Even if you’re completely disinterested in financial markets, you’ve undoubtedly heard of the Dow Jones crash. At the start of this week, the Dow Jones announced its entry with a 4.6% loss. On an intraday basis, the benchmark index suffered the single-worst point loss in its history. Given this backdrop, investors are thinking about stocks to sell, not stocks to buy.
Wall Street jitters were further compounded because no one could explain why the Dow Jones dropped so precipitously. During the epicenter on Monday, CNBC’s Bob Pisani contacted the New York Stock Exchange to inquire about what happened. Was it a “fat finger” incident? Did Skynet become self-aware (say it in an Austrian accent for maximum effect) and deliberately crash the markets?
It turned out that nothing was out of the ordinary. Such news led J.P. Morgan’s Dubravko Lakos-Bujas to say “We see the market selloff entirely disconnected from fundamentals.” But if no technical or suspect behavior sparked the Dow Jones crash, can we immediately cross off the fundamentals? This ambiguity shifts investor sentiment towards defensive strategies, not stocks to buy.
But in my opinion, events like this Dow Jones crash are the perfect time to buy strong companies on discount. I did exactly that when I bought Sony Corp (ADR) (NYSE:SNE) shares post-Great Recession. At the time, no one was talking about stocks to buy, let alone Japanese stocks.
Today, those shares have jumped four-fold, and Japan is quite possibly on the upswing.
So rather than going completely defensive, try some offense as well. Here are seven blue-chip stocks to buy amid this record-breaking selloff.
If you’re looking for a great discount that is also a stable opportunity, consider Home Depot Inc (NYSE:HD). HD stock was looking mighty frothy. However, the broader market correction chopped it down quite nicely. I’m expecting a little bit more of a hit, down between $160 and $170. If it gets there, buy!
As a secular retail play, I absolutely HD stock. I don’t care if we have a recession, depression, or succession: if something goes wrong with your home (and it’s fixable), you go straight to Home Depot. That means the company’s consumer base is all-inclusive.
It doesn’t matter if you’re a rugged everyman or a Millennial who can’t tell the difference between a Philips head screwdriver and a tampon; you need HD.
Now, the risk factor is housing, and the markets reaction to it. Currently, housing prices are out of control, and I’m not sure if wages can keep up, especially with rising inflation. However, this also incentivizes home owners to renovate since this is a seller’s market.
Subsequently, I expect HD stock to rise steadily on the prospect of increasing revenues.
During what potentially could be an extended drought, I wouldn’t mind “buying down” Nvidia Corporation (NASDAQ:NVDA). If you have a longer-term perspective, I don’t think price targets and timing the bottom is helpful. For starters, you never really know with any consistency where that bottom is.
More importantly, though, NVDA stock is too good of an opportunity with which to play games. In my view, that makes NVDA easily one of the best blue-chip stocks to buy during this correction.
In particular, I’m bullish on Nvidia because it has so many revenue channels. Obviously, as a prime graphics processor company, NVDA banks heavily on the video game industry. Additionally, its processors are highly desired in the cryptocurrency mining sphere, especially Ethereum mining.
Gaming and cryptocurrencies are significant tailwinds for NVDA stock, but as I’ve argued, they’re not the only bullish factors. The company has been a mainstay in the driverless technology realm. Furthermore, it’s making significant inroads into deep learning and artificial intelligence.
The bottom line is that NVDA stock is the investment levered towards future industries that have yet to be born. Feel free to acquire positions on any sizable dip.
During any severe corrections in the Dow Jones index, you want to concentrate on established, secular names. Like Home Depot, Johnson & Johnson (NYSE:JNJ) is one of the best stocks to buy in this current malaise. No matter how badly the underlying economy may fall, we all need to clean our teeth and wash our hair.
Technically speaking, the Dow Jones crash gifted new investors with an opportunity to go long JNJ stock. Where prices stand now, shares are back to where they were for most of last year’s summer season. But current trading sentiment looks very pensive. On Tuesday, JNJ only clawed back 1% of Monday’s severe drop, and has since dropped further. This weakness suggests that further declines are likely.
The next logical support line stands at just above $120. If JNJ stock does indeed fall that low, you should buy without hesitation. Not only is Johnson & Johnson an iconic brand with incredible international reach, the company pays a 2.6% dividend yield.
Granted, it’s not the biggest payout that you can find in the markets. But with a combination of stability and passive income, not considering JNJ stock would be almost criminal.
I don’t understand the immediate gut reaction when people see red ink splashed on the Dow Jones index. I’m a cryptocurrency investor, after all! But don’t let the immediate pain detract you from your forward-looking strategy. A major crash almost always produces great opportunities, and United Parcel Service, Inc. (NYSE:UPS) is one of them.
Needless to say, UPS stock took a big hit during this broader market collapse. Year-to-date, shares are down 12%. Moreover, things were looking dicey before the Dow Jones decided to become a Paris Hilton-style hot mess. As InvestorPlace feature writer James Brumley reported, despite topping its fourth quarter sales and earnings estimates, UPS shares cratered.
Why? Brumley explains that “the company was caught with its proverbial pants down during the quarter when holiday-driven shipping was its most frenzied.” To avoid a recurrence, UPS will ramp-up its infrastructure spending. Wall Street didn’t like that, so down goes UPS stock.
Let the current shareholders’ loss be your gain. UPS isn’t going anywhere, demonstrating growth in both domestic and especially international markets. Maybe it wasn’t worth $135 a pop, but towards $100? This is a risk worth taking!
For the same reasons that I like UPS, you should also consider its key rival FedEx Corporation (NYSE:FDX). Admittedly, a good chunk of my reasoning is that FDX stock is a hedge within the courier service industry. Should UPS not deliver the goods, so to speak, I firmly expect FDX to come through, and vice-versa.
But thanks to the Dow Jones crash, FDX stock is too good of an opportunity to pass up. So far this year, FedEx shares are down nearly 9%. Just like its rival, FDX traders acted pensively following Monday’s wild ride. I believe this insecure, apprehensive trading signals further declines, perhaps down to $220.
If that occurs, FDX moves from “stocks to buy” to “stocks you should already own.” Aside from the fact that FedEx is too big to fail, the changing retail landscape boosts the entire courier ecosystem. We’re not just talking about Amazon.com, Inc. (NASDAQ:AMZN). More retail businesses are shifting away from the traditional brick-and-mortar model to the warehouse distribution model.
Customers nowadays simply expect their purchased products to arrive at their doorstep. This unstoppable trend means that FDX stock is an ideal play right now.
After just criticizing the brick-and-mortar retail space, it may seem strange to include Walmart Inc (NYSE:WMT) on this list. Nothing screams traditional retail culture and crass American consumerism quite like Walmart. But from an investor’s point of view, WMT stock is a behemoth. The company makes its own rules, and really, who are we to disagree?
Like I just mentioned, the retail landscape has changed dramatically. Business don’t want to open shop fronts; instead, they need warehousing space to deliver their goods directly to their customers. But certain items just can’t be shipped for economical and logistical reasons. Whether you need food, or clothing, or diapers for your baby, WMT has all your disparate needs covered; and more importantly, they can feed that need immediately.
Best of all, WMT stock absorbed a good-sized beating. Against this year’s closing high, WMT is down nearly 8%. As with other names I mentioned on this stocks to buy list, WMT traders lack confidence and conviction. If the broader markets don’t receive a massive influx of great news, I anticipate shares will fall to $80.
Should that occur, run, don’t walk, towards WMT stock!
Secular companies are always solid picks when the markets collapse. However, if you anticipate a much more protracted decline, you should eye vice stocks. Within this colorful category stands Altria Group Inc (NYSE:MO), one of the world’s biggest tobacco companies.
It stinks to say this, but Altria has more or less an addicted consumer base; thus, no matter what happens in the underlying economy, MO stock has a dependable revenue stream. Furthermore, MO pays out a handsome, 4.1% dividend yield.
Critics contend that the rise of e-cigarettes, or vaporizers, will eat away at Altria’s market share. This is true, but largely to the extent that health concerns drive the transition from “analog” to electronic cigarettes. However, when smokers attempt “vaping,” they discover that the nicotine-based “throat hit” sensation is significant different in the vaporizer format.
Thus, most smokers transition back to regular cigarettes, and inevitably, into the arms of MO and company. In addition, cigarette companies have their own digital alternatives. What better way to replicate throat hit than the “founders” of this sensation?
Finally, MO stock got beat up pretty badly in the Dow Jones crash. That gives you the opportunity to buy a solid, high-yielding company at a discounted rate!
As of this writing, Josh Enomoto is long SNE and Ethereum.