The US stock market crash that is provoked by the outspread of coronavirus has made a swathe of blue-chip stocks available at a discount because Dow Jones Industrial Average and S&P 500 are down almost 25% in the last month alone while NASDAQ has plunged 17% over the same period. But buying on the dip means you must careful to avoid catching a falling knife. Legendary investors like Warren Buffet have made careers out of buy fundamentally sound companies with strong market shares.
Due to the stock market’s wild swings in the past month —including Monday’s selloff of almost 12%, these high quality, and largest companies are trading at significantly lower prices compared to their all-time highs.
1. Apple (NASDAQ: AAPL)
One of the largest companies in the world, based on the market capitalization of $1.06trn, is on investor’s radars following the massive market selloff in the past month. Apple stock price lost close to 20% of value in the last month on the outspread of coronavirus in China, which is its third-largest market.
Although Apple chief executive Tim Cook said the tech giant would not hit its March quarter guidance and previous guidelines for fiscal 2020 due to slowing demand across the world sparked by the outbreak, Wedbush analyst Dan Ives claims buying Apple stock after the selloff with the focus on its performance in 2021 might be profitable.
2. Microsoft (NASDAQ: MSFT)
Microsoft stock price tumbled 21% in the last month, erasing all the gains that it had made earier this year. Microsoft is a favorite stock with dividend investors because of its strong yield and steady share price. It returned $8.5bn to shareholders in the latest quarter via dividends and share buybacks. The company has generated high double-digit revenue and earnings growth in the last year. Deutsche Bank maintains a Buy rating with the price target of $180.
3. Amazon (NASDAQ: AMZN)
Amazon, the third-largest company with a market capitalization of $840bn, has seen its stock under selling pressure due to the broader market selloff.
However, the selloff is muted when compared to other companies. Its stock price fell 16% in the last month and down 4% since the beginning of this year. This is because Amazon has started to see growing demand due to people staying home due to the outbreak, a trend that pushes consumers towards e-commerce platforms. Amazon said this week it will hire 100,000 warehouse workers to keep up with this demand.
“We are seeing a significant increase in demand, which means our labor needs are unprecedented for this time of year,” said Amazon senior vice president of operations Dave Clark.
4. Alphabet (NASDAQ: GOOG)
The stock price of Alphabet, the holding company of Google, is poised to make a big turnaround once the broader markets hit the bottom, according to some analysts.
“The diversification of Alphabet points to greater resilience and likely a greater ability to endure dramatic body blow,” said MKM Partners’ analyst Rohit Kulkarni. But he also warned that the company could experience a significant decline in travel ads, which is likely to lead it to revise 2020 revenue and earnings guidance.
Brokers at Baird have presented a bullish outlook for Alphabet saying the business is one of the best stocks to look for a rebound from a crash of this size. “We believe Search is the most resilient form of online advertising, while Google Cloud and YouTube continue to grow based on secular spending trends [cloud and online video],” Baird said.
5. Alibaba (NYSE: BABA)
Alibaba, the Chinese e-commerce giant, is set to rebound in the coming days, according to analysts at Baird. The broker believes Alibaba is well placed to make a significant recovery as the situation in China improves, where the global spread of the virus began in January. Alibaba’s stock price fell 15% in the last month compared to almost 25% decline of America’s S&P 500 index. The Chinese group is the fifth-largest company in the world based on the market capitalization of almost $500bn.