Three Stocks to Watch for the Week of April 11th

Markets slid after a strong start last week to finish negative.  The situation in Ukraine and Fed policy concerns continued to loom large over sentiment.  Wednesday’s release of minutes from the mid-March FOMC meeting showed that policymakers discussed the possibility of raising the benchmark interest rate by fifty basis points at next month’s meeting.  The hawkish commentary kept most buyers on the sidelines as volumes dwindled into Friday’s close.  The S&P 500 fell about 1.2% for the week, the Dow slipped 0.2%, and the Nasdaq dropped 3.8%.

Earnings season officially kicks off this week, with reports due from some of America’s largest financial firms, including Wells Fargo, Goldman Sachs, JPMorgan Chase, BlackRock, Citigroup, Morgan Stanley, and PNC.  We’ll also find out whether the U.S. economy got any relief from surging inflation in March with the release of the Consumer Price Index report scheduled on Tuesday.  Market watchers will be especially attentive to economic data in the coming weeks that could influence the Fed’s May 4th decision.  

This edition of the weekly watchlist features an ultra-high-yield real estate investment plus a name likely to benefit from the upcoming flood of green infrastructure spending.  We’ve also got the lowdown on gold’s latest move along with our top mining recommendation for 2022. 

After more than a week of consolidation in the $1915 – $1935 range, strength was evident in the price of Gold this weekend, which climbed as high as $1947 on Sunday afternoon.  Experts say additional upside momentum is coming, which should provide support to mining stocks.  

Our first recommendation is none other than the world’s most valuable gold mining company.  Canada-based Barrick Gold Corp’s (GOLD) strong balance sheet complements its top-tier gold mining portfolio, providing financial flexibility and strength. 

Barrick focuses on operating large mines with significant remaining resources, which allows for a relatively steady and predictable production pace.  The company expects to produce an average of 5.5 million ounces per year through 2030.  What’s more, the company expects to decrease its all-in sustaining cost by 10% by 2026, which should help boost profits even if gold prices decline modestly.   

The company has been steadily paying down debt over the past decade through free cash flow and the sale of non-core assets, reducing interest costs and allowing GOLD to grow its dividend, which currently yields 1.61%.  Barrick shares are already up about 37% year to date and have an excellent chance to gain additional upside if gold continues to deviate from its previous range, heading towards the $2000 level.  

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Last year Congress approved the largest investment in the nation’s infrastructure in decades.   More than $150 billion is slated for projects that address climate change, like building electric vehicle charging stations, upgrading energy grids and production to work better with renewables, and making public transit more environmentally sustainable.  One of the companies best positioned to benefit from the upcoming flood in infrastructure spending over the next three years is Eaton Corp (ETN).  

Eaton doesn’t generate power, and it’s not a pure-play on green energy like some of the other best “green infrastructure stocks.”  But, as a major supplier of electrical components and systems, it is absolutely an indirect play on this fast-growing industry and one that is likely to thrive irrespective of the inevitable booms and busts we’ll see in the coming years.  The wind and solar farms popping up around the country need to be incorporated into the national grid, and that’s precisely what Eaton does.

Eaton is a power management company with a 109-year history.  It has been listed on the NYSE for 97 years and has paid a dividend every year since 1923. That’s remarkable consistency in an industry that has undergone tremendous changes over the past century, a significant selling point of this stock.

Many of the high-flying stocks in alternative energy might or might not be around a decade from now.  This is still very much the wild west.  But Eaton almost certainly will be, supplying the survivors with power systems and software and integrating them into the grid.

ETN currently sports a 2.1% dividend yield.  There are 15 Buy ratings for the stock, 9 Hold ratings, and 1 Sell rating. 

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As investors navigate a volatile stock market, many are rotating into more defensive sectors like utilities, healthcare, and consumer staples which are necessary for all phases of the business cycle and tend to offer more stability than growth and tech stocks.  Even better are tickers from these sectors that come with a reliable payout.  

Last up on our list for this week is a high-yielding health-care focused real estate investment trust (REIT), Sabra Health Care REIT (SBRA).  Sabra owns and leases more than 400 senior housing and skilled nursing facilities throughout the U.S.

As you would imagine, occupancy rates at senior housing facilities took a hit due to COVID-19, which raised concerns about possible rent delinquencies.  But due to the essential nature of care facilities, the recovery has been swift.  Senior and skilled nursing occupancy rates bottomed more than a year ago and have steadily rebounded ever since.  In February, the company reported that 99.6% of forecasted rents had been collected since the start of the pandemic.

SBRA’s full-year 2021 investment activity totaled $419.4 million with a weighted average estimated stabilized cash yield of 7.6%, including the completion of the first tranche of the previously announced investment in Recovery Centers of America for $290.0 million at a 7.5% yield.  

With the worst of the pandemic in the rearview,  this high-yield REIT is perfectly positioned to benefit from demographic trends that include aging baby boomers and increasing demand for care-based housing. 

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