The stock market just celebrated a particularly important one-year anniversary. And by some accounts, the honeymoon isn’t over. But in a market made up of stocks, some of 2020’s top stocks have become less-friendly portfolio partners. Today and with our sights on some of those wallflower-like price charts, if history dares to simply rhyme, the following are more than stocks to say “I do” too, once more they’re stocks to buy.
Just yesterday and exactly one year ago, Wall Street and investors collectively were in a hugely different place. Specifically, the novel coronavirus had sent the broader averages crashing over the course of a month. And in the bear market’s wake, a history-making epic bottom was formed on March 23, 2020. Apple (NASDAQ:AAPL). Home Depot (NYSE:HD). Chevron (NYSE:CVX). Jack in the Box (NASDAQ:JACK). Seemingly no stock and no matter its size, industry, or influence, was spared from the destruction.
Since that day, the coronavirus of course has continued to plague families, many businesses, and economies. But fingers crossed, there’s a light at the end of the tunnel as mass vaccinations continue to put us on a path toward herd immunity this summer. Yet the stock market has been healthy for some time already.
While most financial pundits were talking up further pandemic-related carnage to come, companies like those mentioned became spectacular examples of stocks to buy which helped push up the likes of the S&P 500 more than 75% over the past year and trading just off record highs. AAPL. HD. CVX. It turns out most of Wall Street didn’t know, well umm, JACK.
Today and while some areas of the stock market persist in making record highs, rotations and actual corrective price behavior have already gotten the better of some of last year’s top leadership and best growth stories.
So, what’s an investor to do? Well, don’t listen to the so-called experts. Instead listen to the following three stocks to buy demanding your attention before history repeats itself and while the getting is still extremely opportunistic.
Stocks to Buy: Tesla (TSLA)
Source: Charts by TradingView
The first of our stocks to buy are shares of Tesla. I’ve discussed TSLA in recent weeks and for good reason. Bottom line, not only is Tesla the EV market’s 800-pound gorilla, but the outfit has also systematically chewed up its bearish critics during this past year’s pandemic despite stay-at-home and hold-on-to-your-wallet headwinds.
Will a new round of stimulus checks result in more Tesla Model 3 or Model Y sales? Probably not. But increasingly, the price chart is stressing the purchase of TSLA stock. Currently, this past year’s near 700% gain in shares has been supplanted by a healthy corrective move which successfully challenged an area supported by trendline and Fibonacci levels.
Now with Tesla forming a three-weeks long inside consolidation pattern and stochastics also supportive of shares turning the corner, TSLA is in position as a stock to buy. I’d go with a nearby modified collar to take buckle up more safely.
Favored Strategy: Modified April $750 call / ($600/$500 put) Collar
Source: Charts by TradingView
Alibaba is the next of our stocks to buy. Often rightfully referred to as China’s Amazon (NASDAQ:AMZN) the diversified tech giant can also be labeled a bearish stock in today’s stock market. Shares are off 16% from 2021’s February high and roughly 28% removed from last October’s all-time-high. But worries over items like inflation stoking this past month’s sell-off now also appear largely overdone.
InvestorPlace’s Joel Baglole sees BABA stock as one which could turn into a portfolio double given its huge ability and execution on cashing in on China’s burgeoning middle class. Most recently, $90 billion in annual sales and quarterly revenue growth of 30% are certain proof of this tenacious company’s wherewithal.
Technically, the weekly chart in this stock to buy is also suggesting today’s price weakness is tomorrow’s well-taken opportunity.
Right now, shares of BABA are setting up in a Fibonacci-supported, higher-low, double-bottom formation. The pattern hasn’t signaled yet, nor has a bullish crossover in the stochastics indicator. Nevertheless, the combination is very encouraging. And combined with a straight up collar which can be used for accumulating or repositioning on any additional weakness, being in it to win it looks good in our estimation.
Favored Strategy: May $245 Put / $275 Call Collar combination
Source: Charts by TradingView
The last of our stocks to buy are shares of C3.AI. One of 2020’s most talked about IPO’s, AI stock has more quietly of late, turning into one of the market’s more challenged investments.
Shares of the market’s only pure-play on artificial intelligence have tumbled roughly 62% from their February high while striking fresh all-time-lows during Wednesday’s session. The upside? AI has become a more intelligent stock to buy as Wall Street dances, for the time being, with other companies striking its fancy.
Being cheap of course doesn’t necessarily spell value. But InvestorPlace’s Luke Lango sees AI as one of the market’s “most compelling growth companies in the world today.” Luke is all about locating hypergrowth opportunities and with AI he’s estimating there’s a five-fold upside potential in this stock to buy.
Technically and as part of AI’s out-of-favor journey, shares recently failed to hold a hammer pattern, which set up a bullish lower-low, double-bottom. Instead, the formation gave way to a confirmed bearish flag. That brings us to today’s less-than-pleasant looking price chart. And optimistically, much like last year, that has us reflecting on another case of mistaken identity by Wall Street and a stock to buy for the long-haul.
Favored Strategy: Modified April $90 Call / (April $70/$55 Put) Collar
On the date of publication, Chris Tyler holds, directly or indirectly, stock and derivative positions in C3.AI (AI), but no other securities mentioned in this article.
Chris Tyler is a former floor-based, derivatives market maker on the American and Pacific exchanges. The information offered is based on his professional experience but strictly intended for educational purposes only. Any use of this information is 100% the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.