The current stock market is a roller coaster, to say the least. With the novel coronavirus pandemic, economic uncertainty, and a contentious presidential election all weighing on investors’ minds, share markets are likely to deliver volatility through the remainder of the year. But that doesn’t mean investors should stay out of the market. Instead, making a list of stocks to buy on a dip is a good way to find attractive entry points in quality names.
Finding stocks to buy on a dip can be a good way to bring high-quality equities into your portfolio at discounted prices. No one can say for certain exactly where the stock market is heading over the next few months, but strong names with solid financials will never go out of favor.
Investors can find plenty of profit by knowing by finding the best stocks to buy on a dip, and then seizing the opportunities when they come.
Consider these four stocks to buy on a dip:
Stocks to Buy on a Dip: Disney (DIS)
Making a case for DIS stock right now is difficult, to say the least. The firm’s parks are under threat from a lack of travel and worries about another virus outbreak. Its media production has been strained by coronavirus regulations. Its cruise line will likely struggle to gain traction even after the pandemic has subsided.
Pretty much the only aspect of Disney’s business that has garnered any positive attention this year is its streaming service, but it’s not nearly enough to offset the losses in other departments.
But DIS stock isn’t going to zero, and that offers investors an opportunity to look to the firm’s long-term potential. Disney+, the firm’s streaming service launched at the end of 2019, is having a bumper year. Helped by the pandemic and social distancing, more than 60 million people have signed up for the service this year.
That hasn’t helped DIS much financially, though, because the firm’s streaming bets aren’t profitable yet. But that’s because DIS is playing the long game. Once it has people looped into its service, it can start to monetize with higher subscription rates and new premium video offerings.
DIS stock is down, but not out, making it a great long-term play for investors with a little bit of patience.
Tech stocks have disproportionately led the stock market’s rally this year, making this group worth focusing on when looking for stocks to buy during a dip.
The semiconductor space is particularly lucrative in my view as technology evolves. While there are plenty of names to pick from, Nvidia gets my vote because of the firm’s solid position within the industry.
Artificial intelligence, cloud computing, the rollout of 5G and gaming are all areas that semiconductor firms can flourish and NVDA stock has its fingers in almost every pot. This week the firm’s share price skyrocketed on news that Needham analyst Rajivindra Gill increased his price target for NVDA to $700, an upside of 26% from where the stock is trading today.
Gill noted that Nvidia’s acquisition of Arm will cement the firm’s position as “the leading AI computing platform in the semiconductor industry.”
While NVDA stock soared on the announcement, investors can be sure the firm’s share price will wobble once again as volatility within the market continues in the lead-up to the presidential elections. That makes Nvidia a great name to keep on your watch list.
T stock has had a rough run over the past few years, and just when it seemed like the firm had reached its turning point, the pandemic struck. Still, AT&T has a lot going for itself and its long-term growth story remains intact, coronavirus or not.
AT&T took the road less traveled when it comes to telecom stocks. The firm has set itself up to become a one-stop shop that can deliver bundled services that include everything from a wireless connection to a streaming service. While I think that’s going to become the future of the telecom sector, there’s another reason T stock is on my buy-list: 5G.
AT&T has already started rolling out 5G connectivity and CEO John Stankey has said building out its network will be a top priority. While there are a lot of beneficiaries of the 5G revolution, carriers are likely to be a big one according to a study by Ribbon Research. Ribbon found that 5G will significantly boost cloud gaming and that gamers are willing to pay top dollar for a fast connection.
The firm found that cloud gaming will offer carriers a $150 billion opportunity as 95% of those surveyed said they were ready and willing to pay more for an improved gaming experience. A whopping 60% said they’d be willing to double their monthly bill for 5G.
If ever there were a buy the dip opportunity for Ryanair, it’s now. Like the rest of its peers, Ryanair was hit hard by the coronavirus pandemic, a blow that will likely take years to recover from.
But for investors, RYAA stock’s pain can be your gain as it offers an attractive entry point into one of the best-positioned airlines in the world.
As Europe’s discount airline, Ryanair stands to benefit the most from the eradication of coronavirus. Ryanair deals mostly in leisure travel because of its no-frills service and ultra-low ticket fares. That’s a good thing when it comes to a rebound in air travel because many are predicting that business travel may never be the same now that remote working has become the norm.
Not to mention, Ryanair’s impeccable balance sheet and solid management made it much easier for the firm to navigate this crisis. It’s likely that as airline travel starts to pick up, RYAAY will use this opportunity to grab market share and capitalize on its failing peers.
On the date of publication, Laura Hoy held a long position in RYAAY and T.
Laura Hoy has a finance degree from Duquesne University and has been writing about financial markets for the past eight years. Her work can be seen in a variety of publications including InvestorPlace, Benzinga, Yahoo Finance and CCN.