There is much speculation currently that the stock market is in risky territory, and some experts are now alerting investors to the potential of a market retreat in the near term. The stock market has rallied to record heights over the last year. One timeless truism about stock markets is that downturns follow booms. The question now on many investors’ minds is not will there be a correction, but when, and how long might it take the market to return to fair value from its current, inflated levels?
Due to economic uncertainty and a new Presidential administration in the White House, we think it most imperative now that investors choose stocks very wisely. High quality businesses with strong fundamentals can present good buying opportunities even in a downturn. Companies with these qualities have the strength to recover quickly and offer good returns in the long run.
Alphabet Inc. (GOOGL), Oracle Corporation (ORCL), Taiwan Semiconductor Manufacturing Company Ltd. (TSM), and Home Depot, Inc. (The) (HD) are four stocks that one should buy on every dip. They cater to varied sectors, and each commands a leading position in its industry. So, we believe their robust financials and innovative product offerings will help them rebound quickly.
Alphabet Inc. (GOOGL)
GOOGL is the global leader in the digital advertising space. It commands a 90% share of the global internet search engine market. The company’s other businesses include YouTube, Google Play, and Smart Home speakers. GOOGL also offers hardware devices, digital content, cloud services, among other products and services.
GOOGL has signed cloud services deal with Ford Motor (F), wherein, its Android operating system will power Ford’s dashboard infotainment screens by 2023. Ford is also likely to adopt GOOGL’s artificial intelligence (AI) and data-analytics technology.
During the third quarter ended September 30, 2020, GOOGL’s revenue climbed 14% year-over-year to $46.2 billion, led by an upsurge in advertising revenue. YouTube’s ad revenues jumped 32.6% in the third quarter. At the close of the third quarter, YouTube Music and YouTube Premium reported had a combined paid subscriber base of more than30 million. Meanwhile, the company’s EPS for the third quarter jumped 62% year-over-year to $16.40.
Analysts expect the company’s revenue for the quarter ending December 31, 021 to be $53.1 billion, representing 15.3% year-over-year growth. Its EPS is likely to grow at the rate of 16.8% per annum over the next five years.
GOOGL has climbed 25.5% over the past year to close yesterday’s session at $1893.07. Over the past six months, the stock has advanced 20%.
The company’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. The system also evaluates a stock across seven other categories to give users a deeper understanding of a stock’s strengths and weaknesses.
GOOGL has a grade of A for Sentiment, and B for both Momentum and Quality. Of the 64 stocks in the Internet industry, it is ranked #3.
In addition to the POWR Ratings grades I have just highlighted, you can see GOOGL’s ratings for Growth, Value, Stability, and Industry here.”
Oracle Corporation (ORCL)
ORCL sells products and services in the enterprise information technology market globally. It delivers its applications and infrastructure technologies through cloud and on-premise deployment models. ORCL also offers operating systems, such as Oracle Linux and Oracle Solaris, virtualization software, and other hardware-related software.
ORCL has announced that its new converged cloud database Oracle Database 21c will now be available in the Oracle Cloud Database Service Virtual Machine and Bare Metal Service. ORCL believes storing and managing data in a converged database enhances efficiency and productivity versus disintegrating data into multiple single-use engines.
ORCL’s revenue for the second quarter ended November 30, 2020 rose 2% year-over-year to $9.8 billion, supported by growth in its loud services and license support segment. Oracle Gen2 Cloud Infrastructure and Autonomous Database revenue grew over 100% during the quarter, while Fusion Cloud ERP revenue climbed 33%. Its EPS for the quarter rose to $0.82 from $0.71 posted in the same period last year.
A consensus revenue estimate for the quarter ending February 2021 is $10 billion, which represents a 2.8% increase year-over-year. Its EPS is likely to grow 14.4% to $1.11.
Over the past year, ORCL has climbed 14% to end yesterday’s trading session at $61.51. Over the past six months, the stock has risen 8.5%.
It is no surprise that ORCL has an overall rating of A, which equates to Strong Buy in our POWR Ratings system. The system also evaluates a stock across seven other categories to give users a deeper understanding of a stock’s strengths and weaknesses.
ORCL has a Value Grade of A and a grade of B for Momentum, Stability and Quality. In the 108-stock Software – Application industry, it is ranked #2.
Click here to see the additional POWR Ratings for ORCL (Growth, Sentiment, and Industry)
Taiwan Semiconductor Manufacturing Company Ltd. (TSM)
TSM is a global leader in the manufacture and sales of semiconductors and integrated circuits across North America, Europe, Japan, China, and South Korea. The company’s standard business segments are communications, industrial, consumer, and computer. TSM also offers customer service, account management, and engineering services.
According to Digitimes, TSM has received an outsourcing contract from Intel Corporation (INTC) for manufacturing 3nm chips. These chips are likely to go into mass production in the second half of 2022.
TSM’s revenue during the fourth quarter ended December 31, 2020 climbed 13.9% year-over-year to NT$361.5 billion. Advanced technologies, or 16-nanometers represented 62% of its total wafer revenue. TSM reports that 5G smartphones, HPC and 5G nanometer technology are driving the demand for advanced wafers. Its EPS for the quarter climbed 23.3% to NT$5.51 compared to the same period last year.
Analysts expect TSM’s revenue for the quarter ending March 31, 2021 to be $13 billion, representing 25.8% growth year-over-year. Its EPS is likely to rise 26.7% to $0.95.
TSM has surged 112.5% over the past year to end yesterday’s trading session at $126.75. During the past six months it has gained 47%.
TSM’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. The system also evaluates a stock across seven other categories to give users a deeper understanding of a stock’s strengths and weaknesses.
It has a grade of A for Sentiment and Quality, and B for Momentum and Industry. It is ranked #37 in the 98 stock Semiconductor & Wireless Chip industry.
In total, we rate TSM on 8 different levels. Beyond what we stated above, we also have given TSM grades for Growth, Stability, and Value. Get all the TSM ratings here
Home Depot, Inc. (The) (HD)
HD is a global leader in home improvement retailing. It sells various home improvement products, building materials, lawn and garden products, and decor products through its Home Depot stores. It also offers professional installation in various categories sold through its stores as well as in-home sales programs. It has close to 2,295 retail stores across 50 states.
HD has formed a partnership with Allstate to create an extended protection plan to offer customers expanded benefits and faster repair service. Major appliances, home electronics, outdoor power equipment, grills, and power tools bought in store or online will be included in the protection plan.
In November HD announced that it planned to acquire buying industrial goods wholesaler HD Supply Holdings in a deal worth $8 billion. Its objective with the acquisition is to bolster HD’s building, utility and maintenance products because it believes many American will consider purchasing affordable housing after the pandemic.
HD’s sales during the third quarter ended November 1, 2020 climbed 23.2% year-over to $33.5 million, driven by massive demand for home improvement projects. Its comparable sales for the third quarter rose 24.1%. Its EPS for the quarter jumped to $3.18 from $2.53 posted in the prior-year period.
A consensus revenue estimate for the quarter ending January 2021 is $30.3 billion, representing a 17.5% increase year-over-year. Its EPS is likely to grow 12.3% to $2.56.
Over the past year, HD has climbed 15.7% to end yesterday’s trading session at $270.21. Over the past six months, the stock has risen 2.3%.
HD’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B which equates to Buy in our proprietary rating system. The system also evaluates a stock across seven other categories to give users a deeper understanding of a stock’s strengths and weaknesses.
It has a grade of A for both Momentum and Quality, and B for Sentiment. It is ranked #20 of 64 stocks in the A rated Home Improvement & Goods industry. .
In total, we rate HD on eight different levels. Beyond what we stated above we also have given HD grades for Value, Stability, and Growth. Get all the HD ratings here.
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GOOGL shares were trading at $1,927.34 per share on Tuesday morning, up $34.27 (+1.81%). Year-to-date, GOOGL has gained 9.97%, versus a 2.17% rise in the benchmark S&P 500 index during the same period.
About the Author: Namrata Sen Chanda
Namrata is an accomplished financial journalist, with nearly a decade of experience. She specializes in interpreting news releases and framing investment strategies, and has worked with some of the leading companies in real estate, banking, insurance, mutual funds, financial research, fintech, and investment education. More...
More Resources for the Stocks in this Article
|Ticker||POWR Rating||Industry Rank||Rank in Industry|
|GOOGL||Get Rating||Get Rating||Get Rating|
|ORCL||Get Rating||Get Rating||Get Rating|
|TSM||Get Rating||Get Rating||Get Rating|
|HD||Get Rating||Get Rating||Get Rating|