5 Stocks to Buy in January 2026 I January 12, 2026

Key Concepts

• The market is currently reacting to a Department of Justice investigation into Federal Reserve Chairman Jerome Powell, but the impact is considered limited.
• Upcoming economic data (CPI, PPI, Retail Sales) is not expected to significantly alter the current inflation trajectory.
• AI remains a dominant market driver, and its growth is anticipated to continue.
• A “barbell” portfolio strategy – combining AI/tech exposure with high-quality value stocks – is recommended.
• Specific stock picks highlighted include Alliant Energy (utility/AI play), Omnicom Group (advertising, currently discounted), and Albemarle (lithium, speculative).
• The advertising industry is consolidating, and lithium demand is expected to recover despite recent price volatility.

Market Outlook & Economic Indicators (January 15, 2026)

The podcast began addressing a criminal investigation into Federal Reserve Chairman Jerome Powell. While the Dow Jones Industrial Average experienced a decline of 325 points (~0.7%) and the 10-Year US Treasury yield increased by 3 basis points to 4.2%, the market reaction was deemed less severe than previous incidents (like those triggered by Deepsea headlines), suggesting limited concern. The speaker believes the investigation is “noise” given the Fed’s likely holding pattern until the new chair takes over in May.

Key economic data releases for the week – CPI, PPI, and Retail Sales – are expected to show 2.7% year-over-year growth for both headline and core CPI, with PPI rising 0.3% month-over-month (headline) and 2% (core). These figures are not anticipated to signal a significant shift in the inflation trajectory. Morningstar economists predict at least two rate cuts this year, potentially more in 2027, with no cuts expected before June.

The Atlanta Fed GDPNow model currently projects 5.1% GDP growth for the fourth quarter, though caution is advised against relying solely on this metric due to factors like the AI buildout and import declines. A $1.5 trillion defense budget proposal was also noted, leading to a rally in defense stocks, though skepticism was expressed regarding the final amount.

Investment Strategy & Market Valuations

The overall US market is trading at a 4% discount to Morningstar’s composite analyst valuations, but this is largely influenced by mega-cap tech stocks. Small cap stocks are trading at a 15% discount. A “barbell” portfolio strategy is advocated, balancing exposure to high-growth AI/tech stocks with undervalued, high-quality value stocks to mitigate volatility. This strategy acknowledges the continued importance of AI, stating, “I think you still have to be involved in artificial intelligence and tech…just to retain the upside potential that’s there.”

Stock Specific Analysis

Alliant Energy: This utility is considered a partial play on AI due to its $13.4 billion four-year capital investment plan (a 24% increase), largely driven by data center construction. The company is expected to meet 5-7% growth guidance by 2027, with accelerating growth beyond that timeframe, supported by constructive regulation.

Omnicom Group: A four-star rated stock trading at a 31% discount with a 3.7% dividend yield, possessing a high and narrow economic moat based on intangible assets. Despite a 20% decline from 2024 highs due to concerns about AI disrupting the advertising business model, the speaker argues the fundamental need for advertising agencies remains, particularly in developing omnichannel strategies. Five-year revenue growth is projected at 2.1%, with operating margins averaging 10% (down from 13.7%), and earnings growth averaging 8.3% from 2026-2029. The industry is consolidating into “the big five” following a recent merger.

Albemarle: A four-star rated stock trading at a 19% discount with a 1% dividend yield, but with very high uncertainty, making it suitable for a speculative portion of a portfolio. It possesses a narrow economic moat based on cost advantages. While lithium prices surged in 2021-2022 and then crashed due to slowing EV demand and new supply, prices are believed to have bottomed out in August. Demand is increasing from utility battery storage and data center buildouts, and many new lithium projects have been shelved due to insufficient price recovery.

Conclusion

The podcast presents a cautiously optimistic market outlook, downplaying the immediate impact of the Powell investigation and emphasizing the continued growth potential of AI. A diversified “barbell” portfolio strategy, incorporating both high-growth tech and undervalued value stocks, is recommended. Specific stock picks – Alliant Energy, Omnicom Group, and Albemarle – offer varying risk/reward profiles, reflecting the diverse opportunities within the current market landscape. The analysis highlights the importance of looking beyond headline numbers and considering underlying trends when evaluating economic data and investment opportunities.