Investors’ rising risk appetite can be seen in virtually every corner of the market. And that makes finding strong stocks to buy a cinch. Small-caps just logged their eight consecutive up day. Breadth is notching new highs confirming that equities of all sectors are joining in the bullish revelry. And volatility is in the tank. The CBOE Volatility Index just fell to a fresh four-month low.
With this morning’s mild drop, however, traders are hitting the pause button. And that’s a good thing. Low-risk entries were drying up because many stocks had rallied far from support zones. Here’s to hoping sellers can press their advantage and deliver a multi-day pullback. A single day of selling followed by a rapid snap-back doesn’t do anyone any good.
In compiling a shopping list of strong buy stocks to snag into weakness, I found the following three beauties that deserve your consideration.
Mastercard (NYSE:MA) shares were already on the mend, but last month’s earnings report pushed the recovery into overdrive. Indeed, the buying has been relentless, and now MA stock sits a stone’s throw from all-time highs. The 20-day, 50-day and 200-day are all rising beneath the price to show the bulls’ dominance across all time frames.
This week’s pullback is providing the first clean buying opportunity seen since January’s earnings release. Thus far it has been shallow and seen little volume which shows there isn’t any conviction behind the selling pressure.
I suspect this dip will be bought and MA will soon boom to record highs. To capitalize, buy the May $220/$230 bull call spread for around $4.50. The risk is limited to $4.50, and the reward is limited to $5.50.
To those that have been paying attention, Boeing (NYSE:BA) needs no introduction. Ever since breaking out of its year-long base, BA stock has been a mainstay among market leaders. Making the bull case is easy. The trend points higher, all moving averages are rising, accumulation days litter the landscape, and its earnings growth has been robust.
Today’s drop may finally usher in a bout of consolidation or perhaps even a retracement. Either way, BA is a big-time buy into any weakness. To combat its lofty price tag, you can buy spreads over single options. Bull calls should do the trick.
Buy the May $420/$440 bull call for $9. In fine-tuning the entry, you could wait to see if this morning’s weakness gets bought. The price of the spread will cheapen if we see additional down days.
Our final selection is the wildcard. Since going public late last year, YETI Holdings (NYSE:YETI) were stuck in a range, waiting for a catalyst to kickstart a tradeable trend. Last week, the spark finally arrived in the form of an earnings report that impressed the Street. The high volume breakout and subsequent upside followthrough make YETI a must-watch stock.
It’s now in an established uptrend complete with rising 20-day and 50-day moving averages. The amount of volume accompanying the surge adds legitimacy to the resistance breach and suggests it should have staying power. Yesterday’s bearish engulfing candle may signal a pullback or a pause is in the cards, but either pattern will ultimately prove a buying opportunity.
Because YETI is still in its infancy, its stock options are illiquid. So, go with a straight stock purchase if you’re going to play it.
As of this writing, Tyler Craig didn’t hold a position in any of the aforementioned securities. Check out his recently released Bear Market Survival Guide to learn how to defend your portfolio against market volatility.