Here’s a rundown of the market’s best stocks to buy on a decent dip. They’re not necessarily ripe for a purchase right now, but they each sport enough long-term momentum and the right fundamentals to recover from a future stumble as well as they have in the past.
#1: Johnson & Johnson (JNJ)
JNJ may not always soar to higher highs. But, even when the market environment is lousy and the economy is in shambles, JNJ stock finds a way of hammering out some degree of progress. Its stumbles are always short-lived before yielding to a move above its prior peak.
That persistence has everything to do with the nature of its business. Johnson & Johnson sells a mix of prescription drugs, over-the-counter drugs like Tylenol and Zyrtec and a variety of medical equipment. Its top and bottom lines don’t move in a perfectly straight line, but they broadly move higher all the time.
There is a catch with JNJ stock, however. While it can and usually does recover pretty quickly, there’s no rhythm or pattern to its pullbacks and rebounds.
#2: Verizon Communications (VZ)
The telecom industry is changing. It’s getting tougher to be in, as the lines between phone and video — and now entertainment — continue to blur.
Nobody knows that better than the chiefs at Verizon Communications (NYSE:VZ), which acquired a struggling Yahoo with plans to use that as a springboard into the streaming video arena. It has not worked out very well, with the company writing down $5 billion last year to adjust for the deteriorating value of its Yahoo and AOL properties.
Unlike its biggest rival AT&T (NYSE:T), however, Verizon hasn’t taken on too much outside of the telecom realm. Revenue growth has been surprisingly steady, even if income growth hasn’t been quite as consistent. It’s the erratic bottom line largely responsible for the pullbacks the stock has been dishing out since 2010.
Take a closer look at those lulls though. Just when it looks like the stock’s never going to recover, it does.
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#3: Goldman Sachs Group (GS)
Goldman Sachs Group (NYSE:GS) used to be a titan, and arguably the premier name in the investment banking business. That’s not the case anymore. Through a combination of more competition and a lack of effective focus, Goldman lost a step.
Investors have taken notice. It was earnings lulls that largely drove the 2011, 2015 and 2018 setbacks for GS stock. Those were big selloffs too. Last year’s tumble was almost a 50% meltdown from peak to trough.
Those troughs have been great buying opportunities though, since if nothing else, Goldman Sachs can lean on its pedigree while it regroups to restore earnings growth. There’s also a support line that appears to be playing a role in the stock’s recoveries now.
#4: Lowe’s Companies (LOW)
Hardware store chain Lowe’s Companies(NYSE:LOW) has always played second fiddle to bigger rival Home Depot (NYSE:HD), and perhaps hasn’t performed as well as it would have liked because Home Depot was forever standing in the way.
The second-biggest home improvement retailer is no slouch, however. As long as the economy and housing market are on solid footing, Lowe’s is growing too, securing its spot on a list of the best stocks to buy on a dip.
The weekly chart of LOW confirms it. The weekly chart also makes clear that this particular stock ebbs and flows in a rhythm, and more often than not, it turns around when it bumps into previously established support and resistance lines.
#5: Medtronic (MDT)
Medtronic (NYSE:MDT) makes and markets a variety of medical devices, ranging from pacemakers to dialysis catheters to electrosurgical instruments.
Yes, as was the case with Johnson & Johnson, Medtronic’s business is reliable from one quarter — and one year — to the next. The tradeoff is, red-hot growth is incredibly unlikely.
It’s a dynamic investors generally have a tough time remembering, given the stock’s up-and-down action. The market will bid it up to unsustainable values, and when they correct that move, they overdo the downturns as well. The end result is a relatively well-established zig-zag pattern that since 2015 has been framed by equally well-established support and resistance lines.
It looks as if MDT shares just pushed up and off the lower boundary of that rising trading range.
Full story at Investorplace.com
