It is possible to position oneself strategically for long-term benefits by investing in stocks when the market is experiencing a decline.
In this article, we will examine five stocks that, according to the observations of financial industry professionals and the activities of hedge funds, are considered to be good prospects for purchasing during the downturn.
Exploring Five Promising Stocks Backed
- Paycom Software, Inc. (NYSE: PAYC)
Ranked 5th in the list of best dip-buying opportunities by Citi, Paycom Software, Inc. has experienced a 43% loss year-to-date as of November 12.
However, investment firm UBS recently initiated coverage with a Buy rating and a $235 price target. With 40 hedge funds holding stakes in the company, Paycom Software boasts significant investor interest.
Echo Street Capital Management, led by Greg Poole, stands out as the largest stakeholder with a $347 million investment.
2. Lockheed Martin Corporation (NYSE: LMT)
Lockheed Martin Corporation, a major player in aerospace and defense, has seen a 6% decrease in its shares this year.
Citi recommends buying on the dip for long-term gains, emphasizing the company’s strong positioning in the US defense sector. As of Q2 2023, 52 hedge funds held stakes in Lockheed Martin, with Two Sigma Advisors being the largest stakeholder, owning a $364 million stake. RiverPark Advisors, in its Q3 2023 investor letter, expressed optimism about Lockheed Martin’s growth potential, citing a $158 billion backlog and strategic acquisitions.
- Las Vegas Sands Corp. (NYSE: LVS)
Despite a 3% loss in shares year-to-date, Las Vegas Sands Corp. is gaining attention as a dip-buying opportunity. In Q3 2023, the company posted strong results, with adjusted EPS meeting estimates and revenue jumping 177.2% YoY to $2.8 billion. Insider Monkey reports 52 hedge funds holding stakes in Las Vegas Sands, with Point72 Asset Management, led by Steve Cohen, being the most significant stakeholder with a $141 million investment. Baron Real Estate Fund sees potential in the company, anticipating positive inflection following China’s policy changes.
- Datadog, Inc. (NASDAQ: DDOG)
Citi identified Datadog, Inc. as a top dip-buying stock for the long term, despite a temporary setback that led to a pullback in September. The company rebounded, gaining 43% year-to-date through November 12.
With 78 hedge funds holding stakes in Datadog, the company’s strong Q3 results, including a 25.4% YoY revenue increase, contributed to its recovery. RiverPark Large Growth Fund, in its Q1 2023 investor letter, emphasized Datadog’s potential to continue growing revenue at more than 20% annually, given its position in a $40 billion market.
- Apple Inc. (NASDAQ: AAPL)
Apple Inc., recommended by Citi for dip-buying in September, has seen a recovery with a 25% gain in share value over the past year.
Morgan Stanley’s analyst Erik Woodring believes Apple will play a significant role in the AI space, with a potential AI project reveal in 2024. As of Q2 2023, 135 hedge funds reported owning stakes in Apple, with Warren Buffett’s Berkshire Hathaway holding the largest stake at $178 billion.
Five Resilient Stocks for Long-Term Growth During Market Downturns
Investing in stocks during a market dip requires careful consideration and analysis. The five stocks mentioned – Paycom Software, Lockheed Martin Corporation, Las Vegas Sands Corp., Datadog, Inc., and Apple Inc. – are backed by positive analyst sentiments, strong financials, and notable hedge fund investments, making them potential candidates for long-term growth strategies.
As with any investment, it’s crucial for investors to conduct thorough research and consider their risk tolerance before making decisions.
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