- The bear market creates compelling prices for stocks to buy if you’re willing to brave the drama.
- Camping World (CWH): Has been printing profits following the pandemic and boasts a juicy 9% dividend yield.
- Advanced Micro Devices (AMD): Hot off a solid earnings report that beat expectations and reminded investors why its share price won’t stay down.
- Walt Disney (DIS): You have the chance to buy the Mouse House at nearly 50% off the highs and at the same prices available in 2015.
Finding attractive stocks to buy has been easy. But actually profiting from the purchase? Now that’s been difficult. Patience and a willingness to wrestle with volatility and whipsaw are required characteristics if you want to play in this environment. Bear markets can be treacherous, but if you’re willing to brave the drama, some diamonds in the rough could be worth the trouble.
Today I’m sharing three of my favorites.
It’s worth noting what you won’t find on the list: stocks that belong to the underbelly of the market like recent IPOs, SPACs and unprofitable companies. These more speculative issues have been locked in the house of pain and are poison to portfolios. Instead, I focused on excellent, profitable that now offer attractive share prices. To sweeten the deal, I’ll share how to use options to enhance your probability of profit.
|AMD||Advanced Micro Devices||$92.09|
Stocks to Buy: Camping World (CWH)
Camping World (NYSE:CWH) did an admirable job capitalizing on the stay-at-home trend and shift in consumer habits following the pandemic. But, unlike many of the biggest post-pandemic winners, CWH stock has maintained much of its gains. The stickiness of its earnings growth makes it a more attractive buy right now. Rather than keeping the record profits in-house, the company has been quick to share the windfall with investors by ramping up the quarterly dividend from 8 cents to 62.5 cents over the past two years.
Time will tell if the company can maintain the high payout, but for now, the yield stands at a mouth-watering 9%.
On the charting front, CWH stock just bounced off of significant support near $25 and scored a rousing response to earnings. Tuesday’s drop back could be a gift in disguise. You can buy shares outright or sell puts to elevate the odds.
The Trade: Sell the June $20 naked put for 45 cents.
Advanced Micro Devices (AMD)
The decline in Advanced Micro Devices (NASDAQ:AMD) has been nearly as swift as its ascent. From peak to trough, the drawdown measures -48%. The re-pricing hasn’t come because of any company missteps or earning deterioration as much as from market repricing. Rising interest rates and the potential recession they could create have investors rethinking just how much they’re willing to pay for each $1 of earnings.
In a world where positive earnings responses are rare, AMD stock’s price jump last week stands out. Sure, we didn’t see follow-through. And, sure, we’ve since filled the earnings gap, but it’s a victory compared to the horror seen in other growth names. While we may see more pain before the bear has been defeated, I think AMD has fallen enough to justify dipping your toe in. I suggest selling puts as a higher odds alternative to purchasing shares outright.
You’re getting paid for your willingness to buy the stock at lower prices.
The Trade: Sell the June $70 naked put for $1.60.
Stocks to Buy: Disney (DIS)
Walt Disney (NYSE:DIS) is the final idea for today’s stocks to buy, and its price chart is the least inspiring of the bunch. But I find the discount too tempting to pass up. It’s not often that you get the chance to buy a blue-chip company with the most iconic brands on the planet at a 50% discount. But that’s precisely what DIS stock offers.
Bears will argue the streaming slowdown, political turmoil and general threat of a recession are reasons for concern. They’re correct on all fronts, but you have to wonder when it’s baked into the share price. The conservative investor might wait until a more definitive bottoming pattern forms before buying. For now, I think the premium available in put options makes selling them too attractive to pass up.
The Trade: Sell the June $90 put for $1.60.