The markets staged a spectacular rebound on Wednesday, with the Dow Jones up 7.87%, the S&P 500 +9.52% and the Nasdaq +12.16%, as Donald Trump paused the tariffs announced last week for many countries.
For the S&P 500, it was the biggest one-day rise since 2008 and the third-biggest in post-war history. For the Dow Jones, it was its biggest rise since March 2020. Finally, the Nasdaq posted its biggest one-day rise since January 2001 and its second-best day ever.
Why be Wary of a Market Rebound?
However, at the time of writing, sellers already seem to be gaining the upper hand, with the S&P 500 down over 2.2% on futures markets at the time of writing.
Indeed, the suspension of tariffs announced last night has a major downside: China is not affected by the suspension and was even hit last night with new 125% tariffs as part of a US overbid following Beijing's retaliation to Trump's earlier announcements.
What's more, market veterans know that all major crashes include respite sessions like the one seen yesterday. The Nasdaq Composite jumped 14.17% in January 2001, in the midst of the dot-com crash. And during the financial crisis of October 2008, the Nasdaq had two of its best five days ever.
To sum up, caution is still the order of the day, and market turbulence is likely to continue despite yesterday's bullish explosion.
Against this backdrop, investors should continue to be cautious in their stock choices, and favor the safest bets.
Finding Stocks to Profit From a Crash
So, using the Investing.com screener, we can find solid stocks that could currently be good buying opportunities.
The search revealed 357 stocks on the US market. We wanted to refine this search by adding an additional criterion: Bullish potential of over 25% according to InvestingPro Fair Value.
Remember: InvestingPro Fair Value calculates an intelligent blend of several recognized valuation models for each stock on the market.
We have also modified the capitalization criterion to exclude companies valued at less than $10 billion. Finally, we have also prioritized quality by raising the minimum accepted Piotroski score to 8.
With these modifications, the search now returns only 11 results:
InvestingPro Screener
Among these stocks, United Therapeutics Corporation (NASDAQ:UTHR) has the "lowest" potential, at +26.8%. On the other hand, it has the strongest profile according to the criteria taken into account, with a perfect Piotroski score of 9 and the highest health score among the stocks on the list, at 3.93 / 5.
Barrick Gold Corp (NYSE:GOLD), one of the biggest gold stocks in terms of capitalization, also makes the list, with a 28.8% bullish potential according to Fair Value, a Piotroski score of 8, and a health score of 3.25 / 5.
However, there are stocks on this list with much higher potential.
Specifically, this research contains 6 stocks with upward potential of over 40%, according to Fair Value, including one that could even rise by over 68% according to the models.
With solid financial health and considerable upside potential, these stocks could be the wisest choices to weather the current period of high volatility and uncertainty and even profit from it.
For those who know how to keep a cool head, stock market crashes are indeed ideal opportunities to acquire at low prices quality stocks that have been unfairly punished during panic movements.
Indeed, whether markets are rising or falling, there are always opportunities to be seized by those who know how to look.
So, with the right method and the right research tools, such as the Investing.com screener and InvestingPro's exclusive indicators, investors can emerge stronger from crises.
The research in this article is just one example.
In fact, the Investing.com screener offers over 20 pre-configured searches (note that many of these searches are reserved for InvestingPro subscribers, Pro+ plan!), which can be expanded using over 1,200 different indicators and metrics (Pro+ subscribers have access to 160 indicators).
Of course, it's possible to create your own searches without using a pre-configured screener and save them so you can come back to them later and refine them as the markets evolve.
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Disclaimer: This article is written for informational purposes only. It is not intended to encourage the purchase of assets in any way, nor does it constitute a solicitation, offer, recommendation or suggestion to invest. I would like to remind you that all assets are evaluated from multiple perspectives and are highly risky, so any investment decision and the associated risk belongs to the investor. We also do not provide any investment advisory services.
