Yesterday’s Federal Reserve meeting delivered a volatility jolt to equity markets. But many companies are holding firm in the face of the selling. Today we’ll divulge three stocks to buy that should see higher prices in the weeks to come.
The Federal Open Market Committee cut their target rate for the first time in a decade as expected. Market watchers have also been pricing in an additional one or two cuts by year-end. But comments by Fed Chair Jerome Powell during the news conference put into question whether we’ll actually see further easing.
Rather than getting bogged down in a game of will-they-won’t-they, let’s keep things simple. The silver lining of Wednesday’s beatdown is it pushed many recent earnings winners back to low-risk entry points. My watchlist is littered with potential buy-the-dip candidates.
Here are three of the best stocks to buy in the aftermath of the Fed.
Stocks to Buy After the Fed: Twitter (TWTR)
Twitter (NYSE:TWTR) finds itself amid bullish earnings and price trends. The past two quarterly reports saw better-than-expected numbers, and its price trend has been trending higher. Last week’s boost was particularly potent, driving TWTR stock to a new 52-week high.
The follow through seen since has been impressive and speaks to buyers’ willingness to pay up even after the post-earnings pole vault.
With the positive underlying fundamentals, future weakness in the stock should prove fleeting. I like selling naked puts for the next few months to score some cash flow.
Sell the Sep $38 put for around 55 cents.
The theme of powerful earnings gaps continues with our next pick. Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) has a history of the direction of its jump following earnings signaling the price trend for the quarter. Down gaps have usually sparked multi-month downtrends while up gaps have kick-off or accelerate uptrends.
I’m betting last week’s pop will prove no different. The robust earnings beat that drove traders to push GOOGL stock up 9% in a single session will likely continue to support the stock moving forward. And that makes GOOGL a tempting buy into any weakness, like the past three trading sessions. Compared to the beatdown elsewhere, yesterday’s post-Fed slip in Alphabet shares was nothing.
To bank on our bullish bias, let’s sell a Sep $1150/$1140 bull put spread for $1.40. Consider it a bet that GOOGL sits above $1,150 at expiration.
My final pick for stocks to buy in the aftermath of the Fed is Snap (NASDAQ:SNAP). The rationale for its inclusion mirrors that of its predecessors. Its uptrend is bangarang and last week’s earnings reaction simply added fuel to an already raging fire.
SNAP stock’s year-to-date gains have now climbed to a mouth-watering 213%, and we still have five months to go. Chasing stocks after such a monster move post-earnings is challenging, but that’s what makes this week’s three-day retreat so appealing. It’s providing a lower-risk entry for traders hesitant to pile in after the strong up-gap.
Today’s bullish candle is confirming buyers’ dip-buying desires, suggesting now’s the time to enter. The cheap price tag of SNAP makes it a compelling candidate for naked puts. Sell the Sep $15 put for 35 cents.
As of this writing, Tyler Craig held bullish positions in GOOGL. Check out his recently released Bear Market Survival Guide to learn how to defend your portfolio against market volatility.