Following the recent rout on Wall Street, investors are looking for stocks to buy at the bottom. 2022 kicked off with all eyes on the Federal Reserve (Fed). The central bank has let the market know that it will battle inflation by tapering bonds and raising interest rates.
As a result, investors have been rotating out of high growth names or stocks with frothy valuations. So far this year, benchmark indices S&P 500, Dow Jones Industrial Average (DJIA), and Nasdaq 100 have declined 7.3%, 5%, and 10%, respectively.
Many investors are understandably nervous. Yet, in every uncertainty there could be opportunity. Therefore, seasoned investors are now on the lookout for resilient stocks to buy at the bottom.
According to the most recent survey of the American Association of Individual Investors (AAII), 43.2% of market participants are bearish about where the stock market could go in the next six months. As a result, many robust companies could still change hands at discount prices, offering profitable investing opportunities for buy-and-hold investors.
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With that information, here are seven stocks to buy at the bottom:
- Apple (NASDAQ:AAPL)
- Bio-Rad Laboratories (NYSE:BIO)
- Deere (NYSE:DE)
- ETFMG Prime Mobile Payments ETF (NYSEARCA:IPAY)
- Invesco S&P 500 Equal Weight Technology ETF (NYSEARCA:RYT)
- JPMorgan Chase (NYSE:JPM)
- Smart ETFs Advertising & Marketing Technology ETF (NYSEARCA:MRAD)
Stocks to Buy at the Bottom: Apple (AAPL)
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52-week range: $116.21 – $182.94
Our first stock is the tech giant Apple whose smartphone market share stateside was 17.4% in 2021. iPhone sales comprise over 57% of Apple’s total revenue. In addition, the company also offers other services, wearables, and products like Apple Music, iCloud or Apple TV.
On Jan. 27, management issued fiscal Q1 2022 financial results. Revenue hit a record $123.9 billion, up 11% year-over-year (YOY).
Net income stood at $34.6 billion or $2.10 per diluted share, compared to $28 billion or $1.68 per diluted share, in the prior-year quarter. Cash and equivalents ended the period at $37 billion.
On the results, CEO Tim Cook said, “This quarter’s record results were made possible by our most innovative lineup of products and services ever.” The board also declared a cash dividend of 22 cents per share. Management now anticipates accelerated growth on an YOY basis and an easing of supply constraints.
AAPL stock currently hovers around $171, down 3.55% year-to-date (YTD). Shares are trading at 28.8 times forward earnings and 7.5x trailing sales. The 12-month median price forecast for AAPL stands at $192. Interested readers could consider buying the dips in the tech behemoth.
Bio-Rad Laboratories (BIO)
52-week range: $547.22 – $832.70
Next on our list is the California-based Bio-Rad Laboratories, which offers solutions for the clinical diagnostics and life sciences markets. The company manufactures test systems and quality controls for clinical laboratories. Its products are also used in research, biopharmaceutical production, and food testing.
During the pandemic, markets saw a massive growth in demand for life science products and reagents. Recent research by Mordor Intelligence projects the revenue of the life science reagents market to reach almost $67 billion by 2026. Such an increase would mean a compound annual growth rate (CAGR) of 7.9% between 2018 and 2026.
Bio-Rad released Q4 2021 financial results on Feb 10. Revenue declined 7.2% YOY to $732.8 million. Net income was $97 million or $3.21 per diluted share, compared to last year’s $90.3 million or $3 per diluted share. Cash and short-term investments ended the quarter at $875 million, down $122 million from the prior-year period.
“… supply chain constraints during the fourth quarter impacted our ability to fully meet customer demand,” CEO Norman Schwartz commented on the results.
Looking ahead, the company expects revenue growth of between 1% and 2% in 2022. Also, the non-GAAP operating margin is estimated to be around 19%.
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BIO stock changes hands around $600, down close to 21% since the start of 2022. Shares are trading at 40.9 times forward earnings and 6.4x trailing sales. The 12-month median price forecast for BIO is $800. Potential investors might want to keep the stock on their radar screens, especially with a view to buy around $600.
Stocks to Buy: Deere (DE)
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52-week range: $298.54 – $400.34
Dividend Yield: 1.07%
Agricultural commodities have soared in price due to supply disruptions and increased transportation costs during the pandemic. Now, given the current inflationary pressure, many companies in the agricultural sector are once again in the limelight.
Therefore, we next take a look at the Illinois-based agricultural equipment manufacturer and financial services company Deere. Q4 2021 financial results were published on Nov. 24. Revenue surged 16% YOY to $11.32 billion.
Net income of $1.283 billion translated into earnings of $4.12 per share. A year ago net income was $757 million or $2.39 per share. Cash and equivalents ended the period at $8.017 billion.
Sales increased as a result of higher shipment volumes and price realization in the quarter. Yet, management anticipates supply-chain pressures to continue posing challenges in the months ahead. Looking ahead, net income for fiscal 2022 is projected to be in a range of $6.5 billion to $7.0 billion.
On the metrics, CEO John May cited, “Our results reflect strong end-market demand and our ability to continue serving customers while managing supply-chain issues and conducting contract negotiations with our largest union.”
Regular InvestorPlace readers would know that the company continues combining traditional agricultural machinery with the cutting-edge technology. It recently presented a fully autonomous tractor which is ready for large-scale production. Analysts note that Deere “looks to build on its core value of innovation by leveraging the latest in connectivity.”
DE stock currently trades around $387, up 13% YTD. Shares are trading at 17.42 times forward earnings and 2.79x trailing sales. The 12-month median price forecast for DE is $425.
Interested readers might want to wait for Q1 fiscal 2022 financial metrics which will be reported on Feb. 18. Post-earnings, we could potentially see short-term profit-taking, which would mean a better entry point for long-term investors.
ETFMG Prime Mobile Payments ETF (IPAY)
52-week range: $49.00 – $73.38
Expense ratio: 0.75% per year
The global mobile payments market should surpass $273 billion by 2028. Such growth would equate to an impressive CAGR of well over 31.5%.
Our next discussion centers around the ETFMG Prime Mobile Payments ETF. It was the first exchange-traded-fund (ETF) to provide a pure-play exposure to global mobile payments. The fund, which was listed in July 2015. currently holds 54 companies.
The top ten firms make up around 54% of net assets of $894.2 million. Leading names include American Express (NYSE:AXP), Mastercard (NYSE:MA), Visa (NYSE:V), Fidelity National Information Services (NYSE:FIS), and Fiserv (NASDAQ:FISV).
In terms of sectoral exposure, data processing & outsourced services (83.9%), customer finance (10.6%), and application software (2.8%) lead the portfolio. Meanwhile, the geographic breakdown is heavily weighted toward the U.S. with 72.1% of the fund, followed by the Netherlands (5.6%), and the Cayman Islands (5.5%).
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IPAY currently changes hands over $52. So far this year, the fund has declined close to 10% and hit a 52-week low of $49 on Jan. 24. Given the growth prospects of mobile and digital payments, potential investors could regard the recent drop in IPAY price as a good entry point.
Stocks to Buy: Invesco S&P 500 Equal Weight Technology ETF (RYT)
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52-Week Range: $247.33 – $327.81
Dividend Yield: 0.44%
Expense Ratio: 0.40% per year
Technology shares have been leading the recent decline on Wall Street. As a result, many leading names are trading at valuations not seen in months, if not years.
Our next fund, the Invesco S&P 500 Equal Weight Technology ETF, gives access to the information technology (IT) sector of the S&P 500 Index. This equally-weighted fund started trading in November 2006.
RYT, which has 76 stocks, tracks the S&P 500 Equal Weight Information Technology Index. The top 10 holdings account for about 16% of net assets of $2.93 billion.
In terms of sub-sectors, the fund is divided in IT services (26.23%), semiconductors & semiconductor equipment (25.04%), software (21.82%), and electronic equipment, instruments & components (11.62%).
Citrix Systems (NASDAQ:CTXS), which offers workplace solutions and Software-as-a-Service (SaaS); consumer cyber safety platform NortonLifeLock (NASDAQ:NLOK); digital IT solutions provider DXC Technology (NYSE:DXC); payment technology services firm Global Payments (NYSE:GPN), and enterprise tech giant Hewlett Packard Enterprises (NYSE:HPE) lead the names on the roster.
For the past 12 months, the ETF is up around 6% and saw a record high on Dec. 30, 2021. But since then, it has lost over 11%. It currently hovers around $287.
The fund’s forward price-to-earnings (P/E) and price-to-book (P/B) ratios stand at 22.01x and 5.83x. Interested readers whose long-term portfolios can handle short-term volatility could consider investing toward $280.
JPMorgan Chase (JPM)
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52-week range: $139.57 – $172.96
Dividend Yield: 2.59%
Next stock on our list comes from the finance industry. JPMorgan Chase is one of the oldest financial institutions stateside. It currently ranks #19 on the Fortune 500 list.
JPMorgan published Q4, 2021 results on Jan. 14. The company recorded its smallest quarterly earnings beat in two years. Revenue came in at $30.3 billion, just up 1% YOY.
Net income narrowed to $10.4 billion or $3.33 per diluted share compared to $12.1 billion or $2.79 cents in the prior-year quarter. The decrease was mainly driven by a higher-than-expected noninterest expense. Assets under management (AUM) ended the period at $3.1 trillion, an increase of 15%.
Meanwhile, management expects more headwinds than tailwinds ahead and might not be able to meet the firm’s target of 17% for the return on tangible common equity (ROTCE).
The 12-month median price forecast for JPM stands at $175. Shares are trading at 13.46 times forward earnings and 3.79x trailing sales.
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JPM shares are currently trading at around $152, down 3.7% YTD. A further drop toward $150 would improve the margin of safety.
Stocks to Buy: Smart ETFs Advertising & Marketing Technology ETF (MRAD)
Source: Tero Vesalainen / Shutterstock.com
52-week range: $20.95 – $31.42
Expense ratio: 0.68% per year
Our final pick of stocks to buy at their bottom is another fund, namely the Smart ETFs Advertising & Marketing Technology ETF. It invests in companies likely benefit from the growth in advertising and marketing sectors. In terms of sub-sectors we see advertising (55%), marketing technology (37%) and enterprise software (5%).
MRAD, which has 30 holdings, started trading in December 2020. The top 10 holdings account for close to 50% of net assets which is around $2.27 million.
Among the leading holdings are Alphabet (NASDAQ:GOOGL NASDAQ:GOOG), French digital performance marketing firm Criteo (NASDAQ:CRTO), the U.K.-based multi-platform media and digital publisher Future (OTCPK:FRNWF), data and analytics software solutions provider TechTarget (NASDAQ:TTGT), and Australian software development platform Atlassian (NASDAQ:TEAM).
MRAD hit a record high about a year ago on Feb. 16, 2021. Yet, over the 12 months, the fund is down 29%. It declined almost 18% YTD as well. Potential investors could regard the recent drop in price as a better entry point.
On the date of publication, Tezcan Gecgil did not have (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.
Tezcan Gecgil has worked in investment management for over two decades in the U.S. and U.K. In addition to formal higher education in the field, she has also completed all 3 levels of the Chartered Market Technician (CMT) examination. Her passion is for options trading based on technical analysis of fundamentally strong companies. She especially enjoys setting up weekly covered calls for income generation.
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