The current market selloff, while scary, presents an enormous berth of stocks to buy for investors. Ron Baron, founder of investment management firm Baron Capital, recently went on CNBC to say that the bear market we’re in presents a “once-in-a-generation buying opportunity” for investors to pick-up stocks of quality companies at distressed prices.
Legendary investor Warren Buffett has bought more stocks this year than he has at any time over the last decade, spending $51 billion in the process and adhering to his own mantra that investors should: “Be fearful when others are greedy and greedy when others are fearful.”
With market volatility near all-time highs and both the S&P 500 and Nasdaq indexes each down more than 20% and firmly in bear market territory, the conditions are right for investors to steady their nerves and add some great stocks to their portfolio while prices are at their lowest levels since before the pandemic hit in March 2020. Here are seven stocks to buy right now.
|F||Ford Motor Company||$11.48|
|AXP||American Express Company||$142.11|
|DIS||The Walt Disney Company||$93.33|
|BRK-A, BRK-B||Berkshire Hathaway Inc.||$403,519.53, $268.56|
Stocks to Buy: Apple (AAPL)
The market downturn this year has washed out a lot of unprofitable high-growth technology stocks that were grossly overvalued coming out of the pandemic. However, the rout has also dragged down the share prices of the very best tech concerns, presenting a huge opportunity to investors.
Case in point is consumer electronic giant Apple (NASDAQ:AAPL), whose stock is down nearly 24% this year at $136.13 a share. The drop in AAPL stock does not reflect the valuation of the company or its earnings, which have remained robust despite some headwinds in terms of manufacturing in China and global supply chain disruptions.
At the end of April, Apple reported quarterly results that showed its revenue grew nearly 9% year-over-year during this year’s first quarter. The company also announced plans to buyback $90 billion of its own stock. Plus, the company has continued to announce a raft of product upgrades and new services in recent months, including a buy now, pay later feature that moves Apple further into the finance space.
By almost every measure, Apple continues to fire on all cylinders. This helps explain why Warren Buffett added to his position in AAPL stock during this year’s first quarter as the price fell, buying an additional $600 million worth of shares.
“Unfortunately the stock went back up, so I stopped. Otherwise who knows how much we would have bought?” Buffett said at his company Berkshire Hathaway’s (NYSE:BRK-A, BRK-B) annual meeting in early May.
Speaking of great American companies whose stock is available at fire sale prices, how about automotive powerhouse Ford (NYSE:F)? Year to date, F stock is down 45% to $11.45 a share. This is after the Detroit automaker’s stock ran up more than 100% in 2021 to hit a 52-week high of $25.87.
The decline in recent months has been mostly due to global supply chain issues that are impacting all automakers, and concerns that a global economic recession could lead consumers to put off big ticket purchases such as a new vehicle. However, these issues are temporary and shouldn’t get in the way of Ford’s long-term transition to electric vehicles.
Already, Ford is rolling out electric versions of its most popular vehicles, the F-150 pick-up truck, that has topped the North American sales charts every year since 1976, and its iconic Mustang muscle car. The electric F-150 truck already has more than 200,000 preorders. And it is just one of the electric vehicles Ford is set to release as the company aggressively moves to challenge rival Tesla (NASDAQ:TSLA) as the world’s leading electric vehicle manufacturer.
To that end, Ford recently announced plans to invest $3.7 billion in its development of electric vehicles, which is on top of the $11.4 billion it had already committed. The money is expected to create more than 6,000 unionized manufacturing jobs in states such as Michigan, Ohio and Missouri. Ford is also in the process of building new battery manufacturing facilities in Tennessee and Kentucky. The money spent on Ford’s electric future should benefit shareholders over the long-term.
Stocks to Buy: American Express (AXP)
Credit card giant American Express (NYSE:AXP) has proven to be a reliable investment through good times and bad. In the past five years, AXP stock has gained approximately 75%, and risen 1,075% since the low point of the 2008-09 financial crisis. Yet, at its current share price of $141.95, American Express stock is only slightly above its 52-week low, making it a screaming buy for investors who have a long time horizon.
At the start of this year, American Express stock was near $200, and most analysts see it climbing back to that level once the current market downturn reverses. The lowest estimate on the stock is currently $146 a share, or nearly two bucks higher than where it’s currently trading.
Like all financial companies, American Express’ earnings should be positively impacted as interest rates rise, enabling it to charge higher rates on the credit cards and other loan vehicles it issues.
Wells Fargo (NYSE:WFC) recently named AXP stock a top pick, noting that “The shares are trading at 14 times our 2023 earnings estimate. [That’s] well below the 18 times we believe is warranted for this high return on equity business.”
Additionally, American Express enjoys more affluent card members than rival credit card issuers, which Wells Fargo says brings with it lucrative partners in the form of hotels, airlines and various retailers.
Amazon (NASDAQ:AMZN) recently split its stock on a 20-for-1 basis, bringing the price down to $123 a share from more than $2,000 previously. But in the days immediately following the split, AMZN stock fell to a fresh 52-week low of $101.26 a share, pushing the stock to its most affordable level in more than a decade.
Down over 34% this year, Amazon’s stock is now trading at $109.65, only slightly above its low point over the past 12 months. This gives investors an opportunity to own a piece of the world’s biggest e-commerce company on the cheap and benefit hugely when the stock inevitably recovers and rises again.
Like virtually every company on this list, Amazon is struggling with issues that include wage inflation, supply chain snarls, and rising interest rates that are slowing consumer spending. But none of these problems is unique to Amazon and they will pass eventually. And coming out of the pandemic, Amazon is proving to be a stronger and more diversified company. Consider that e-commerce sales are forecast to exceed more than $1 trillion in the U.S. this year, and that Amazon controls 40% of the market.
The company also continues to benefit from its Amazon Web Services (AWS) cloud computing unit, which last year represented more than 70% of its operating income. Amazon currently holds a 33% share of the global cloud computing market, and growing.
Stocks to Buy: Walt Disney (DIS)
Shares of the world’s biggest entertainment company are currently changing hands at $94.34 a share. The last time Walt Disney (NYSE:DIS) stock was that low was immediately after the World Health Organization (WHO) declared Covid-19 a global pandemic and markets around the world crashed.
Prior to that, you have to go back to early 2015 to find the last time shares of the Mouse House traded around $95. Disney stock is currently down 40% on the year, and 50% below its 52-week high of $187.58. The selloff has been partly due to broader market volatility and partly due to concerns that subscriber growth is slowing on the Disney+ streaming platform.
However, the naysayers are neglecting to factor in the strong box office performances from several theatrically released Disney films in recent months. Pixar animated movie Lightyear just debuted in the number one spot at the global box office with a weekend haul of $85.6 million. That follows the $942.48 million total earned by Marvel’s Doctor Strange in the Multiverse of Madness.
Other highly anticipated movies are on their way to the big screen in coming months, including Thor: Love and Thunder and Pinocchio. Plus, this summer marks the first time since the Covid-19 pandemic began that all Disney theme parks will be fully open with no capacity restrictions. Add in the company’s cruise ships and branded merchandise, and it’s easy to see that Disney is more than a streaming platform.
Federal Express (FDX)
Shares of shipping and logistics giant Federal Express (NYSE:FDX) recently got a big boost after the company announced that it is boosting its quarterly dividend by 53%. That news immediately sent FDX stock up 14%, its biggest one-day gain since 1986. Yet despite the jump higher, Federal Express’ stock remains down 12% on the year at $227.43 a share.
The company’s stock has been in investor jail since management warned that shipments are slowing coming out of the pandemic. But shareholders shouldn’t be overly concerned. Especially ones who can afford to be patient with the stock.
The company is clearly making shareholders a priority. In addition to the massive dividend increase, which takes the quarterly payout to $1.15 a share, FedEx also announced that it is adding “total shareholder return” as a performance metric to its executive compensation program. This is on top of the $5 billion share repurchase program the company announced last December.
The renewed focus on shareholder returns comes as FedEx founder Fred Smith transitions to the role of executive chairman and is replaced as chief executive officer (CEO) by Raj Subramaniam. The leadership transition, coupled with the depressed price of FDX stock, presents a nice entry point for investors.
Stocks to Buy: Berkshire Hathaway (BRK.B)
Given the outsized influence Warren Buffett continues to exert on markets and investors, it is fitting to include his holding company, Berkshire Hathaway, on this list. Berkshire Hathaway’s Class B stock is down 10% year to date at $268.55 per share. That’s better than the 23% decline in the benchmark S&P 500 index. However, BRK.B stock is now 25% below its 52-week high of $362.10 and only slightly above its 52-week low of $265.68 a share. This presents a great entry point for investors and an opportunity to own shares of one of the most successful companies in U.S. history.
A holding company, Berkshire Hathaway owns many companies outright, ranging from railroads and insurers to the Dairy Queen fast food restaurant chain and Fruit of the Loom underwear maker.
Berkshire also owns a vast portfolio of stocks that includes many of the names on this list, such as Apple, American Express and Amazon. The company’s portfolio currently totals more than $300 billion and that is with this year’s market decline. However, Berkshire Hathaway’s portfolio has consistently beaten the results of the S&P 500. Between 1999 and 2020, Berkshire outperformed the benchmark S&P 500 in 12 years.
The company’s track record is even more impressive the further back one goes. Investors could do worse than throw their lot in with Warren Buffett.
On the date of publication, Joel Baglole held long positions in AAPL, AXP and DIS. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.