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Market Dip Temporary, Ride Next Rally With These 5 Solid Picks

Aniruddha Ganguly
·6 min read

Major U.S. indices, namely, the Dow Jones Industrial, the S&P 500 and the Nasdaq witnessed a disappointing week ended Jun 26 due to a spike in the number of coronavirus infections across several American states.

The Wall Street witnessed sell-offs on Jun 24 and 26 due to the rise in coronavirus infection cases. Notably, the Dow Jones Industrial, the S&P 500 and the Nasdaq declined 3.3%, 2.9% and 1.9%, respectively, in the week.

Coronavirus cases have risen in states like Texas, California and Florida, which were among the first to reopen economy. However, the latest surge has prompted governors to roll back the lifting of the lockdown.

Overall, the United States witnessed a record 45.3K cases on Jun 26. To date, the pandemic has infected more than $2.56 million in the United States, with the death toll rising to 125,803 per John Hopkins university data.

The Dip Opens Up Buying Opportunity

Although resurgence in coronavirus infection is worrying, chances of another nationwide lockdown is minimal, which should boost investor optimism. Markedly, the Dow Jones and the S&P 500 index futures rose on Jun 29.

Moreover, a steady decline in jobless claims reflects improving conditions in the U.S. labor market. The Bureau of Labor Statistics June jobs report is now anticipated to show another 3 million job additions. The unemployment rate is expected to decline to 12.2% from 13.3% in May, which however, is much higher than 3.5% at the end of 2019.

Further, the Trump administration’s draft proposal of a $1-trillion stimulus plan to strengthen infrastructure, including roads, bridges and 5G, is expected to help the economy revive.

Here we pick five stocks that have declined in the past week, which we see as a profitable buying opportunity, given their solid fundamentals and prospects.

Moreover, these stocks carry a favorable combination of a VGM Score of A or B and a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks proprietary methodology suggests stocks with such a perfect mix of elements offer solid investment opportunities.

Notably, each of these stocks has a market cap of more than $5 billion and has outperformed the S&P 500 composite in the past year.

One Year Performance


Top Bets

Thor Industries THO is riding on strong demand for Recreational Vehicle (RV) amid the coronavirus outbreak. The RV market is witnessing strong retail traffic and sales, especially from first-time buyers. The momentum is expected to continue due to social-distancing norms amid rising incidences of coronavirus in a number of U.S. states.

Thor has a Zacks Rank #2 and a VGM Score of A. The Zacks Consensus Estimate for its fiscal 2020 earnings stands at $3.34 per share, having moved 85.6% north over the past 30 days.

Shares of this $5.87-billion company have been down 6.1% in the past week.

Lowes Companies LOW is well positioned to capitalize on the demand in the home improvement market, backed by investments in technology, merchandise category and strength in Pro business. Markedly, continuous investments in online infrastructure and smooth progress with the Google Cloud migration has improved this Zacks Rank #2 company’s site stability, which is helping it to efficiently cater to the burgeoning demand.

Lowes has a VGM Score of A. The Zacks Consensus Estimate for fiscal 2021 earnings stands at $6.66 per share, having moved 2.6% north over the past 30 days.

Lowes has a market cap of $97.70 billion. The stock lost 3.3% last week.

Nintendo NTDOY is expected to gain from the popularity of its Switch video game console and Animal Crossing: New Horizons game amid rising fears of a second coronavirus wave. Moreover, the company’s partnership with Tencent allows the latter to publish Super Mario Odyssey and Mario Kart 8 Deluxe in China, the world’s largest gaming market.

Nintendo currently has a Zacks Rank of 2 and a VGM Score of A. The consensus mark for its fiscal 2021 earnings has climbed 3.9% to $2.64 per share over the past 30 days.

Shares have slipped 4.1% in the past week.

Micron Technology MU is benefiting from strong demand for memory chips from PC manufacturers and data-center operators. Markedly, the latest work-and-learn-from-home trend is stoking demand for cloud storage. Also, the coronavirus-led social distancing and lockdowns have boosted usage of online and e-commerce services globally. Therefore, data-center operators are enhancing their capacities to accommodate the demand surge for cloud services. This bodes well for this $53.93-billion company.

Micron currently carries a Zacks Rank #2 and a VGM Score of B. The Zacks Consensus Estimate for fiscal 2021 is pegged at $2.48 per share, up 1.6% in the past 30 days.

Shares have lost 4.6% in the past week.

Microchip MCHP is riding on solid demand for its microcontrollers. Moreover, this Zacks Rank #2 company is anticipated to witness strength in the medical end market, driven by growth in demand for hospital equipment. Improving demand across office equipment and communication infrastructures, courtesy of requirement for cloud computing solutions amid the coronavirus crisis-led work-from-home wave also bodes well.

Microchip has a VGM Score of B. The consensus mark for this $23.97-billion company’s fiscal 2021 earnings is pegged at $5.71 per share, having moved 5.4% north in the past 30 days.

The stock has lost 3.3% in the past week.

Breakout Biotech Stocks with Triple-Digit Profit Potential

The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.

Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.

See these 7 breakthrough stocks now>>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Micron Technology, Inc. (MU) : Free Stock Analysis Report
Microchip Technology Incorporated (MCHP) : Free Stock Analysis Report
Lowes Companies, Inc. (LOW) : Free Stock Analysis Report
Thor Industries, Inc. (THO) : Free Stock Analysis Report
Nintendo Co. (NTDOY) : Free Stock Analysis Report
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