Major market indexes including the S&P 500 and Nasdaq 100 are set to close out 2023 at or near their all-time highs. With the Federal Reserve’s seeming pivot toward looser monetary policy, the bulls are running wild on Wall Street. That totally makes sense. Rising interest rates were a huge concern hanging over the market in 2023, and with that set to be lifted in 2024, investors are entering the new year on an optimistic footing. But after such huge moves, investors might feel like they are missing out. Many stocks have already skyrocketed over the past few months.
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Fortunately, there are some attractive opportunities out there for January 2024. Despite the broad market enthusiasm, these five stocks to buy all are set to close 2023 with losses of at least 10%. These companies look primed to rebound in 2024, providing considerable value in an otherwise frothy market. Here are five of the best stocks to buy now:
— PayPal Holdings Inc. (ticker: PYPL)
— Charles Schwab Corp. (SCHW)
— Air Products and Chemicals Inc. (APD)
— Bristol-Myers Squibb Co. (BMY)
— JD.com Inc. (JD)
PayPal Holdings Inc. (PYPL)
PayPal offers merchants tools for accepting and processing online payments. It had thrived in recent years as consumers increasingly turned to the internet for shopping and internet-based subscription services. However, the momentum came to an abrupt halt over the past 18 months. Spending on digital goods and services slowed as consumers resumed spending on brick-and-mortar stores and in-person experiences. In addition, PayPal has faced rising competition as other tech companies, banks and financial technology
firms have launched competing payments, platforms and e-wallets.
Investors have concluded that PayPal is in structural decline, doomed to falling profit margins and shrinking market share. Yet the numbers don’t reflect this at all. PayPal’s revenues are expected to grow more than 8% in 2024. Earnings per share are rising at a double-digit rate. And the firm’s forward P/E ratio is currently hovering around 11. Now is a great time to pick up this out-of-favor e-commerce operator.
Charles Schwab Corp. (SCHW)
This was supposed to be a triumphant year for Charles Schwab. The discount brokerage finally completed the integration of legacy TD Ameritrade brokerage accounts into Charles Schwab in September 2023, following the brokerages’ mega-merger several years ago. This integration should, over the long-term, provide major cost savings for Charles Schwab.
Unfortunately, the banking market shock spoiled the party. Schwab shares plummeted in spring 2023 amid soaring interest rates which caused the firm to show massive mark-to-market losses on its securities portfolio. Some analysts fretted that Schwab could fall victim to the same forces which sank Silicon Valley Bank and First Republic Bank. However, Charles Schwab’s deposit base held stable. And now that interest rates are set to fall again, the main source of concern should be alleviated in 2024. Despite that, investors can still buy SCHW stock at a substantial discount to last year’s prices.
[See: 10 Best Health Care Stocks to Buy for 2024]
Air Products and Chemicals Inc. (APD)
Air Products and Chemicals is an industrial company focused on selling industrial gases. On the surface, this might seem like a commodity business. However, the firm has thrived due to facing limited competition and offering products which are vital, but which make up a tiny portion of their customers’ total cost structure. This gives Air Products and Chemicals strong pricing power and the ability to retain customers over long periods. The company has an ambitious investment program scheduled; it plans to deploy more than $30 billion in new projects over the next decade. Booming areas such as green hydrogen and coal gasification should significantly expand the company’s total addressable market in the industrial gases space. APD shares were soft this year due to weakness in the Chinese market, but the firm is a proven blue-chip stock that has raised its dividend for 40 consecutive years.
Bristol-Myers Squibb Co. (BMY)
Bristol-Myers Squibb is a leading American pharmaceutical company with roots dating back to 1887. The company generates about $45 billion in annual revenues and has a wide lineup of products treating a vast array of diseases — it is not overly tied to any one drug or medical condition. Shares currently trade at less than seven times forward earnings, as investors are frustrated with the firm’s recent lack of top-line growth.
However, Bristol-Myers Squibb is set to fix that. It has announced more than $20 billion of acquisitions and business development deals in recent months. The most recent came in late December, as the pharma giant unveiled a $4.1 billion deal to acquire RayzeBio Inc. (RYZB), which has a late-stage drug in development for the treatment of neuroendocrine tumors. While not all of these investments in the pipeline will ultimately pay off, Bristol-Myers Squibb is taking lots of shots on goal with its aggressive investment strategy. BMY stock is down nearly 30% for 2023, pushing its dividend yield up to 4.7%.
JD.com Inc. (JD)
JD.com is one of China’s leading e-commerce platforms. Its founder, Richard Liu, noted that there was an opportunity for an entrant in the Chinese e-commerce market that used something other than absolute lowest price to attract consumers. Rather, JD.com focused on higher-quality products and superior customer service. Over the years, JD.com has invested heavily in technology, such as delivery drones and logistics, which allow it to have best-in-class product fulfillment.
The firm was booming through the early days of the pandemic, with shares quadrupling between 2018 and 2021. However, the stock has given back all those gains and has now returned to near its IPO price from 2014. This comes amid a painful slowdown in the Chinese consumer market and rock-bottom valuations for Chinese companies more broadly. There are valid geopolitical concerns as it pertains to U.S.-Chinese relations, but investors are getting paid well to shoulder that risk, with JD shares at less than nine times forward earnings.
[See: 7 Best Pharmaceutical Stocks to Buy for Income]
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5 of the Best Stocks to Buy Now originally appeared on usnews.com
Update 12/29/23: This story was published at an earlier date and has been updated with new information.
