While the S&P 500 will end 2022 on a negative note (barring a miracle), it’s also an opportunity for contrarian investors to consider the best stocks to buy on a dip now. At this point, this sentiment understandably sounds like turning that frown upside down. I get it, I really do. However, during bearish cycles, negative emotions can get ahead of themselves.
To be fair, Wall Street experts cited several pain points, particularly the Federal Reserve’s hawkish monetary policy and Russia’s invasion of Ukraine. Along the way, we endured other geopolitical flashpoints, along with a varied response to the coronavirus pandemic. The disjointed nature of 2022 rightfully brought pain to the equities market. Still, it also opened doors for the best stocks to buy on a dip.
Likely, you must exercise patience with the ideas below. Nevertheless, in the long run, these relevant plays could eventually put a smile on your face. So, without any more delay, below are the best stocks to buy on a dip now.
Best Stocks to Buy on a Dip: Albemarle (ALB)
As seemingly every market expert says, electric vehicles are the future. Naturally, such sentiments inspired investors to seek out public firms that might dominate the electric vehicle (EV) sector for years to come. However, consumer sentiment symbolizes a tricky business. And that’s why infrastructure-related companies like Albemarle (NYSE:ALB) may offer a better solution.
Fundamentally, Albemarle takes away much of the guesswork involved in the EV race. Rather than picking out brand winners and losers, Albemarle provides what all EVs need: lithium. Therefore, ALB easily qualifies as one of the best stocks to buy on a dip now.
To be sure, investors shouldn’t expect to get rich off ALB. Infrastructure plays just aren’t as exciting as individual consumer brands. Still, if you look at individual EV stocks right now, the sector hurts badly. Since it’s not 100% clear who will win out, it’s better to sell tickets to the game rather than wagering on specific teams.
Archer Daniels Midland (ADM)
No matter what we invent in the coming years, humans must eat. It’s this harsh reality that bolsters the case for Archer Daniels Midland (NYSE:ADM) being one of the best stocks to buy on a dip. A multinational food processing and commodities trading corporation, ADM represents a fine investment during times of trouble.
Mainly, the company symbolizes resilience and reliability. According to Dividend.com, Archer Daniels Midland commands 49 consecutive years of dividend increases. With myriad organizations struggling amid an environment of rising borrowing costs, this track record provides much-needed reassurances.
Fundamentally, Archer Daniels offers products and solutions throughout the food value chain. From ingredients to supplements to beverages, the company does it all. As well, ADM features an animal nutrition division, serving pets, poultry and the equine industries.
As you might imagine, investors placed a premium on ADM for its safe-haven profile. While shares are up 37% on a year-to-date basis, ADM tripped up recently. In the trailing month, shares declined by 4.5%. It’s not the biggest discount. However, the sheer relevance of ADM means it will probably jump higher soon.
Best Stocks to Buy on a Dip: Intuit (INTU)
Frankly, I’ve been talking about Intuit (NASDAQ:INTU) because, in my opinion, it sells itself. Best known for its tax and accounting software, should the gig economy accelerate as advertised, Intuit will likely enjoy increased demand. Fundamentally, tax preparation for independent contractors presents much more complexities than a standard W2 filing for employees.
From my perspective, the gig economy should enjoy increased participation thanks to the massive return-to-the-office debate. In short, worker bees want to continue telecommuting while upper management wants them to return.
More than likely, the latter party will emerge victorious. First, companies sign the checks so they own incredible leverage. Second, employees can’t have it both ways, where they enjoy the security/benefits of employment yet also make their own rules.
Should a recession materialize, corporations will enjoy even greater leverage. That may inspire several holdouts to become full-time gig workers, which will invariably boost Intuit. As I said earlier, because of more complex tax-filing processes, Intuit will gain extraordinary relevance. Thus, it’s a worthwhile idea among the best stocks to buy on a dip.
Tech icon Intel (NASDAQ:INTC) represents one of the riskier plays among the best stocks to buy on a dip. However, it may also be the most compelling.
This past summer, Reuters reported that Intel inked an agreement with Canada’s Brookfield Asset Management (NYSE:BAM) to “jointly fund up to $30 billion for the U.S. chipmaker’s leading-edge chip factories in Arizona.” This contract fuels “Intel’s ambition to bring more chip production onshore without weighing on its balance sheet.”
Reuters added that through the deal, “Intel could preserve debt capacity for other priorities with financing commitment for a multi-year project, while maintaining operational control.” David Zinsner, Intel’s finance chief, stated that the arrangement “builds on the momentum from the recent passage of the CHIPS Act in the U.S.”
Here’s the deal with INTC stock. Since the start of the year, shares have tanked nearly 51%. However, Gurufocus considers Intel to be significantly undervalued based on its proprietary calculations for fair market value. Further, the market prices INTC at eight times trailing-12-month earnings, below the industry median of 15.9 times.
Best Stocks to Buy on a Dip: Netflix (NFLX)
Once a darling of Wall Street, Netflix (NASDAQ:NFLX) suffered a catastrophic loss of confidence in the outgoing year. Since the January opener, NFLX slipped around 51% of equity value, even inclusive of a sizable rally in the past several months. Problematically, the content-streaming giant suffered subscriber losses that spooked investors. While management has been busy righting the ship, the jettisoning was understandable.
One of the headwinds that negatively affected Netflix centered on revenge travel. After roughly a two-year period of lockdowns and mobility restrictions, people wanted to get out of the house. Therefore, many folks had little need for Netflix or similar at-home entertainment platforms. However, this desire for vacationing quickly met skyrocketing inflation and eventually job losses.
Moving forward, I’m not entirely sure that the American consumer owns the capacity to vacation. If you look at government-provided data, credit card debt soared to a record high. Nevertheless, consumers will seek entertainment to distract them from everyday struggles — and Netflix is still relatively cheap. Thus, NFLX ranks among the best stocks to buy on a dip.
Sea Limited (SE)
On paper, Singapore-based tech conglomerate Sea Limited (NYSE:SE) appears to be an easy win. After all, the company features broad exposure to e-commerce, financial technology (fintech) and gaming enterprises. Each of these segments commands strong growth potential. As well, Sea benefits from geographical dynamics. Levered to developing regions, the company enjoys much more upside potential than those firms tied to mature economies.
Unfortunately, this narrative has not panned out pleasantly, at least for 2022. Since the January opener, SE gave up more than 76% of its equity value. And while the back half of the year presented a better performance, it was only based on a relative scale. In the trailing six months, SE stock still managed to drop 21%.
However, even with the pain, experts in the field believe that Southeast Asia’s internet economy can hit $330 billion by 2025. Eventually, it can still hit the projected $1 trillion mark as the core fundamentals haven’t really changed. It’s just that this milestone may take an extra two or three years. For the patient, though, SE could still rank among the best stocks to buy on a dip.
Best Stocks to Buy on a Dip: NuScale Power (SMR)
Easily one of my favorites regarding best stocks to buy on a dip, NuScale Power (NYSE:SMR) specializes in small modular reactors; hence, the ticker symbol. Commanding the extraordinary energy density of nuclear facilities but with a smaller and safer footprint, NuScale carries the potential to bring power closer to the source of demand. I look at it as edge computing but with electrons.
Of course, when you think nuclear, you invariably think meltdowns and radioactive disasters. To be realistic, every nuclear power investment will face product evangelism challenges. However, I’m bullish on SMR because a discussion about clean energy stocks for future development can’t ignore nuclear. It’s the most reliable energy source and it commands incredible density that nothing else can touch.
Further, I’m very much interested in the scientific potential of NuScale, which theoretically empowers previously economically unfeasible endeavors such as desalination or the conversion of ocean water into potable (drinking) water. With SMR, it’s possible for international policymakers to kill two birds with one stone. Plus, with shares falling substantially since late August, the discount is incredibly tempting.
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.
Agriculture, Automotive, Battery, Commodities, Communications, Consumer Discretionary, Consumer Staples, E-Commerce, Electric Vehicles, Energy, Financial, Fintech, Food, Industrial, Lithium, Media, Precious Metals, Renewable Energy, Retail, Semiconductor, Software, Streaming, Technology