Early this month, the CBOE Volatility Index, or VIX soared to multi-year highs. As a contrarian indicator, a northward trek of the fear gauge implies a negative outlook for equities. To put it simply, the VIX tells us the magnitude by which options traders anticipate the market will move. Since acceleration is sharper during down cycles than up, higher mobility is generally bearish. Still, speculators may want to consider certain stocks to buy now.
That’s because the VIX is part of the usual ebb and flow of the equities space. Over the long run, the market features an upward bias: people tend to be optimistic and thus over time, they’re more inclined to buy up the red ink. Stated differently, it’s not so much about what the VIX is telling us right now. Rather, it’s more important to consider what may lie ahead.
Further, the VIX itself has come down significantly from its recent peak. That doesn’t mean investors should lose their vigilance – folks still need to be extra cautious. Nevertheless, for the risk-tolerant trader, there are several stocks to buy now that are awfully enticing.
Vulcan Materials (VMC)
Operating in the construction materials space, Vulcan Materials (NYSE:VMC) represents one of the most important players in the infrastructural arena. Of course, Vulcan is sensitive to economic conditions. As a result, when the VIX soared to multi-year highs, it had a negative impact on VMC. Still, as the market digests the volatility, Vulcan could be one of the stocks to buy now.
Naturally, if broader economic sentiment picks up – and it’s possible that the Federal Reserve can play a key role in this via interest rate cuts – Vulcan would look quite attractive. Right now, shares are priced at 4.26X trailing-year sales. That’s a bit high compared to the building materials industry’s average multiple of 3.22X.
Given the uncertainties of the economy, analysts are actually projecting a dip in sales to $7.57 billion this year, down from last year’s print of $7.78 billion. Still, if the Fed cooperates, the high-side view calls for $7.93 billion. In addition, the consensus sales target for fiscal 2025 aims for $8.23 billion.
If you want to bet on America, VMC one of the stocks to buy now.
Newmont (NEM)
Falling under the broad materials segment, Newmont (NYSE:NEM) specifically specializes in precious metals. Not surprisingly, NEM stock has been one of the top performers recently. In the trailing month, shares gained almost 4% of equity value. While that doesn’t sound like much, several high-profile tech players lost double-digit percentage points during the same period.
By logical deduction, NEM represents one of the stocks to buy now thanks to the relevance of the underlying asset. Rising fear as illustrated by the VIX suggests that the Fed may need to act more aggressively with its policy. That could translate to more robust interest rate cuts, which would be inflationary. In turn, this backdrop could boost gold-related investments like Newmont.
In the trailing year since the second quarter, Newmont has been quietly delivering the goods. It posted an average earnings per share of 53 cents, above the consensus view of 47 cents. This yielded an earnings surprise of 15.33%.
NEM stock trades at 3.35X sales, which is pricey compared to the industry average of 2.63X. Still, the company may see gargantuan growth in the top line of 52.2% to $17.98 billion this year.
ServiceNow (NOW)
Falling under the infrastructure software ecosystem, ServiceNow (NYSE:NOW) provides cloud-based services for enterprise IT operations management. Its offerings help organizations automate workflows. It’s an important idea to consider among stocks to buy now thanks to its leadership role in the digital transformation. Plus, its automation acumen may see greater demand among enterprise clients seeking a competitive edge.
Before diving into the bullish narrative, it’s impossible to ignore the obvious. NOW stock trades at a blisteringly hot premium – we’re talking a price-to-sales ratio of 16.78X. That’s well above the infrastructure software sector’s average yield of 3.96X. However, not everyone in the space has as much upside potential as ServiceNow.
First, the market in the past year accepted an average multiple of 16.48X. Further, in Q1 of this year, the average stood at 17.47X. Second and more importantly, covering experts are targeting significant growth of 21.6% in fiscal 2024 to $10.91 billion. In the following year, revenue could jump to $13.15 billion, another 20.6% up.
To be fair, that doesn’t quite mean NOW is a cheap discount. However, it’s one of the stocks to buy now that can rise from strength to strength.
Schlumberger (SLB)
Operating in the hydrocarbon equipment and services space, Schlumberger (NYSE:SLB) is a key player in the oilfield services realm, offering technical know-how and services to the energy industry. It’s a compelling idea for stocks to buy now because the relatively soft oil pricing dynamics might not last. Geopolitics could make the upstream (exploration and production) component of the value chain more pertinent. If so, SLB stock could be a downwind beneficiary.
Right now, shares trade hands at 1.8X sales. That’s a bit higher than the equipment and services sector’s average multiple of 1.11X. However, in the past year, the market previously accepted a multiple of 2.36X. Therefore, it’s possible that Schlumberger may rise to its prior valuation. That could happen if geopolitical dynamics cynically cooperate; that is, if global supply chains get disrupted.
Even better, analysts anticipate robust business expansion in the years ahead. By fiscal 2025, EPS could hit $4.11 thanks to an average bottom-line expansion of 17.44%. On the top line, sales could hit $41.63 billion, implying an average growth rate of 12.1% over the next two years.
Block (SQ)
Operating in the financial technology (fintech) arena, Block (NYSE:SQ) offers payment processing solutions along with financial services for small businesses and individuals. Thanks to the burgeoning gig economy – or a network of freelance workers (independent contractors) – Block could see increased demand. Further, the platform offers cryptocurrencies, a popular avenue among young investors and entrepreneurs.
What makes Block exciting is that it technically falls under the infrastructure software ecosystem. This arena runs an average sales multiple of 3.96X. Right now, SQ stock trades at only 1.64X. That’s even undervalued relative to the prior year’s running average, which stood at 1.93X. During Q1, the metric averaged 2.37X.
Even better, covering experts are anticipating tremendous growth ahead. In fiscal 2024, EPS could double from $1.80 to $3.60. In the following year, the bottom line could rise to $4.59 per share, another solid increase. On the top line, fiscal 2024 sales could hit $24.72 billion, up 12.8%. That may be followed up by revenue of $27.45 billion in 2025.
To be fair, SQ stock is trading at 34.5X levered free cash flow (FCF), which is a bit hot. Still, the business is booming.
Prologis (PLD)
Structured as a real estate investment trust or REIT, Prologis (NYSE:PLD) is a leading global enterprise specializing in logistics-based properties. This includes warehouses and distribution centers. Why is that important? With the continued rise of e-commerce, demand for such physical spaces has only increased. It will probably continue to rise, making PLD one of the potential stocks to buy now.
Financially, the company is more than holding its own. In the past year since Q2, the REIT posted an average EPS of 76 cents. This figure beat out the consensus target of 57 cents, thus yielding an average earnings surprise of 33.1%. However, if there is a noticeable point of contention, it’s that PLD stock is trading hands at 14.72X revenue. That’s quite high.
However, the idea with REITs is to generate consistent profits and turn that into passive income. Prologis offers a forward dividend yield of 3.2%. As for forward projections, this year may be mixed, with a decline in EPS and a boost in sales. However, fiscal 2025 could see EPS soar to $3.77 on revenue of $8.48 billion.
Last year, the REIT posted earnings of $3.29 on sales of $6.82 billion.
Uber (UBER)
If the VIX truly settles down due to genuinely positive fundamentals, then ride-sharing giant Uber (NYSE:UBER) should be on your radar of stocks to buy now. If consumers feel more comfortable about their financial standing, they may be more willing to use ride-sharing platforms. That would be a positive for UBER stock. Plus, the company offers other services, such as food deliveries and even freight and logistics.
Technically, Uber falls under the application software sector, which features an average price-to-sales ratio of 3.87X. Right now, shares trade hands at 3.69X so technically speaking, the enterprise is undervalued. What’s more, the market previously accepted an average quarterly multiple exceeding 4X. So, UBER stock has room to expand vertically.
In terms of earnings performances, the company is hit or miss: it’s either going to hit big or miss big, with few in-betweens. That makes UBER risky but it’s also part of the fun.
Finally, analysts see major growth ahead. Fiscal 2024 sales could rise to $43.32 billion, up 24.4% from last year’s print of $34.83 billion. And fiscal 2025 sales could rise to $49.99 billion, up 15.4%.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
