5starsstocks Stocks To Invest
The stock market continues to hit new records. There are still some concerns, however, such as rising inflation and interest rates, along with the upcoming presidential election. But nothing seems to stop the rally higher as traders focus on the growth potential that artificial intelligence and other advanced technologies can bring. Perhaps those bets will continue to pay off, or perhaps this summer will bring a pullback.
Either way, investors looking for good stocks to buy now still have solid options that haven’t risen yet. All five stocks are down in 2024 and saw their share prices fall sharply in May.
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Here are five of the best buy-in opportunities in a hot market:
- CVS Healthcare Corporation (ticker: CVS)
- Estee Lauder Companies (EL)
- Global Payments (GPN)
- Baxter International (BAX)
- Clorox Company (CLX)
CVS Health Corporation (ticker: CVS)
The pharmacy sector is under fire. Shares of Walgreens Boots Alliance Inc. (WBA) have fallen to levels last seen in the 1990s after a sharp decline in earnings and a dividend cut. Investors have also begun to sell off rival CVS, which recently hit a 52-week low. The convenience store division of the drugstore has been under pressure from increased competition, and changes in reimbursement and drug pricing have also hurt the pharmacy division’s profits.
However, CVS will be on much stronger footing than Walgreens. That’s because CVS has become a full-service health care provider; it operates a leading pharmacy benefits management company alongside insurer Aetna. This allows CVS to provide a more robust and personalized patient experience, helping it stand out from the competition. With its recent stock price decline, CVS trades at less than 8 times forward earnings and offers a 5% dividend yield.
Estee Lauder Companies (EL)
Estee Lauder is one of the world’s leading multinational cosmetics companies. With brands including Clinique, Origins, MAC and Bobbi Brown under the Estee Lauder name, the company’s products can be found all over the world. For years, Estee Lauder and its competitors have enjoyed rapid and steady growth. The rise of social media and influencer culture has placed a premium on beauty and cosmetics products.
However, the market has been in turmoil since the pandemic. Traditional distribution channels have been disrupted, inventory levels have been high, and the Asian cosmetics market in particular has been in a severe slump. EL stock is now down two-thirds from its all-time high. That makes for an attractive entry point as it is only a matter of time before the industry returns to its usual rapid growth pace.
Global Payments ( GPN )
The payments industry is still trying to dig itself out of its post-pandemic slump. Back in 2021, payments stocks soared as providers rushed to roll out digital payments for e-commerce along with in-app subscription options. This accelerated the move away from cash transactions, creating a huge tailwind for payment processors like Global Payments. Growth has since slowed. In a highly competitive industry, a sudden drop in demand like this can spook investors and cause them to sell off the entire sector indiscriminately.
Global Payments has a broad business with multiple product lines that help merchants accept payments in-store, online, via digital wallets, and more. It also helps providers perform all sorts of ancillary services like auditing and recordkeeping, tax management, and fraud detection. GPN stock has fallen nearly 15% over the past month, pushing the industry leader’s forward earnings to below 9 times forward earnings.
Baxter International (BAX)
Baxter is a diversified healthcare company focused on medical devices and healthcare equipment. Its core businesses include medical products and therapies, healthcare systems and technologies, pharmaceuticals, and kidney care. Baxter stock has historically performed well. However, the stock has been on a tear since 2021 as the pandemic has significantly disrupted the medical device market as patients postpone elective surgeries. In addition, the market has attracted companies with diabetes management and weight loss solutions, while the value of the rest of the pharmaceutical and medical device sectors has fallen sharply.
Baxter’s stock price has continued to decline, with the stock now trading at less than 12 times forward earnings. The company’s upcoming kidney care business could also add value to Baxter’s remaining operations.
Clorox Company ( CLX )
Speaking of companies thrown off-balance by the pandemic, Clorox has had an interesting couple of years. At the start of the COVID-19 outbreak, CLX stock soared as people bought cleaning supplies at a record pace. But this led to excess inventory; sales fell below their previous baseline as customers checked their inventory. Higher labor and input costs further squeezed Clorox’s margins. All of this resulted in Clorox’s earnings per share falling to levels well below 2019 levels. Higher interest rates and investor disinterest in long-term, stable blue-chip stocks further depressed CLX’s stock price.
While these factors present short-term challenges, Clorox’s long-term future remains bright. And with the recent sell-off, the stock is at an attractive entry point and yields 3.7%.
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