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Understanding the current trends in the stock market is proving to be a challenging task. With the Federal Reserve attempting to combat inflation levels that have not been witnessed in over four decades, coupled with predictions from financial specialists that an upcoming recession is inevitable, the situation remains uncertain.
Understanding the current trends in the stock market is proving to be a challenging task. With the Federal Reserve attempting to combat inflation levels that have not been witnessed in over four decades, coupled with predictions from financial specialists that an upcoming recession is inevitable, the situation remains uncertain.
As expected, the market has responded to these developments, with the S&P 500 index plummeting by over 21% in the past year. The Dow Jones Industrial Average and Nasdaq Composite have also experienced significant declines, dropping by over 16% and 30% respectively.
This is the best stock to buy. Important stuff
It's important to keep in mind that the NYSE and Nasdaq have thousands of stocks available for trading. However, if you're looking to maximize your profits, it's crucial to identify the best stocks currently available.
To achieve this, the CAN SLIM investment strategy provides clear guidelines on what to look for. It's recommended to invest in stocks with a recent quarterly and annual revenue growth of over 25%. Additionally, it's advisable to identify companies with new and innovative products or services that have the potential to revolutionize the industry. It's also worth considering loss-making companies, particularly recent IPOs, that are experiencing significant revenue growth.
The CAN SLIM Investment System developed by IBD has a proven track record that outperforms the S&P 500 Index. Meeting or exceeding this industry benchmark is essential for achieving exceptional long-term returns.
Asbury Automotive Group Inc. (ABG)
Asbury Automotive Group operates over 140 dealerships across 15 states and also provides third-party auto loans and insurance products.
Currently, ABG's stock price is trading approximately 35% lower than its all-time high in 2021. Following the market crash in early 2020, the stock price plummeted by almost 70%, but it has since rebounded and presented a great long-term entry point with a withdrawal of over 25%.
Since 2016, Asbury has consistently increased its net earnings per share (EPS) and revenue. Over the past three years, the company has maintained an average annual growth rate of 53.6% and 22.6% for EPS and revenue, respectively. Industry analysts predict an average annual EPS growth rate of 18.5% over the next five years.
Ford Motor Company
Like many other companies on Wall Street, Ford has faced a challenging year. The automaker's shares have declined by more than 50% in 2022, with the company contending with a multitude of issues, including pandemic-related obstacles, semiconductor shortages, inflationary costs, and supply chain disruptions. These issues were further compounded by the announcement that third-quarter earnings may be lower, with a shortage of parts expected to leave over 45,000 cars unbuilt and unsold in the current quarter.
However, the recent decline in Ford's stock price may have transformed it from an attractive option to one of the best to purchase today. Currently, Ford's stock price is trading at a sales-to-share ratio of 4.45 times, making it a valuable option in comparison to the auto industry average of 9.23 times.
This undervaluation is a crucial reason why investors should consider adding Ford's stock to their portfolios. Despite the stock's poor performance, there are several reasons for investors to remain optimistic about the company's future prospects.
Devon Energy Company (NYSE: DVN)
For revenue investors seeking a high-yielding stock, Devon Energy is an ideal choice. The company boasts the highest dividend payout among all stocks listed on the S&P 500. Despite being an oil and gas company, Devon Energy has a long history of delivering outstanding performance to its investors. In fact, its stock price has surged by over 80% in the past year and is expected to remain strong in the future.
Some investors may assume that the company's high dividends are due to surging oil and gas prices. However, Devon Energy has been consistently paying high dividends for 29 years, even during periods of falling oil and gas prices. This is largely due to the company's robust balance sheet and impressive credit rating. Even in difficult market conditions, Devon Energy has the financial strength to continue delivering dividends to its investors.
Eli Lilly Stock
Marketsmith analysis indicates that LLY stock is slightly below its flat base buy zone, with its earlier ideal buy point of 335.43 now removed. The fact that the stock has regained its 50-day moving average is a positive sign of growth. However, given the current market conditions, buying now would be considered a very aggressive move.
Despite this, Eli Lilly stock has performed well in the stock market and is currently ranked in the top 5% of stocks in terms of price performance over the past year. Additionally, Diversified Healthcare Providers has strong earnings with an EPS rating of 85 out of 99.
One area of particular interest for analysts is Eli Lilly's drugs Munyaro and Donanemab. While Lilly is already approved for use by type 2 diabetics, the company is testing the drug on patients with cardiovascular/metabolic diseases related to obesity. Moreover, Eli Lilly is working with Donamap on Alzheimer's disease, indicating significant potential for growth and development in the future.
Builders First Source, Inc.(BLDR)
Builders First Source is a manufacturer of building materials such as floor and roof trusses, engineered wood, windows, and wall panels. In addition to their manufacturing operations, they also offer installation and construction services.
Despite trading 40% below its 2022 record highs, BLDR stock has gained 204% over the last five years. Over the past decade, the stock has experienced a decline of more than 30%, presenting an attractive entry opportunity. It is worth noting that the stock has undergone more than one 50% drop during this time, but it has always bounced back.
Since 2016, Builders Firstsource has recorded an increase in earnings per share and revenue every year, with an average annual growth rate of 94.9% and 44.9%, respectively, over the past three years. Analysts predict an average annual EPS growth rate of 18.8% over the next five years.
Currently, BLDR's P/E ratio is 3.6, its lowest level in five years. P/E ratios have ranged from 3.6 to 60.9 in the past. With a forward P/E of 6.6, which falls at the lower end of the historical range, BLDR is an attractive investment opportunity.
Alphabet Co., Ltd
Alphabet is a strong contender for one of the best stocks to buy in today's market. While investment strategies vary, Alphabet's prosperity and secular tailwind make it a popular choice among investors. The company's net worth and attractive valuation provide a solid foundation for growth, regardless of the state of the economy. In fact, Alphabet's recent earnings report did not even mention the possibility of a recession, which is significant at a time when the Fed is trying to slow down the economy to fight inflation.
Although tech stocks tend to sell off when interest rates rise, Alphabet has managed to avoid a sell-off and maintain its strong financial position. This is particularly noteworthy given that the Nasdaq has experienced a 38% sell-off due to higher borrowing costs cutting into the future profits of loss-making companies. Despite these challenges, Alphabet's sales have only decreased by 27% year over year, demonstrating the resilience of the company. Overall, Alphabet's impressive financials and stable position in the market make it a top pick for many investors.
Meta Platforms Inc (NASDAQ: META)
Meta Platforms, formerly known as Facebook, is a highly popular stock on Wall Street and ranks fourth in ETF portfolios. Despite a challenging year, the recent decline in Meta's stock price presents an opportunity for investors.
Meta is a company that has been experiencing steady revenue growth for years, and until recently, impressive net income per share growth. Although the technology sector faced inflation concerns earlier this year, Meta's stock was known for tremendous price gains.
The current decline in Meta's stock price has created an opportunity that many investors may overlook. With a P/E ratio of around 12, compared to the S&P 500's P/E ratio of over 19, Meta's stock is undervalued in comparison to the market. Additionally, the profit/loss ratio for Meta and similar growth stocks is at its lowest level in five years. This makes Meta a compelling investment opportunity for investors seeking growth stocks at an attractive valuation.
