The equity markets are expected to remain volatile in the near term due to elevated interest rates, persistent inflation, and geopolitical tensions, all of which might drag the valuations of companies across sectors lower.
But timing the market is futile which means you need to hold stocks that can thrive across economic downturns and market cycles. Here are the three best stocks to invest $5,000 in right now.
Barrick Gold stock
While gold prices are hovering at all-time highs, gold mining companies such as Barrick Gold (TSX:ABX) continue to trail the broader markets and trade at a compelling valuation. Among the largest gold miners in the world, Barrick Gold currently trades at a market cap of $42 billion.
It recently reported preliminary numbers for the first quarter (Q1) of 2024, producing 940,000 ounces of gold and 40,000 tonnes of copper. The miner sold 910,000 ounces of gold and 39,000 tonnes of copper in the March quarter.
Barrick Gold emphasized gold and copper production will progressively increase each quarter through 2024, driving revenue and cash flows higher. Analysts forecast Barrick Gold to end 2024 with adjusted earnings per share of $1.3, up from $1.16 per share in 2023. So, ABX stock is priced at 18 times forward earnings, which is not too expensive.
Generally, the performance of mining stocks is tied to the prices of the commodity they mine. With tensions rising in the Middle East and the possibility of rate cuts by the end of 2024, the yellow metal should gain pace in the next 12 months, acting as a tailwind for Barrick Gold and its peers.
Visa stock
Valued at US$545 billion by market cap, Visa (NYSE:V)is among the largest fintech companies globally. Visa is a payment processing company and its payments volume totaled US$15 trillion in 2023.
Despite its massive size, Visa is forecast to grow its adjusted earnings by more than 13% annually in the next five years. Further, unlike lending companies such as banks, Visa is sheltered from credit risks, allowing it to thrive during periods of economic downturns.
Additionally, its low-cost business model allows Visa to enjoy an operating margin of 60%, making it one of the most profitable companies on the planet.
Analysts remain bullish on Visa stock and expect shares to surge by 12% in the next 12 months.
Enbridge stock
The final stock on my list is Enridge (TSX:ENB), an energy infrastructure giant that pays shareholders a forward dividend yield of 7.7%. Enbridge enjoys a wide economic moat due to a vast network of pipelines.
Moreover, while it is part of the oil and gas sector, the company is sheltered from fluctuations in commodity prices as a majority of its earnings before interest, tax, depreciation, and amortization is tied to long-term, fee-based contracts.
This visibility in earnings has allowed Enbridge to raise dividends by 10% annually in the last 29 years, enhancing the yield at cost in the process.
Enbridge aims to increase cash flows between 3% and 5% through 2025, which suggests investors should expect dividend hikes in the future as well.