The stock market may be nerve-wracking in coming weeks, as sequestration issues, reminders of sluggish economic growth and some foreign governing problems take over the headlines. Columnists right and left are predicting a downhill run for the S&P 500 over the next month, although longer-term forecasts from strategists remain bullish. Among long-term value investors, the correct cliché for this phenomena is: “a buying opportunity.”
To aid with the bargain-hunting, we’ve listed here a few of Wall Street’s current favorites. These are big, well-managed companies that lately have carried words of praise from analysts even when their shares traded at outsized valuations. Some all-around selling in the market that knocks down their price-earnings ratios might make these shares more palatable for value investors.
Notice that there’s no lululemon athletica (LULU), Amazon.com (AMZN) or other amazing share-price gainers on this list, although many analysts like them too. Their gains have put valuations up very high, making them more vulnerable to large drops in a market correction. Also, it would take disastrous share price falls to put their prices into value territory.
Monsanto (MON)
As the engineer of some of the world’s most reliable food seeds, in a world where food demand is skyrocketing, Monsanto often emerges as a favored stock. Its dividend yield is low – 1.5% now – but the company reliably boosts it most years. The Supreme Court recently heard arguments in a case that could have threatened the company’s patents on genetically engineered seed, but that’s done little to hurt Monsanto’s PE ratio. Even the justices listening to arguments seemed sympathetic to Monsanto’s case.
Qualcomm (QCOM)
Qualcomm makes the chips for iPhones, Android phones, tablets of varying provenance – all those mobile devices that are putting PC makers out of business. Sales growth of these devices will be slower this year than last, but mobile is still the hottest growth industry around. Nearly 900 million smartphones alone are expected to be sold this year. Qualcomm’s revenues are forecast to rise 25% this year with nearly as much in earnings gains. More than 30 analysts follow its shares, and already, buy recommendations outnumber holds three to one.
Google (GOOG)
Google investors took some knocks in recent years while everyone worried about whether it could sell online ads that worked on mobile devices. Suddenly, mobile is a great growth opportunity for Google as it emerges as the leader in mobile tech and rakes in higher profits doing it.