The U.S. equities market remains in a dip no matter how you define it. Year-to-date, the Dow Jones Industrial Average is off by 12%. The S&P 500 is off by 16%. The Nasdaq has led the group, down 24% this year. The reason for this is that the Nasdaq is heavily tech-dominated, and tech has fared much worse as the Federal Reserve has ramped up successive rounds of rate hikes.
But any way investors slice it, we’re still in the middle of a dip. And there are few, if any, signs that things won’t get worse. Depending on who you ask, we’re either in a recession or likely headed toward one.
That implies that investors need to exercise extreme caution. Conservative equities that traditionally weather market cyclicality will remain strong no matter what happens. But the dip has also made many volatile picks very attractive. With that said, here are some of the best stocks to buy on the dip.
|KDP||Keurig Dr. Pepper||$37.11|
|PG||Procter & Gamble||$145.64|
Keurig Dr. Pepper (KDP)
Keurig Dr. Pepper (NASDAQ:KDP) stock is nothing if not steady. Stock in the producer, marketer and seller of Keurig coffee products and services and soft drinks has only varied between $34 and $39 this year.
And that lack of volatility is precisely why investors should consider purchasing it. Its 0.54 beta reflects the idea that it simply won’t behave wildly in the tumultuous period investors find themselves in.
That said, KDP is still down this year and that means it has room to run upward. Analysts believe it should trade above $40 as a consensus. And shares come with a modest dividend yielding a bit above 2% currently.
Company management has given shares the ultimate approval in that chief supply chain officer, Tony Milikin recently scooped up $1.4 million worth of shares. Given his title, investors have to believe that Dr. Pepper products will remain easy to find on shelves throughout 2022.
Procter & Gamble (PG)
Investors are well aware of the notion that Procter & Gamble (NYSE:PG) stock comes highly recommended currently. The consumer packaged goods giant is noted as a strong bulwark against market cyclicality. That notion is evidenced by its 0.39 beta over the past five years.
The good news is that despite the press, Procter & Gamble stock still has more than $20 to go until it reaches its consensus target price.
PG stock will remain steady, investors know that. If it doesn’t move substantially higher toward that target price, investors will still have its rock-solid dividend to rely on for income. And here’s the kicker: PG stock has returned 12.31% annually on average over the past 10 years.
That’s more than double what its peers on the NYSE returned over the same period. And that’s without the dividend being reinvested.
While the broader market remains down in 2022, Merck (NYSE:MRK) stock is rising. In fact, it has appreciated in price by more than 19% this year.
In late April, when the firm last released earnings, the news was strong. Revenues reached $15.9 billion in the quarter, outstripping consensus estimates of $14.6 billion by a wide margin.
That might logically give investors pause. After all, Merck has outpaced the market by a wide margin and some investors might reasonably believe the positives are fully priced in.
However, Merck has a significant catalyst on the immediate horizon: Its deal to buy Seagen (NASDAQ:SGEN). According to sources, that deal is unlikely to transpire prior to upcoming earnings. That means investors willing to bet on the deal occurring could see share prices move up significantly on positive news.
Berkshire Hathaway (BRK.B)
Berkshire Hathaway (NYSE:BRK.A, NYSE:BRK.B) stock is neither particularly recession-proof, its beta is 0.91, nor does it bear a dividend. So, from those perspectives, it’s a bit of a divergence from prior picks on this list.
But what it may lack there, it makes up for in pedigree. Warren Buffett’s firm invests with the long term in mind and his results and wealth speak to the strategy’s success. So, if we are entering another recession, Buffett’s knowledge of business cycle investing, borne out of many decades of experience, is where investors should be.
It’s a bet on American business resilience and an investment into a diverse sampling of key U.S. industry leaders. It’s also a bet on growth that is expected to continue steadily this year, next year and well into the future.
Chevron (NYSE:CVX) stock is among the more volatile stocks on this list. Its 1.13 beta over the past five years serves as evidence of that notion. The energy market is known to suffer prolonged periods of ups and downs. Chevron is certainly subject to that cyclicality as a leading oil equity.
That said, there are too many positives underpinning Chevron to ignore it. Earnings-per-share expectations continue to trend upward this quarter and for the remainder of the year. That means that Chevron has a greater chance to approach the $177 target price that analysts have assigned it.
Further, CVX stock comes with a dividend that currently yields a very respectable 3.91% moving forward. There’s a very strong chance that Chevron will continue to reap record profits this year, investors shouldn’t ignore that.
Meta Platforms (META)
Meta Platforms (NASDAQ:META) stock has received a lot of stick throughout 2022. It’s pretty easy to doubt the stock. The tech selloff has seen Meta Platforms lose 50% of its market capitalization. That has fueled bears who are quick to point out notions that Facebook harms society as they hope to hasten its demise.
Those same detractors will point to the firm’s pivot to the metaverse and the rebrand as its death knell. To them, Meta Platforms, ex-Facebook, is already dead.
If Meta proves successful, it’ll be reflected in new segment reporting, which separates Reality Labs from Facebook, Instagram and the company’s other apps. Now is the time to make that contrarian bet on the simple idea that Facebook didn’t become Meta Platforms on a whim. That seems very likely given the talent it has attracted over its massive, successful run.
Qualcomm (NASDAQ:QCOM) stock is undervalued if you listen to analyst Samik Chatterjee, of JP Morgan.
He believes that Qualcomm is making good progress as it diversifies away from the phone market. And he believes that negative sentiment is overblown on that front. Thus, he was confident in putting it on the firm’s focus list. That alone should ignite some interest in QCOM stock.
Another reason is that Qualcomm is a significant OEM manufacturer to Apple (NASDAQ:AAPL). Apple is moving to develop the modems Qualcomm supplies in-house. But that hasn’t gone as smoothly as predicted. That means Qualcomm can count on that revenue a bit longer as it diversifies, making it attractive during the interim and perhaps much longer.
On the date of publication, Alex Sirois 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.