The stock market keeps hitting new record highs. Still, there are some reasons for concern, such as heightened inflation and interest rates, along with the upcoming presidential election. But nothing has seemed to stop the march higher as traders focus on the growth possibilities that artificial intelligence and other cutting-edge technologies may enable. Perhaps those bets will continue to pay off, or maybe this summer will bring a market pullback.
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In either case, investors looking for good stocks to buy now still have solid options that haven’t seen their share prices run up yet. All five of these stocks are down in 2024 and saw their share prices tumble in May.
Here are five of the best buy-the-dip opportunities in an otherwise frothy market:
— CVS Health Corp. (ticker: CVS)
— Estee Lauder Cos. Inc. (EL)
— Global Payments Inc. (GPN)
— Baxter International Inc. (BAX)
— Clorox Co. (CLX)
CVS Health Corp. (ticker: CVS)
The pharmacy sector is under fire. Shares of Walgreens Boots Alliance Inc. (WBA) have plunged to levels last seen in the 1990s following a sharp decline in profitability and a dividend cut. Investors have started to dump rival CVS as well, with its stock also falling to 52-week-lows recently. The convenience section of the pharmacy store has come under pressure from rising competition, and changes in drug reimbursement and pricing have hurt margins on the pharmacy part of the business as well.
However, CVS should find itself on a much steadier footing than Walgreens. That’s because CVS has become an all-in-one health care provider; it operates a leading pharmacy benefits manager along with insurance firm Aetna. This allows CVS to offer patients a more robust and personalized experience that should help it stand out amid a competitive landscape. With the recent stock price decline, CVS goes for less than eight times forward earnings and offers a 5% dividend yield.
Estee Lauder Cos. Inc. (EL)
Estee Lauder is one of the world’s leading multinational cosmetic companies. With brands including Clinique, Origins, MAC and Bobbi Brown along with the namesake Estee Lauder, the firm’s products can be found worldwide. For many years, Estee Lauder and its rivals enjoyed rapid and steady growth. The rise of social media and influencer culture has placed a premium on beauty and cosmetic products.
Coming out of the pandemic, however, the market was thrown into upheaval. Traditional distribution channels were upended, inventory levels have mounted, and the Asian cosmetics market in particular has gone into a deep slump. EL stock is now down by two-thirds from its all-time highs. That sets up a compelling entry point as it should be only a matter of time until the industry returns to its usual rapid growth rate.
[15 Best Dividend Stocks to Buy for 2024]
Global Payments Inc. (GPN)
The payments industry is still trying to snap out of its post-pandemic funk. Back in 2021, payments stocks skyrocketed as vendors rushed to roll out digital payments for e-commerce along with in-app subscription options for services. This accelerated the move away from cash transactions, giving a huge tailwind to payment processing firms like Global Payments. Since then, growth has slowed to a crawl. In a heavily competitive industry, this sort of sudden demand slowdown can lead investors to panic and sell off the whole industry indiscriminately.
Global Payments has a broad business with numerous product lines helping merchants receive money in stores, online, through digital wallets and so on. It also helps vendors with all sorts of ancillary services like audit and recordkeeping, tax management and fraud detection. GPN stock fell nearly 15% over the past month, pushing this sector leader down to less than nine times forward earnings.
Baxter International Inc. (BAX)
Baxter is a broadly diversified health care company focused on medical devices and health care equipment. Its main business segments are medical products and therapies, health care systems and technologies, pharmaceuticals, and kidney care. Baxter stock historically had an excellent track record. However, shares have been in a tailspin since 2021 as the pandemic greatly disrupted the market for medical devices as patients delayed elective surgeries. In addition, the market has gravitated to companies with solutions for diabetes management and weight loss, while valuations have plunged across the rest of the pharmaceutical and medical devices space.
With Baxter’s unrelenting share price decline, the stock now goes for less than 12 times forward earnings. The company’s upcoming renal care spinoff could boost value in the rest of Baxter’s operations as well.
Clorox Co. (CLX)
Speaking of companies thrown off their rhythm by the pandemic, Clorox has had an interesting few years. At the start of the COVID-19 outbreak, CLX stock soared as people bought cleaning supplies at a record pace. But this resulted in excessive inventory levels; sales dropped to below the prior baseline as customers worked through their stock. A surge in labor and input costs further hit Clorox’s profit margins. All this resulted in Clorox’s earnings per share falling to a level far below where they were in 2019. Higher interest rates and investor disinterest in staid blue-chip, long-term stocks further led to the ongoing slump in the price of CLX stock.
While these factors represent short-run challenges, Clorox’s long-term future remains bright. And with the recent sell-off, shares are at an attractive entry point and yield 3.7%.
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5 of the Best Stocks to Buy Now originally appeared on usnews.com
Update 05/30/24: This story was previously published at an earlier date and has been updated with new information.
