Stocks finally slipped on Tuesday following news that Los Angeles will remain in a novel coronavirus-induced lockdown far longer than anyone expected. Even so, it has been a tremendous run for the equity market over the past few weeks. The S&P 500 as a whole has bounced 30% off its lows, and many stocks are up 50% or more from recent prices. As such, many are questioning whether there are any remaining good deals on stocks to buy.
The truth is that there are plenty of stocks that are still worth bottom fishing for at this point. While the market has indeed bounced back strongly, much of that energy has been contained to just a few areas. Tech stocks, and in particular cloud computing names have done well. Anything with a stay-at-home angle is soaring, which also includes things such as consumer staples companies and makers of things to use during quarantine such as Peloton (NASDAQ:PTON) and its popular exercise bikes.
Move past those hot sectors, though, and plenty of stocks remain largely down on the year. For example, just look at the S&P 500. Out of the companies in that index, 94 of them are down 40% or more year-to-date. If you aren’t finding bargain stocks to buy, make sure you are looking at a wide enough list of stocks. Here are seven names to have on your radar that have strong upside potential ahead:
- Anheuser-Busch InBev (NYSE:BUD)
- Tyson Foods (NYSE:TSN)
- General Electric (NYSE:GE)
- Altria (NYSE:MO)
- Nordstrom (NYSE:JWN)
- Boston Properties (NYSE:BXP)
- Sysco (NYSE:SYY)
With all of that in mind, let’s take a deeper look into what makes each of these among the promising stocks to buy now.
Stocks to Buy: Anheuser-Busch InBev (BUD)
It’s finally the right moment to grab a BUD stock. Long-time readers know that while I invest heavily in beer and liquor stocks, I’ve never owned Anheuser-Busch, at least up until now. The company’s huge debtload and struggle to grow revenues have put it in the penalty box. As a result, its valuation has collapsed. BUD stock plunged from as much as $102 last summer to just $41 now.
Investors are rightfully nervous about companies with lots of debt in this environment — and they find them hard to consider as stocks to buy. But they should still give Anheuser-Busch a fair evaluation. That’s because the company is recession-resistant; beer sales tend to be pretty steady regardless of the economic environment. Sure, people are drinking much less from restaurants and bars. However, grocery store and liquor store sales are up big to compensate.
And here’s where the crisis may actually help Anheuser-Busch and other macro beer companies. A recent survey found that as many as 60% of small brewers may permanently close if they obtain no revenues over the next three months. If stay-at-home orders remain in place this summer, as Los Angeles is now planning, expect a craft beer apocalypse.
For macro brewers like Anheuser-Busch, there will be plenty more opportunity. Don’t forget that they’ve been stealthily buying up a ton of craft labels as well, so they profit regardless of a consumer’s preferences as the industry consolidates.
Tyson Foods (TSN)
Tyson Foods is one of the nation’s largest meat companies. It gets more than a third of its revenues from beef, with the rest being a mix of chicken, pork and packaged or prepared products. TSN stock ran up sharply last year as the African Swine Fever caused a pork shortage in Asia — it reaped the rewards of high prices.
But the boom has turned to bust, as the coronavirus has complicated international supply chains and caused a sharp fall in the price of certain meat products. On top of that, Tyson has been hit with numerous Covid-19 outbreaks at its plants. As a result, it has had to shut some, and pay far highers wages at others to keep operations going. Between the loss of windfall pork profits and the uncertainty around the virus, investors have dumped TSN stock.
Now is the time to buy the dip, however. Shares trade at just 11x trailing earnings. And meat demand overall remains robust. Although the supply chain issues have created short-term disruptions, Tyson will sell as much or more product as usual in coming months. Meanwhile, with TSN stock at $60, it’s the cheapest it has been since 2015.
General Electric (GE)
General Electric has had a terrible couple of years, which might make you surprised to see it on a list of stocks to buy now. After all, management changes, asset sales, short seller allegations, dividend cuts — all of these have led to a brutal run for GE stock. Not surprisingly, investors are still fearful about the company’s future. The coronavirus has folks wondering just how much worse things can get for the ailing giant.
However, while General Electric clearly has problems, analysts may be getting too negative at this point. Remember that new CEO Larry Culp had one of the most impressive track records of recent memory at a U.S. industrial company when he ran Danaher (NYSE:DHR). Under his watch, Danaher shares ran up nearly 500%.
Culp has bought GE stock aggressively, showing his commitment. And he has taken bold measures to get the company back on the right track. But there was significant institutional resistance to the outsider coming in and forcing the company into painful, if needed, changes.
Now though, with the coronavirus, Culp has much more autonomy to make drastic moves. The crisis gives GE the ability to start over in many ways. And since the company has already raised capital and gotten into stronger financial position, the lean and revitalized GE could be quite a force as the economy starts to pick back up.
Tobacco stocks have performed surprisingly poorly during the bear market so far. Most other consumer staples shares have been moving up. People are eating as much food and drinking as much as usual, after all. Personal hygiene products are also in high demand. Yet investors have sold the tobacco names like MO stock.
Some of this is due to regulatory uncertainly. Altria still has numerous lingering questions about its involvement in Juul, after all. The government may try to unwind Altria’s investment in the vaping company, but that might actually help Altria, given how messy that has been so far.
The heart of the matter, however, is that MO stock remains down around 50% from its highs a few years ago. That leaves it at around 10x earnings, which is a fine value in any market, and particularly in one which should favor defensive companies with strong cash flows. Altria shares are yielding 9% and offer considerable value as a defensive play. If the market tanks again, Altria should hold its own. And if sentiment improves, look for people to latch onto that outsized dividend yield. All of this justifies its placement among the beaten-down stocks to buy now.
It’s no secret that American malls have suffered in recent years. And the coronavirus has only added to these problems. Investors have, rightfully, dumped their exposure to a whole bunch of mall stores and the real estate investment trusts that own the underlying real estate. That has been the correct play so far. And in general, the virus will only accelerate these negative trends.
However, there will be some survivors. For example, Nordstrom. The department store chain is set to benefit as weaker rivals like J.C. Penney (NYSE:JCP) and Lord & Taylor go bankrupt and potentially liquidate. To the extent that folks still want a department store experience, the remaining companies will get more foot traffic.
Nordstrom is particularly well-positioned as it is a more high-end brand. It is in many of America’s best malls — the ones that will get more traffic as stores consolidate to the top properties when weaker malls close. Nordstrom tends to locate itself in the malls where you also find Apple (NASDAQ:AAPL) stores, Tesla (NASDAQ:TSLA) shops and other top-tier brands. The decline of smaller malls should fortify the top-tier properties where Nordstorm is located.
In addition, the Nordstrom Rack store concept locates outside of malls, and has given the company a presence in many of the new lifestyle and outdoor shopping centers that are most popular nowadays. Nordstrom has a great brand, and JWN stock is well-situated to rebound strongly once stay-from-home orders wind down.
Boston Properties (BXP)
Stay-at-home stocks have been huge winners from the coronavirus crisis. On the other end of the spectrum, anything that relies on going out in public has been crushed. Count Class A office REIT Boston Properties among the latter group. Investors have taken it as gospel that the current shift toward working-from-home will become entrenched and that vast portions of the office landscape will go permanently dark.
And sure, some office buildings, particularly older buildings, buildings in tertiary markets and buildings in bad locations will struggle going forward. In a downturn, however, high-quality tends to carry the day. And Boston Properties is right up there. It has focused its properties on the best markets in the country, including New York, D.C. and California in addition to its namesake. It has top-tier locations within those markets, and has a huge growth pipeline of new properties that it can develop in coming years.
Again, it’s fair to say that offices in general may see some lasting weakness as a result of this crisis. But not everyone will continue working from home indefinitely. When people return to the office, the top spaces — such as what Boston Properties owns — will have the most demand. With BXP stock down nearly 50% and offering its highest yield in a decade at 5%, it’s time to see this office giant as being among the bargain bin stocks to buy today.
Sysco, like Boston Properties, has been another stay-at-home loser. That’s because this Sysco (don’t confuse it with the networking equipment giant) is a leader in food service. Sysco runs supply chains for a vast number of restaurants, schools, hospitals and other institutional settings.
With schools shut down for the moment and most restaurants either closed or only doing takeout, Sysco has seen a sharp drop-off in business. As a result, the company has taken forceful measures, such as drawing down $2 billion from its credit lines while furloughing workers. The market initially panicked, with Sysco shares plummeting from $80 to $30 before advancing back to $50 now.
Cooler heads have prevailed, helping stabilize the shares. Look past the headlines, and you see a company that is incredibly consistent, and is still selling at a large discount. It doesn’t hurt matters that SYY stock has paid an increasing dividend every year for more than half a century. The company has been the epitome of a dependable and reliable dividend growth machine. Shares will recover as the economy starts to recover and more people start eating in public again.
Ian Bezek has written more than 1,000 articles for InvestorPlace.com and Seeking Alpha. He also worked as a Junior Analyst for Kerrisdale Capital, a $300 million New York City-based hedge fund. You can reach him on Twitter at @irbezek.