Stocks to buy

3 Stocks Every Smart Investor Should Own in 2024

2023 was a year when growth outperformed value by a huge margin, led by the technology-heavy Nasdaq 100. However, in 2024, there might be a reversal of fortunes, given the numerous headwinds on the horizon. Thus, you should consider some smart investor stocks to weather the potential market turmoil.

2024 might be a challenging year, considering the macro and geopolitical backdrop. First, the Federal Reserve rate-cutting decision is key. In their December 2023 meeting, they indicated the likelihood of three cuts. Then, there is the uncertainty regarding the U.S. elections, which could weigh heavily on markets.

Also, geopolitical tensions are flaring up, and the potential for a full-blown war is not out of the question. Russia has resumed its heavy bombardment of Ukraine, and there appears to be no end in sight. On the other hand, the Israeli-Hamas war is still raging and isn’t close to a resolution.

According to Citadel’s Ken Griffin, the peace dividend is over. Given these market risks, it might be worth considering a defensive posture after massive stock gains in 2023. These smart investor stocks are well-positioned to benefit in a volatile geopolitical landscape.

Lockheed Martin (LMT)

A Lockheed Martin (LMT) Space Systems sign in Sunnyvale, California.

Source: Ken Wolter / Shutterstock.com

As one of the largest defense contractors, Lockheed Martin (NYSE:LMT) will benefit from the increased geopolitical conflicts. As mentioned above, the Russia-Ukraine war is going on, and so is the Israel-Hamas war. A prolonged conflict only demands more Lockheed’s jets, missiles, and defense systems.

Even if these conflicts get resolved, there is still demand for Lockheed’s arms. After two decades of relative calm, conflicts have escalated, not to mention a likely China-Taiwan war. Nations are investing in their militaries to boost preparedness in a global conflict.

Although questions persist about the fiscal year 2024 appropriations going through Congress, management is confident about funding support. Furthermore, supplemental requests for Israel, Ukraine, and potentially Taiwan are an option.

As one of the top smart investor stocks, Lockheed Martin is a buy. It is at the core of the defense systems and capabilities of the U.S. and its allies. The F-35 program continues to deliver with a year-to-date total of 80 jets as at the need of Q3. The production rate is 156 jets per year, and management expects to keep up that pace.

Besides, the company is banking on its 21st Century Security Strategy for growth. Under this plan, the company plans to offer integrated battle management, command, and control systems across multiple domains. Already, it has secured several contracts with the U.S. Navy and Coast Guardthe Australian Defense Force, and the Guam Government.

As of Sept. 24, 2023, the company had a robust backlog of $156 billion, buoyed by domestic and international orders. The backlog presents stable growth, supporting its generous shareholder return strategy in 2024.

Walmart (WMT)

Source: Jonathan Weiss / Shutterstock.com

Walmart (NYSE:WMT) is an economic bellwether and is one of the top smart investor stocks for 2024. Surprisingly, Walmart outperformed Target (NYSE:TGT) in 2023 and can produce a stellar 2024. Management is executing flawlessly, and the retailer is winning market share in the U.S.

By entering 2024, Walmart could see more share gains, especially if unemployment rises from record lows. It is a discount store that could benefit as middle- and low-income consumers begin to tighten their budgets. Furthermore, the retailer is highly exposed to grocery, with the segment accounting for over 58% of sales. Thus, despite a recession, Walmart sales will likely hold up due to its high essentials mix.

Secondly, the firm could see more growth from its e-commerce business. Since the pandemic, it has invested in expanding its online presence. It has increased third-party sellers on the platform to increase the selection breadth. Additionally, it has expanded its logistics network to guarantee faster delivery.

In December 2023, it released Q3 FY2024 results that highlighted the strength of its e-commerce business. Global e-commerce sales were $24 billion, an increase of 15% year-over-year. The segment is rising in significance and accounted for 15% of total revenues in the quarter.

TipRanks analysts are bullish, with an average price target of $180, presenting over 10% upside. TD Cowen thinks WMT stock is one of the best stocks for 2024. Analyst Oliver Chen notes it has defensive and offensive characteristics and could benefit from Walmart+, a digital marketplace, and digital advertising.

Procter & Gamble (PG)

A Procter & Gamble (PG) distribution center in Vandalia.

Source: Jonathan Weiss / Shutterstock.com

Procter & Gamble (NYSE:PG) is a top buy for 2024, given the stable nature of its business. Furthermore, most of the company’s 2023 headwinds could be tailwinds. Commodity prices are moderating, lowering input costs, and the foreign exchange situation could improve.

The household products giant’s strong U.S. dollar was one major headwind in 2023. In FY2023, management expects a $1 billion headwind from foreign exchange. However, a weaker U.S. dollar in 2024, as the Federal Reserve cuts rates, could boost earnings.

Besides, the company has taken measures to reduce the negative impacts of foreign exchange. It has launched a restructuring program under challenging markets such as Argentina and Nigeria. To facilitate foreign exchange losses, they plan to turn Nigeria into an import-only market and divest the Fabric and Home Care business in Argentina.

And although markets have been wary about price deceleration, management is optimistic. At the Morgan Stanley Global Consumer & Retail Conference, management forecasted 4-5% growth. This will come from flat to 1% volume growth and a 4-5% price contribution.

Lastly, China remains a key growth market despite the current consumer headwinds. Chief Financial Officer Andre Schulten believes this market can return to mid-single-digit growth. Indeed, it’s one of the top smart investor stocks, given the potential for emerging market growth.

As of this writing, Procter & Gamble has several category-leading brands like Tide, Gilette, Cascade and Downy. The stock is reasonably valued at 23 times FY2024 EPS guidance of $6.25 to $6.43. Steady 4-5% growth and a defensive business selling essential products will support a rising PG stock.

On the date of publication, Charles Munyi did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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