With the market in free fall and the volatility index indicating high fear levels going into Friday, a buy at this time would seem misguided. As the market stabilizes; however a massive purchasing opportunity will reveal itself. Depressed stocks, many of which endured losses in spite of internal strength will become bargains. A well-timed move could result in nearly instant returns so which are the best stocks to benefit from the current decline?
Apple (AAPL): Apple lost considerably in trading yesterday and if the current attitude persists shares will only go lower. The weakness appears to be more a consequence of broader panic than anything specific to the tech goliath. Illuminating this was Apple’s decline alongside the news that their iPhone replaced Nokia as the number one smartphone world wide. Additionally, the companies’ new cloud computing system could be an additional boon to its worth. With its long history of strength and wide range of well-liked products, even a weaker economy is unlikely to deter growth. Apple’s current P/E ratio is pricy at 14.94 but if it shimmies a bit lower Apple will look considerably more attractive
JPMorgan Chase (JPM): Financials across the board have been taking a beating as investors, scarred by 2009 losses, attempt to escape before enduring a second burn . Many major banks have high exposure to goodwill impairment charges (looking at you Bank of America) and the mortgage market but others seem to have the wherewithal to survive. JPMorgan Chase is among them. While the company still has a weak mortgage unit, their portfolio size is barely a third the size of Bank of America’s. Simultaneously, the company’s CEO Jamie Dimon has been putting aside increasing reserves allocated for related complications, protecting the institution’s PR in the event of further challenges. Certainly, JPMorgan Chase will continue an upward battle, but with one of the deepest discounts in the sector (that continues to deepen) there could be some upside here after the storm.
Whole Foods Market (WFM): There seems to be a knee-jerk reaction to sell Whole Foods, the organic grocer often mocked as Whole paycheck, whenever the market hits the skids. If the old adage, the rich get richer the poor get poorer is true; however, that’s hardly necessary. It’s unlikely the Whole Foods customer will endure enough of an impact to reassess their shopping habits. This is going unaddressed by investors who have been selling off their shares like hot cakes in recent trading. Even after the decline, the price to earnings ratio is still well above other grocers, but it does have a different business model that permits the inequity. Right now, it is still too expensive but if trends persevere, this could be a great company to snap up.