In this update: Blackstone Group (BX) moves from Hold to Strong Buy, Dollar Tree (DLTR) moves from Hold to Buy, Goldman Sachs (GS) moves from Hold to Buy, Vertex Pharmaceuticals (VRTX) moves from Hold to Buy, XL Group (XL) moves from Buy to Strong Buy; plus a list of stocks to buy today.
We’ve had a small pullback in the U.S. stock market averages. It’s a little too early to tell if they might fall further, which could easily happen if the recent increase in hostility that’s coming from North Korea continues to escalate. My suggestion today is to deploy a small portion of the cash that you have on the sidelines that’s been waiting for a market correction.
Historically, the threat of war drives stocks down, but the actual outbreak of war (bombings, etc.) triggers an upturn in U.S. stock markets. Perhaps that’s because threats bring uncertainty, but action brings certainty. I invested in a 401(k) rollover during the week of the commencement of the second Gulf War conflict in March 2003. That turned out well for my portfolio.
My favorite stocks to purchase during market corrections are the ones that barely fell. That’s because they’re showing so much strength that they’re likely to be the first to rise when the market recovers. If you also love that idea, then consider Apple (AAPL), PulteGroup (PHM), Vertex Pharmaceuticals (VRTX) and XL Group (XL).
I’ll point out which stocks I would most likely purchase today, but first, some rating changes.
Ameriprise Financial (AMP – yield 2.3%) rose rapidly since joining the Growth & Income Portfolio on July 13, and is now having a small pullback. Short-term investors who buy on dips below 146 will have 10% upside to my price target of 160, where AMP will be fairly valued. (I’m not going to change the rating back and forth while the stock is so close to 146.) Hold.
Blackstone Group LP (BX – variable large payouts) has dipped down to price support at 32. I’m moving BX from Hold to Strong Buy. This stock could appeal to traders who will later sell when BX reaches long-term price resistance at 37. BX could also appeal to dividend investors and long-term growth investors who will not mind if the stock gets stuck in an extended period of sideways trading after it reaches 37. This is an excellent stock for a buy-and-hold portfolio. Strong Buy.
Dollar Tree (DLTR) has dipped down into the low 70’s. I’m moving DLTR from Hold to Buy because there’s now more than 10% upside to my price target. I anticipate selling DLTR near price resistance at 83, where it traded in May. Buy.
Goldman Sachs (GS – yield 1.3% ) has dipped down into the low 220’s again, and the price chart appears stable. I’m moving GS from Hold to Buy because there’s now more than 10% upside to my price target. I anticipate selling GS near price resistance at 250, because the shares will be fully valued. Buy.
Schnitzer Steel Industries (SCHN – yield 3.0%) rose rapidly in June, and is recently trading sideways. Short-term investors who buy below 26 will have 10% upside to my price target at 29, where I plan to sell. (I’m not going to change the rating back and forth while the stock is so close to 26.) Hold.
Vertex Pharmaceuticals (VRTX) pulled back after a rapid run-up in July, then barely moved with yesterday’s stock market volatility. That tells me that the stock is showing tremendous strength, and that the downside risk will mostly be confined to any sudden bad news that appears. I’m moving VRTX from Hold to Buy. The stock is fully valued based on 2017 EPS, but distinctly undervalued based on 2018 earnings projections. Buy.
XL Group (XL – yield 2.0%) did not even blink during yesterday’s stock market volatility. That’s extremely bullish, and I’m therefore moving XL from Buy to Strong Buy. Strong Buy.
I would buy the following stocks today:
Alexion Pharmaceuticals (ALXN)
Ameriprise Financial (AMP)
Andeavor (ANDV)
Apple (AAPL)
BP plc (BP)
Bank of America (BAC)
Blackstone Group (BX)
Boise Cascade (BCC)
Commercial Metals (CMC)
Dollar Tree (DLTR)
Goldman Sachs (GS)
Johnson Controls (JCI)
KLX (KLXI)
Legg Mason (LM)
PulteGroup (PHM)
Quanta Services (PWR)
Schnitzer Steel (SCHN)
Total (TOT)
Vertex Pharmaceuticals (VRTX)
XL Group (XL)