13 Best Buy-the-Dip Stocks To Buy Right Now
In this article, we discuss 13 best buy-the-dip stocks. If you want to skip our discussion on the stock market performance, head over to 5 Best Buy-the-Dip Stocks To Buy Right Now.
In June 2022, year-over-year consumer price index (CPI) inflation reached a 40-year high of 9.1%. However, throughout most of 2023, stabilized prices were observed due to elevated interest rates and declining energy prices. Despite a slowing rate of increase, the latest CPI reading remains somewhat discouraging for investors who anticipated a continuous decline in inflation with the latest Federal Reserve monetary policy measures. The most recent report from the Labor Department indicates that in January, the CPI rose 3.1% year-over-year, a decrease from December's 3.4% gain but higher than the expected 2.9% increase. On a monthly basis, the CPI increased by 0.3%, surpassing economists' estimates of a 0.2% gain.
The current US inflation and the possibility of a more lenient Federal Reserve policy are sparking discussions about a mild economic slowdown instead of a recession, a severe economic downturn, or a bear market, according to JPMorgan. Leading indicators suggest a deceleration in growth rather than a sudden collapse. Some indicators, such as real estate, corporate, and household delinquency rates, are on the rise, but history shows that these usually trail behind other signals for investors. Essentially, equity markets typically hit their lowest points well before the peak of economic turmoil, with the dot-com cycle being a notable exception. While there is still risk of a recession in 2025, it is important to note that even if it occurs, it is likely to be mild, especially with the Federal Reserve offering significant indirect liquidity to the banking system. JPMorgan acknowledged that investors face challenges, including the impact on public sector finances due to large deficits, markets that have already factored in a very gradual economic slowdown, and the significant influence of mega-cap stocks. In 2023, S&P 500 earnings remained stagnant. However, they surged by 33% for the top 7 mega-cap stocks and declined by 5% for the rest of the S&P 500. Taking everything into account, 2024 seems poised for a year of decelerating GDP growth, single-digit earnings growth, and single-digit returns for the average S&P 500 stock, per the bank’s report.
On February 18, Goldman Sachs increased its year-end target for the S&P 500 index to 5,200, indicating a potential 4% increase from its current levels. This adjustment is attributed to a more positive earnings outlook for the companies within the index. Previously, Goldman Sachs had anticipated the index reaching 5,100 by the end of 2024. This initial projection was then revised from 4,700 in December, driven by factors such as moderating inflation and the anticipation of the US central bank implementing interest rate reductions throughout the year. David Kostin, lead strategist at Goldman Sachs, told Reuters:
"We expect strong world GDP growth and a slightly weaker dollar will support EPS, while lower rates and lower oil prices will be a slight drag."
In 2024, Morningstar believes that the focus will shift towards a more fundamental analysis of individual companies and sectors, moving away from the macroeconomic and behavioral factors that influenced the market in recent years. Economic growth was expected to decelerate not only in the fourth quarter of 2023 but the trend will persist throughout the next three quarters, until a resurgence in the third quarter. Expectations include the Federal Reserve initiating rate cuts in 2024 and throughout 2025, concluding by 2026. This reduction in the federal funds rate is predicted to bring the 10-year Treasury yield down to a long-term projection of 2.75%, a decline from the current 4%. In terms of GDP growth, short-term forecasts align closely with consensus, but over a five-year horizon, Morningstar expects a cumulative 3% higher real GDP growth compared to consensus. This is primarily attributed to perspectives on the supply side, involving labor force expansion and productivity growth. Inflation has significantly receded, and by the second quarter of 2024, a return to the Federal Reserve's 2% target is forecasted.
Amid this market backdrop, some investors prefer to buy stocks that are trading near 52-week lows to reap the benefits later. Some of the best 52-week low stocks include Humana Inc. (NYSE:HUM), Johnson & Johnson (NYSE:JNJ), and Exxon Mobil Corporation (NYSE:XOM).
Our Methodology
For this article, we used a stock screener to identify stocks that are trading near or at their 52-week lows. Then, we chose different industry filters, picking 13 companies stocks from popular industries with the highest number of hedge fund investors in the fourth quarter of 2023. The list is arranged in ascending order of the number of hedge fund holders in each firm. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here).
Best Buy-the-Dip Stocks To Buy Right Now
13. Newmont Corporation (NYSE:NEM)
Number of Hedge Fund Holders: 53
Industry: Gold
Newmont Corporation (NYSE:NEM) focuses on the production and exploration of gold, as well as the exploration of copper, silver, zinc, and lead. It has operations and assets in the United States, Canada, Mexico, Dominican Republic, Peru, Suriname, Argentina, Chile, Australia, and Ghana. On October 26, 2023, Newmont Corporation (NYSE:NEM) reported a Q3 non-GAAP EPS of $0.36. The revenue declined 5% compared to the prior-year quarter, coming in at $2.5 billion.
According to Insider Monkey’s fourth quarter database, 53 hedge funds were bullish on Newmont Corporation (NYSE:NEM), compared to 49 funds in the prior quarter. Jean-Marie Eveillard’s First Eagle Investment Management is the largest stakeholder of the company, with 23.75 million shares worth $983.2 million.
Like Humana Inc. (NYSE:HUM), Johnson & Johnson (NYSE:JNJ), and Exxon Mobil Corporation (NYSE:XOM), Newmont Corporation (NYSE:NEM) is one of the best 52-week low stocks to buy.
Here is what First Eagle Investments Global Fund has to say about Newmont Corporation (NYSE:NEM) in its Q2 2022 investor letter:
“Shares of Colorado-based Newmont, the largest gold miner in the world, experienced weakness in the quarter as falling gold bullion prices and cost inflation hurt miners in general. More idiosyncratically, the company reported slightly disappointing earnings and production results for its most recent quarter due to pandemic-related disruptions, ongoing supply-chain constraints, and labor shortages.
It also warned that operating costs for 2022 were likely to come in at the upper end of previous guidance. We remain constructive on the stock, which offers steady production anchored in good jurisdictions, a good pipeline of organic projects, a strong balance sheet, and proven management.”
12. Deere & Company (NYSE:DE)
Number of Hedge Fund Holders: 54
Industry: Farm & Heavy Construction Machinery
Deere & Company (NYSE:DE) is a global manufacturer and distributor of farming equipment, operating through four segments – Production and Precision Agriculture, Small Agriculture and Turf, Construction and Forestry, and Financial Services. On February 15, Deere & Company (NYSE:DE) reported financial results for the first quarter of fiscal 2024. The company’s GAAP EPS and revenue came in at $6.23 and $12.19 billion, beating Wall Street estimates by $1.02 and $1.86 billion, respectively. It is one of the best 52-week low stocks to consider.
According to Insider Monkey’s fourth quarter database, 54 hedge funds were long Deere & Company (NYSE:DE), compared to 55 funds in the earlier quarter. Bill & Melinda Gates Foundation Trust is the largest stakeholder of the company, with 3.5 million shares worth $1.4 billion.
ClearBridge Large Cap Value Strategy made the following comment about Deere & Company (NYSE:DE) in its Q4 2022 investor letter:
“Our industrials holdings produced robust absolute returns for the quarter. While the ISM Manufacturing Index fell in November to contractionary levels, our industrial holdings have largely been able to maintain earnings due to strong competitive positions, historically large backlogs and company-specific drivers. For example, Deere & Company (NYSE:DE) continues to benefit from a strong upgrade cycle as record farmers’ income is driving broad and rapid adoption of the company’s precision agricultural equipment.”
11. Warner Bros. Discovery, Inc. (NASDAQ:WBD)
Number of Hedge Fund Holders: 56
Industry: Entertainment
Warner Bros. Discovery, Inc. (NASDAQ:WBD) is a global media and entertainment company operating in three segments – Studios, Network, and DTC. The company ranks 11th on our list of the best 52-week low stocks. On November 8, 2023, Warner Bros. Discovery, Inc. (NASDAQ:WBD) reported a Q3 GAAP EPS of -$0.17, missing market consensus by $0.08. The revenue increased 1.5% year-over-year to $9.97 billion, exceeding Wall Street estimates by $10 million. The global direct-to-consumer (DTC) subscriber count declined by 0.7 million, reaching 95.1 million at the conclusion of Q3, compared to 95.8 million subscribers at the close of Q2.
According to Insider Monkey’s fourth quarter database, 56 hedge funds were bullish on Warner Bros. Discovery, Inc. (NASDAQ:WBD), compared to 63 funds in the prior quarter.
Longleaf Partners Fund stated the following regarding Warner Bros. Discovery, Inc. (NASDAQ:WBD) in its fourth quarter 2023 investor letter:
“The rules have improved how we analyze existing holdings and influenced the price at which we will buy a new holding and/or trim or add to an existing one. This has resulted in a higher level of resizing positions in the portfolio and exiting some long-term holdings this year. A good example in the portfolio today is Warner Bros. Discovery, Inc. (NASDAQ:WBD), a company that we bought too early but that remains a holding in the portfolio. Our average price for the initial WBD investment in 2021 was $26.48, or a P/V ratio in the mid-60s%. However, P/EV on the initial report was 79%. Under the new rules, we would not pay that price for the company today. We most likely would have waited for a mid-60s% P/EV, which would have equated to a $mid-teens entry price. In this case, we would have missed a too-large initial downturn in the stock price. The overweight rule dictated that we trimmed the position after the price ran up in the first half of 2023, which benefitted overall performance as the stock price subsequently fell again. However, even with the new rule lens, we remain confident in our case for the business and management’s ability to deliver going forward.”
10. Lockheed Martin Corporation (NYSE:LMT)
Number of Hedge Fund Holders: 58
Industry: Aerospace and Defense
Lockheed Martin Corporation (NYSE:LMT) is a global security and aerospace company specializing in the research, design, development, manufacture, integration, and sustainment of technology systems, products, and services. It is one of the top 52-week low stocks to invest in. On February 15, Lockheed Martin Corporation (NYSE:LMT) announced that it is responding to heightened security concerns by increasing the production of weapons systems. The company plans to double the production of High Mobility Artillery Rocket Systems (HIMARS) from 48 to 96 per year. Production of the Javelin antitank missile system is set to increase from 2,400 to an estimated 3,960 per year by late 2026. Lockheed is on track to deliver over 10,000 Guided Multiple Launch Rocket Systems (GMLRS) this year and aims to increase output to 14,000 per year by 2025. Additionally, the company intends to boost production of the PAC-3 MSE air-defense missile to 650 per year by 2027.
According to Insider Monkey’s fourth quarter database, 58 hedge funds were bullish on Lockheed Martin Corporation (NYSE:LMT), compared to 60 funds in the preceding quarter. John Overdeck and David Siegel’s Two Sigma Advisors is the biggest investor in the company, with 772,600 shares worth over $350 million.
RiverPark Advisors made the following comment about Lockheed Martin Corporation (NYSE:LMT) in its Q3 2023 investor letter:
“Lockheed Martin Corporation (NYSE:LMT): LMT is the world’s largest aerospace and defense contractor. With about 70% of its $66 billion in revenue from the U.S. government, the company is well positioned to benefit from U.S. defense budget growth, historically 5%-6% per year, as well as increased global military spending. With a $158 billion backlog and almost 30% of its revenue coming from building F-35 aircraft with deliveries forecast to reach 180 per year (up from 141 in 2022) in the coming years, we believe the company could grow at a higher rate than overall defense budget growth and Street expectations over the next several years. Further, strategic acquisitions, debt repayment, a 2.9% dividend yield, and continued share buybacks from more than $6 billion per year of free cash flow should lead to even greater shareholder returns. We re-initiated a small position in August.”
9. Starbucks Corporation (NASDAQ:SBUX)
Number of Hedge Fund Holders: 59
Industry: Food and Beverages
Starbucks Corporation (NASDAQ:SBUX) ranks 9th on our list of the best 52-week low stocks to buy. On January 30, Starbucks Corporation (NASDAQ:SBUX) adjusted its full-year revenue growth guidance, now expecting a range of +7% to +10%, compared to the earlier projection at the lower end of +10% to +12%. The forecast for full-year global and US comparable sales growth has been revised to a range of 4% to 6%, down from the previous estimate of +5% to +7%. Despite these adjustments, the company has maintained its prior guidance for earnings per share growth and global store growth.
According to Insider Monkey’s fourth quarter database, 59 hedge funds were long Starbucks Corporation (NASDAQ:SBUX), compared to 60 funds in the prior quarter. Ken Fisher’s Fisher Asset Management is the leading position holder in the company, with 11.3 million shares worth over $1 billion.
RiverPark Advisors made the following comment about Starbucks Corporation (NASDAQ:SBUX) in its Q3 2023 investor letter:
“Starbucks Corporation (NASDAQ:SBUX): SBUX is the premier roaster, marketer and retailer of specialty coffee in the world, operating in 83 markets. Through its more than 36,000 global stores (roughly 50% operated and 50% licensed) the company offers handcrafted coffee, tea and other beverages and a variety of food items. SBUX also sells a variety of packaged coffee and tea products and licenses its trademarks through other channels such as grocery and foodservice through a Global Coffee Alliance with Nestlé. In addition to its flagship Starbucks Coffee brand, the company sells goods and services under the brands Teavana, Seattle’s Best Coffee, Ethos, Starbucks Reserve and Princi.
SBUX’s recently appointed CEO (March 2023), Narasimhan Laxman, reiterated the company’s long-term plans for 10-12% revenue growth and 15-20% EPS growth while reporting fiscal 3Q23 earnings. Revenue will be driven by a combination of factors including unit growth, higher food “attach” rates (more food sold per cup of coffee), equipment innovation to speed throughput, and delivery expansion. In addition to the leverage of higher revenue across the company’s fixed asset base, SBUX sees margin expansion from supply chain management opportunities and procurement efficiencies. We initiated a small position in August.”
8. Cisco Systems, Inc. (NASDAQ:CSCO)
Number of Hedge Fund Holders: 60
Industry: Communication Equipment
Cisco Systems, Inc. (NASDAQ:CSCO) engages in the design, production, and sale of networking products related to the communications and information technology sector. The company operates in the Americas, Europe, the Middle East, Africa, Asia Pacific, Japan, and China. Cisco Systems, Inc. (NASDAQ:CSCO) is one of the best 52-week low stocks to buy. On February 14, Cisco declared a $0.40 per share quarterly dividend, a 2.6% increase from its prior dividend of $0.39. The dividend is payable on April 24, to shareholders of record on April 4.
According to Insider Monkey’s fourth quarter database, 60 hedge funds were bullish on Cisco Systems, Inc. (NASDAQ:CSCO), compared to 64 funds in the prior quarter. Cliff Asness’ AQR Capital Management is the largest stakeholder of the company, with 12 million shares worth roughly $615 million.
Oakmark Fund made the following comment about Cisco Systems, Inc. (NASDAQ:CSCO) in its Q3 2023 investor letter:
“Cisco Systems, Inc. (NASDAQ:CSCO) is the leading networking solutions company. Networking equipment becomes more important as businesses modernize their IT infrastructure, and Cisco is well positioned to capture this demand given its broad portfolio and highly effective go-to-market strategy. Cisco is transitioning away from selling mainly transactional hardware and toward selling more software and subscriptions. This shift is expected to accelerate revenue growth, improve operating margins and build recurring revenue. Despite these notable business improvements, Cisco still trades near a trough valuation relative to the S&P 500 Index. More recently, Cisco announced its intention to acquire Splunk, a leader in security and observability, adding to its already strong position in the increasingly important security market. At a low-teens multiple of our estimate of normalized earnings, Cisco is trading comfortably below our estimate of intrinsic value.”
7. Becton, Dickinson and Company (NYSE:BDX)
Number of Hedge Fund Holders: 60
Industry: Medical Devices
Becton, Dickinson and Company (NYSE:BDX) specializes in the development, manufacturing, and sale of medical supplies, devices, laboratory equipment, and diagnostic products worldwide. Becton, Dickinson and Company (NYSE:BDX) is one of the best buy-the-dip stocks to monitor. On January 23, the company declared a $0.95 per share quarterly dividend, in line with previous. The dividend is payable on March 29, to shareholders of record on March 8.
According to Insider Monkey’s fourth quarter database, 60 hedge funds were bullish on Becton, Dickinson and Company (NYSE:BDX), compared to 57 funds in the prior quarter. Jean-Marie Eveillard’s First Eagle Investment Management is the largest stakeholder of the company, with 1.95 million shares worth $476.4 million.
Madison Sustainable Equity Fund stated the following regarding Becton, Dickinson and Company (NYSE:BDX) in its fourth quarter 2023 investor letter:
“Becton, Dickinson and Company (NYSE:BDX) reported an in-line fourth quarter but provided guidance for fiscal 2024 that was below expectations. Revenue guidance was in-line, but earnings guidance was below expectations driven by lower operating margins. The lower operating margin is a result of currency and inventory reduction headwinds.”
6. 3M Company (NYSE:MMM)
Number of Hedge Fund Holders: 62
Industry: Conglomerates
3M Company (NYSE:MMM) delivers a range of diverse technology services globally. The company is divided into four segments – Safety and Industrial, Transportation and Electronics, Health Care, and Consumer. On February 6, 3M Company (NYSE:MMM) declared a $1.51 per share quarterly dividend, a 0.7% increase from its prior dividend of $1.50. The dividend is payable on March 12, to shareholders of record on February 16.
According to Insider Monkey’s fourth quarter database, Dmitry Balyasny’s Balyasny Asset Management is the biggest stakeholder of the company, with 2.65 million shares worth $290 million. Overall, 62 hedge funds were bullish on 3M Company (NYSE:MMM).
In addition to Humana Inc. (NYSE:HUM), Johnson & Johnson (NYSE:JNJ), and Exxon Mobil Corporation (NYSE:XOM), 3M Company (NYSE:MMM) is one of the best 52-week low stocks to monitor. 3M ranks 6th on our list.
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Disclosure: None. 13 Best Buy-the-Dip Stocks To Buy Right Now is originally published on Insider Monkey.
