microsoft and gradually increase my position as we approach the acquisition date in 2023. That’s how I would play it, however, but investors should decide for themselves as my opinion is merely meant to provide you with context.

Stock to buy: Barrick Gold (GOLD)

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If you’re looking for mining exposure, then Barrick is probably your best bet. I like this business because of Mark Bristow’s success in running an efficient business.

Barrick succeeded in increasing its EBITDA by an average of 24.38% over the past three years, with events such as the acquisition of Rand Gold and the partnership with Newmont (NYSE:NMS) in the Nevada gold mining project being the main catalysts.

Barrick intends to mine in the Arabian Shield with the intention of producing copper at the lowest possible cost to facilitate the renewable energy space.

I find this really exciting, as additional exposure to copper could smooth Barrick’s earnings and subsequently get rid of unnecessary cyclicality.

The stock is undervalued, with its price to earnings trading at a 43.16% standard discount. Additionally, Barrick’s trading volume remains strong, with a three-month daily average of 17.02 million.

AT&T (T)

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AT&T faced a lot of criticism last year and, understandably, given that it essentially dethroned itself as the ultimate dividend aristocrat after announcing a corporate restructuring.

I think it’s time to replace that flack with slack. I chose this stock as part of my list after investing in iShares MSCI USA Value Factor ETF (NYSEARC:VLUE), a pure value ETF.

I took a look at the ETF holdings and noticed that AT&T was its biggest holding with 7.67% absolute exposure. This made me look at the outlook for the stock, where I saw that it is currently undervalued by 20.09% and 15.51% relative to its normalized price-to-earnings and price-to-book ratios, respectively.

AT&T has also formed a strong momentum pattern lately by trading above its Moving averages over 10, 50 and 100 days. I support the stock through 2022 because it looks like we’re poised for a rally in value stocks, and I think AT&T will be one of the biggest beneficiaries.

Stock to buy: American Airlines (AAL)

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I had to throw an airline stock here given the propensity for investors to buy the drop in underperforming sectors.

American Airlines suffered a withdrawal of almost ten% towards the latter stages of last year as Delta and Omicron entered the fray.

In addition, many investors sold the stock to offset tax losses, and may re-enter positions this year amid global easing of travel restrictions.

Although the company faced flight numbers removed in 2020/21, it is surprisingly undervalued on a sales basis. American Airlines shares are trading at a 2.17x the price compared to the sales discount, suggesting that investors likely oversold the stock during the hard closings.

I support this stock to outperform this year; hedge funds have already done so in the fourth quarter of last year with 388,700 shares gobbled up by notable fund managers such as Louis Morre Bacon and Ken Fisher.

IIt’s only a matter of time before an institutional buying frenzy begins, which could subsequently attract a lot of interest from retailers.

As of the date of publication, Steve Booyens held indirect positions in all stocks and ETFs mentioned in this article, all positions in the securities mentioned. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.

Steve Booyens co-founded Pearl Gray Equity and Research in 2020 and has since been responsible for equity research and public relations. Prior to founding the company, Steve held various finance positions in London and South Africa, and his articles are published on various reputable web pages such as Seeking Alpha, Benzinga, Gurufocus and Yahoo Finance. Steve’s content for InvestorPlace includes stock recommendations, with occasional articles on crowdfunding, cryptocurrency and ESG.

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