The calendar is still suggesting that the spate of volatility is far from finished as September and October are historically the most volatile months of the year. While most investors may be sitting around trying to figure out what to sell to avoid the volatility, our focus has remained on exactly what it is we want to buy!
That’s right; the seasonal volatility, while scary, historically offers incredible limited-time opportunities for those willing to weather the storm.
Like so many other things in life, the prepared investors often comes out of these volatility seasons with some great values in their portfolios. Here’s how to prepare.
Sometimes, getting the real value takes a little imagination and patience. The imagination comes in to figuring out which stocks you would like to buy at “crazy low prices.” After that, it’s just a matter of using a limit order to buy shares. We sometimes refer to them as “lottery pick orders,” since you feel real lucky if you get filled.
Here are three of our favorites.
Lottery Pick Blue-Chip Stocks: Under Armour (UA)
Athletic apparel company Under Armour (UA) is winning battles on many different fields as they pressure Nike’s (NKE) presence. The company has been expanding its sponsorships and product lines, resulting in a strong fundamental outlook.
As of Friday, shares were trading well above their bullishly trending 50-day moving average, putting it in rare company as fewer than 12% of the S&P 500 companies are above their respective 50-day trendlines.
Our models suggest that the long-term trend will remain on Under Armour’s good side, and any pullback should be viewed as a buying opportunity. That said, there is a chance that the market volatility could result in a $95 print. Setting an order to buy shares at $95 would result in an 8% discount on this market leader.
Lottery Pick Blue-Chip Stocks: Netflix (NFLX)
Another market leader that makes our wish list is streaming media leader Netflix (NFLX), as subscription and revenue growth continue to outpace expectations.
From our perspective, the concern of competition eating into Netflix’s market share is underwhelming, especially as there is plenty of room for Netflix’s business model to flex with changes.
Technically, long-term support for NFLX lies at the $70 level, but we would love to add positions at $85 and $80. According to our calculations, a price point of $85 would move NFLX back into short-term technically oversold territory, making it likely to see some technical buying.
August’s volatility saw NFLX trade to a low of $85.50, which also adds to the attractiveness of setting a price target at this level.
Lottery Pick Blue-Chip Stocks: Lockheed Martin (LMT)
It might not be as sexy as other companies on our list, but Lockheed Martin (LMT) has been growing at around 15% over the past year and throwing off a 3% dividend yield. Dividend stocks remain attractive to us given our current outlook of volatility, which is likely to hang around along with continued uncertainty surrounding interest rates.
The chart indicates that LMT shares should see some support at the $190 level, but we’re willing to take a shot at buying shares at their August lows of $185.
A move to this price would garner plenty of technical buyers and provide you with a chance to cash in on a 9% discount from today’s prices.
As of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.
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