In this article, we discuss the 11 best stocks to buy in falling markets now.
Even though the year 2024 was not kind to certain sectors within the US economy, the broader outlook for the stock market heading into the new year was more than rosy. Investment banks generally anticipated moderate economic growth for the US in 2025. For example, Deutsche Bank forecasts a growth rate of approximately 2%, noting that 2025 will not be a year of rapid GDP growth. Meanwhile, JP Morgan’s Global Investment Strategy team emphasized a foundation of strength stemming from 2024’s robust market returns. They highlighted themes such as easing global policies and rising capital investment as key drivers for the coming year. Their report, Outlook 2025: Building on Strength, suggested that the US economy was well-positioned to capitalize on these favorable conditions.
Read more about these developments by accessing 10 Best AI Data Center Stocks and 10 Buzzing AI Stocks According to Goldman Sachs.
However, inflation remained a focal point in economic discussions. Top economic experts project that inflation rates will decelerate in 2025, approaching the Federal Reserve’s 2% target by the second half of the year. This outlook suggests a stabilization of price levels, which could influence monetary policy decisions. US Bank Chief Economist Beth Ann Bovino offered insights into the Federal Reserve’s anticipated actions. She predicted that the Fed would implement two interest rate cuts in 2025, citing continued economic strength. Bovino also noted that proposed tariffs and tax cuts by the new administration could exert additional inflationary pressures, potentially complicating the Fed’s policy decisions.
The fiscal policies of the new administration are expected to play a significant role in shaping the economic landscape. Bank of America analysts Claudio Irigoyen and Aditya Bhave discussed the interplay between US policy changes and the global economy. They anticipated that fiscal policy would be expansionary through tax cuts and acknowledged that proposed tariff increases could have a modest impact on consumer price inflation. Their analysis underscored the importance of balancing growth initiatives with inflation control. In terms of sector performance, Standard Chartered Bank expressed optimism about equities and commodities. Entering 2025, the bank was overweight in equities and gold, citing a resilient global economy with a projected GDP growth of 3%.
Read more about these developments by accessing 30 Most Important AI Stocks According to BlackRock and Beyond the Tech Giants: 35 Non-Tech AI Opportunities.
To make our list of the best stocks in falling markets, we first made a list of stocks that have lost 15% or more over the past 12 months and are in the telecommunications, technology, or software infrastructure industries. Then, we picked the stocks that had the highest number of hedge fund investors in Q3 2024 courtesy of Insider Monkey’s database of hedge funds. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
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Best Stocks to Buy in Falling Markets Now
11. Axcelis Technologies, Inc. (NASDAQ:ACLS)
Number of Hedge Fund Holders: 29
Decline in Share Price Over Past 12 Months: 49.1%
Axcelis Technologies, Inc. (NASDAQ:ACLS) markets ion implantation and other processing equipment used for the fabrication of semiconductor chips. The following elements demonstrate why this company is an excellent investment choice. Firstly, as per the report for the third quarter of 2024, the company reported revenue of $256.6 million, compared to $256.5 million for the second quarter of 2024, demonstrating consistent sales performance quarter-over-quarter. In addition, Axcelis Technologies served as a top-level Platinum Sponsor at the International Conference on Ion Implantation Technology 2024 in Japan. The company focused on emerging technologies related to doping and annealing processes, device applications, equipment, metrology and modeling. Moreover, the company has announced the establishment of new service offices in Chitose, Hokkaido and Kumamoto to support an expanding customer base in Japan.
10. Akamai Technologies, Inc. (NASDAQ:AKAM)
Number of Hedge Fund Holders: 30
Decline in Share Price Over Past 12 Months: 21.7%
Akamai Technologies, Inc. (NASDAQ:AKAM) is a company specializing in content delivery network (CDN), cybersecurity, DDoS mitigation, and cloud services. The following elements demonstrate why this company is an excellent investment choice. First of all, the report for the third quarter of 2024 indicates the constant financial growth of the company. For instance, revenue was $1.005 billion, a 4% increase over third quarter 2023 revenue of $965 million and a 4% increase when adjusted for foreign exchange. Moreover, the company plans to embed cloud computing capabilities into its massive edge network. Akamai’s Generalized Edge Compute (Gecko) advances Akamai’s strategy to be the cloud computing platform for companies that want to deliver better experiences by running workloads closer to users, devices, and sources of data.
9. Snap Inc. (NYSE:SNAP)
Number of Hedge Fund Holders: 34
Decline in Share Price Over Past 12 Months: 33.6%
Snap Inc. (NYSE:SNAP) is a technology company that believes that cameras present the greatest opportunity to improve the way people live and communicate. This company presents a solid investment opportunity, supported by the following points. Firstly, as per the report for the third report of 2024, total revenue was $1,373 million, compared to $1,189 million in the prior year, reflecting an increase of 15% year-over-year. This growth indicates that the company experienced higher sales, suggesting strong business performance and improved revenue generation over the past year. Secondly, the company has announced the fifth generation of Spectacles that enables users to use Lenses and experience the world together with friends in totally new ways. Spectacles are powered by Snap OS, a brand-new and groundbreaking operating system designed to enhance how people naturally interact with the world.
8. Iridium Communications Inc. (NASDAQ:IRDM)
Number of Hedge Fund Holders: 35
Decline in Share Price Over Past 12 Months: 15.5%
Iridium Communications Inc. (NASDAQ:IRDM) is a global satellite communications company that provides access to reliable voice and data services anywhere on Earth. The following elements demonstrate why this company is an excellent investment choice. First of all, the company showed positive financial growth depicted in the report for the third quarter of 2024. For instance, total revenue was $212.8 million, which consisted of $159.9 million of service revenue and $52.9 million of revenue related to equipment sales and engineering and support projects. Service revenue, which represents primarily recurring revenue from Iridium’s growing subscriber base, grew 5% from the year-ago period and was 75% of total revenue for the third quarter of 2024. Total revenue increased 8% versus the comparable period of 2023, largely due to higher commercial service revenue and government engineering revenue. Moreover, the company has launched the Iridium Certus 9704, its newest IoT module, ideal for supporting satellite IoT applications that require real-time data analysis.
7. Paramount Global (NASDAQ:PARA)
Number of Hedge Fund Holders: 44
Decline in Share Price Over Past 12 Months: 18.7%
Paramount Global (NASDAQ:PARA) is a media and entertainment company with expertise in streaming, advertising, global markets, and consumer products. There are several compelling factors that make this company a strong investment. Firstly, as per the reports for the third quarter of 2024, Adjusted OIBDA (Operating Income Before Depreciation and Amortization) improved $287 million year-over-year to $49 million, which reflects the company’s ability to reduce its losses or increase profitability in its DTC operations, highlighting the success of its direct consumer-focused strategies or products. Moreover, the company has entered into an agreement with Skydance Media to form New Paramount – a next-generation media and technology leader, through a two-step transaction, including the acquisition of National Amusements, which holds the controlling share stake in Paramount, and subsequently a merger of Skydance and Paramount Global.
6. Etsy Inc. (NASDAQ:ETSY)
Number of Hedge Fund Holders: 45
Decline in Share Price Over Past 12 Months: 22.9%
Etsy Inc. (NASDAQ:ETSY) operates two-sided online marketplaces that connect buyers and sellers primarily in the United States, the United Kingdom, Germany, Canada, Australia, France, and India. This company emerges as a prime investment opportunity for several reasons. First and foremost, the company’s ability to generate growth through diverse revenue streams and efficient monetization of its platform is reflected in the report for the third quarter of 2024. For instance, consolidated revenue was $662.4 million, increasing 4.1% versus the third quarter of the prior year, with a take rate (i.e., consolidated revenue divided by consolidated GMS) of 22.7%. The positive revenue growth was driven by growth in both Marketplace and Services revenue, with payments revenue driving Marketplace revenue performance and Etsy Ads the primary driver of Services revenue growth.
5. MGM Resorts International (NYSE:MGM)
Number of Hedge Fund Holders: 46
Decline in Share Price Over Past 12 Months: 22.7%
MGM Resorts International (NYSE:MGM) is a Las Vegas-based hospitality and entertainment firm that runs several destination resorts. There are several compelling factors that make this company a strong investment. Firstly, as per the report for the third quarter of 2024, MGM China declared a special dividend, resulting in approximately $200 million in cash to MGM Resorts in total this year. This special dividend represents a one-time cash payment, highlighting the strong profitability and cash flow of MGM China, allowing it to return value to its shareholders. Additionally, net income attributable to MGM Resorts was $185 million in the current quarter compared to $161 million in the prior year quarter, indicating the company’s continued ability to generate higher earnings for its shareholders. Moreover, MGM Resorts International with Grupo Globo announced the formation of a new venture to seek a sports betting and iGaming license in Brazil. The new venture will launch in Brazil in early 2025 under the BetMGM brand and will bring a responsible, best-in-class betting platform to one of the newest and fastest-growing regulated markets in the world.
4. Sirius XM Holdings Inc. (NASDAQ:SIRI)
Number of Hedge Fund Holders: 49
Decline in Share Price Over Past 12 Months: 59.4%
Sirius XM Holdings Inc. (NASDAQ:SIRI) provides satellite radio services. This company presents a solid investment opportunity, supported by the following points. Firstly, as per the report for the third quarter of 2024, total revenue was $2.17 billion, indicating the company’s positive financial growth. Secondly, the company shared an updated strategic plan, which sharpened the company’s focus on its core subscription business, leveraging the strength of its advertising business across its portfolio, accelerating efficiency throughout the organization, and emphasizing robust margins, free cash flow generation, and stockholder returns. Moreover, the company has introduced a new seamless app download feature for in-car subscribers, enabling the users to easily sign in to and use the streaming app to access more content.
3. NIKE, Inc. (NYSE:NKE)
Number of Hedge Fund Holders: 75
Decline in Share Price Over Past 12 Months: 26.8%
NIKE, Inc. (NYSE:NKE) markets athletic footwear and apparel. The following elements demonstrate why this company is an excellent investment choice. Firstly, as per the report for the fourth quarter of 2024, wholesale revenues were $7.1 billion, increasing 5% on a reported basis and 8% on a currency-neutral basis, indicating a strong operational performance. Also, the gross margin for the fourth quarter increased 110 basis points to 44.7%, reflecting the company’s efficiency in managing costs, leading to a higher profitability ratio for each dollar of revenue. Moreover, Nike’s strategic use of AI and Gen AI has dramatically improved the consumer experience, optimised the supply chain, and fueled product innovation. For instance, the company has developed its own generative AI model to design products using exclusive athlete data.
2. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders: 107
Decline in Share Price Over Past 12 Months: 30.4%
Advanced Micro Devices, Inc. (NASDAQ:AMD) operates as a semiconductor manufacturer. This company presents a solid investment opportunity, supported by the following points. To begin, as per the report for the third quarter of 2024, revenue was $6.8 billion, gross margin of 50%, operating income of $724 million, net income of $771 million and diluted earnings per share of $0.47, which reflects positive financial growth and its overall profit after accounting for all expenses, taxes, and other factors. Secondly, the company’s strategic partnership with Fujitsu aims to develop a more sustainable computing infrastructure intended to accelerate open-source AI initiatives. Lastly, the company plans to acquire ZT Systems to deliver leadership AI training and inferencing solutions based on innovating across silicon, software and systems.
1. Adobe Inc. (NASDAQ:ADBE)
Number of Hedge Fund Holders: 123
Decline in Share Price Over Past 12 Months: 27.6%
Adobe Inc. (NASDAQ:ADBE) operates as a diversified software company worldwide. There are several compelling factors that make this company a strong investment. Firstly, the company’s robust financial performance and its ability to grow revenue and deliver solid profitability are reflected in the report for the fourth quarter of 2024. For instance, Adobe achieved revenue of $21.51 billion, which represents 11% year-over-year growth in constant currency. Diluted earnings per share was $12.36 on a GAAP basis and $18.42 on a non-GAAP basis. Secondly, the company has teamed up with artist and culinary author Benny Blanco to create a collection of customizable marketing templates for Adobe Express, the company’s powerful yet user-friendly design app. This collaboration aims to empower small businesses, including restaurants, to easily create eye-catching content that stands out both online and in person. Moreover, the company has launched Adobe GenStudio, which would drive customer engagement, personalization and conversion.
While we acknowledge the potential of Adobe Inc. (NASDAQ:ADBE) as an investment, our conviction lies in the belief that some stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a stock that is more promising than Adobe Inc. (NASDAQ:ADBE) but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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