Insider Monkey
13 Best Buy-the-Dip Stocks To Buy Right Now
Hamna Asim
16 min read

In This Article:

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:

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