Stock Market Slump: Top Four Shares to Acquire Amidst Current Downturn
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Brace Your Portfolio: four Stocks to Buy as S&P 500 Dives
If you're a savvy investor looking to navigate the choppy stock market waters, here's a look at four solid stocks to consider adding to your portfolio as the S&P 500 plunges into correction territory:
NextEra Energy (NEE)
In a market gripped by fear and uncertainty, next on our list is America's largest electric utility by market cap, NextEra Energy. When turbulence hits the stock market, investing in essential goods and services can be a sound strategy. Healthy demand for electricity makes NextEra a reliable choice, especially as it benefits from the embrace of renewable energy solutions.
With approximately half of its 72 gigawatts of capacity coming from renewable energy sources, such as wind and solar, NextEra boasts a 10% compound annual earnings growth rate over the last decade. It's also managed to grow its dividend by around 10% per year, all while enjoying considerably lower electricity generation costs due to its pioneering efforts in the clean-energy space.
To top it off, NextEra trades at a forward price-to-earnings (P/E) ratio of 18, offering a 26% discount to its average forward P/E multiple over the past five years.
Johnson & Johnson (JNJ)
Next up is healthcare conglomerate Johnson & Johnson. Historically, healthcare stocks have proven to be excellent defensive investments due to our ongoing need for medical services. J&J, in particular, boasts a track record of growth thanks to its decisive shift toward novel-drug development.
Its extensive portfolio of medicines, medical devices, and consumer products creates a steady revenue stream, while its brand-name therapies and strong pricing power set it apart in the industry. Adding to its appeal is the company's deep bench of leadership, with a relatively stable set of executives at the helm.
Shares of J&J can be purchased for less than 15 times forecasted earnings for 2026, which, as we write this, is a far cry from its five-year average, making it a bargain to consider.
AutoZone (AZO)
Auto parts supplier AutoZone is our third recommendation. As the average age of cars on U.S. roads steadily rises, the growing need for auto parts and repair services presents a significant opportunity for companies like AutoZone.
To adapt to this trend, AutoZone is aggressively expanding its network of so-called "mega hubs," stores carrying up to 110,000 stock keeping units (SKUs). By strategically placing these hubs, AutoZone ensures customers efficiently access the parts they need, regardless of location.
Perhaps most impressive is AutoZone's dedication to repurchasing shares, having retired approximately 16.75 million shares for $37.8 billion since implementing buybacks in fiscal 1998. This share repurchase program has reduced its outstanding share count by a staggering 89%, resulting in a significant positive impact on its earnings per share.
Alphabet (GOOGL)
Lastly, we have Alphabet, the parent company of search engine Google and streaming platform YouTube. In today's digital age, Alphabet remains a dominant force, with a keystone position in internet search. Google commands a 90% worldwide monthly share, during a time when the global push towards online advertising is growing.
Alphabet derives approximately 75% of its net sales from advertising, and its ad-pricing power gives it a significant edge in earning income, especially during economic expansions. The company's commitment to investing in AI technology promises to expand its cloud infrastructure services, driving future growth and profits.
As the cheapest "Magnificent Seven" stock in the group, shares of Alphabet can be picked up for a mere 16 times forecasted earnings for 2026 – a 30% discount compared to its five-year average.
In short, these four stocks blend attractive valuations with a mix of defensive, growth, and cyclical attributes, providing investors with a range of opportunities to capitalize on this S&P 500 correction. Happy investing!
- Undeniably, the S&P 500 correction presents an opportunity for savvy investors to make strategic moves in the market, and one such stock to consider is Alphabet with a forward P/E ratio of 16, offering a 30% discount compared to its five-year average.
- In essence, the healthcare sector is a defensive investment, and Johnson & Johnson, with forecasted earnings for 2026 available at less than 15 times, boasts a track record of growth and strong pricing power in medical services.
- The ongoing trend of increasing age for cars on U.S. roads opens avenues for auto parts suppliers, and AutoZone stands out with its network of mega hubs, aggressive expansion strategy, and commendable share repurchase program.
- In the face of market volatility, investing in essential goods and services can be a sound strategy, and NextEra Energy, America's largest electric utility, offers reliable returns with approximately half of its capacity coming from renewable energy sources and a 10% compound annual earnings growth rate over the last decade.
