It looks like there’s a decent chance the market is headed for a bit of a correction. I still believe the long-term trend is overall bullish, but as I’ve said before, stocks don’t go up in a line, and it’s inevitable that there are going to be bumps in the road.
Anyone who’s been following me long enough knows that for me, those bumps are opportunities. Whenever the market is about to come in, I always look for good companies trading at a discount that I’m confident will stay the course and bounce back up.
But you have to be careful when you go bottom-fishing and not just indiscriminately pick up anything that looks cheap. Keep in mind, the market rally we’ve seen this year has mostly been driven by just seven stocks, and while there was some broadening of support more recently, there’s no guarantee that the rising tide is going to lift every boat.
So you have to dig a little deeper. With earnings season underway, we have some good indicators to help us determine where the best dips to buy are, especially in companies that performed well on earnings and have positive forward guidance but haven’t necessarily been “rewarded” for it by the market yet.
We also know what to avoid – beaten-up stocks with terrible earnings and shaky financials aren’t done feeling the pain if the market pulls back.
In today’s Buy This, Not That, I take a look at a handful of potential dip-buying prospects to help you sort out which ones you need to move on right now, and which ones you should kick to the curb.
Check it out:
— Shah Gilani
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Source: Total Wealth