5 Best Bear Market Stocks To Buy Now

In this article, we discuss the 5 best bear market stocks to buy now. If you want to see more stocks in this selection, go directly to the 13 Best Bear Market Stocks To Buy Now.

5. Bank of America Corporation (NYSE:BAC)

Number of Hedge Fund Holders: 97

Bank of America Corporation (NYSE:BAC) is a Charlotte, North Carolina-based diversified financial services company involved in consumer banking, investment banking, financial research, and related services.

The company is the second biggest holding in the portfolio of Berkshire Hathaway, only falling behind Apple Inc (NASDAQ:AAPL). The bank is expected to experience higher revenues due to the increasing benchmark interest rates. Furthermore, experts believe that some impact of the recession has already been incorporated into the stock price. Vivek Juneja at JPMorgan increased the price target on Bank of America Corporation (NYSE:BAC) from $35.5 to $39 and reiterated an Overweight rating on November 2. Bank of America Corporation (NYSE:BAC) offers an annual forward dividend yield of 2.38% as of November 30.

Artisan Partners shared its bullish outlook on Bank of America Corporation (NYSE:BAC) in its Q2 2022 investor letter. Here’s what the firm said:

“We made only one new purchase during the quarter, initiating a position in Bank of America (BAC). As one of America’s largest banks, Bank of America Corporation (NYSE:BAC) is second only to JPMorgan Chase (JPM) in size and is probably its closest peer. Both are well-run banks, but compared to JPM, since the GFC, BAC has retired more shares, grown EPS faster and currently has more capital and a lower dividend payout. We are attracted to BAC’s strong capital base, high capital generation capacity, large loan loss reserve, low (~50%) loan/deposit ratio, short duration investment securities book, and low dividend payout that provides financial flexibility. BAC has a less volatile earnings stream than JPM with lower capital market sensitive exposures. Additionally, BAC is rigorously stress tested by the Fed every year in quantitative and qualitative fashion. Warren Buffett’s Berkshire Hathaway, which we hold in the portfolio, owns 12% of BAC. He petitioned the Fed to own more than 10%, so he clearly likes it. Bank stocks were strong gainers in 2021 on the prospects of higher rates boosting net interest margins, but the stocks pulled back in the first half of 2022 on economic concerns. We believe BAC has massive scale advantages, should benefit from increasing interest rates, particularly in the 2-year part of the yield curve, and should grow over time with the economy. The economic environment is highly uncertain, but current consensus includes the provision for losses more than doubling and capital markets activity slowing. Against that backdrop, our purchase price equated to about 8.5X our estimates of “mid-cycle” earnings. With leading businesses, a double-digit ROE, a prudent capital return strategy and a strong balance sheet, we believe this entry point offered a solid long-term value.”

4. T-Mobile US, Inc. (NASDAQ:TMUS)

Number of Hedge Fund Holders: 100

T-Mobile US, Inc. (NASDAQ:TMUS) is a wireless network operator. The company is on the fourth position on our list of the 13 best bear market stocks to buy now.

T-Mobile US, Inc. (NASDAQ:TMUS) is expected to face tailwinds of 5G adoption in the US in terms of customer gains and top-line growth. Based on these factors, Ivan Feinseth at Tigress Financial increased the price target on T-Mobile US, Inc. (NASDAQ:TMUS) from $195 to $202 and maintained a Buy rating on the stock on November 15. The analyst noted that the company is in a leadership position in the field of 5G technology following the completion of its merger with Sprint in 2020. Furthermore, this will drive cash flow growth for T-Mobile US, Inc. (NASDAQ:TMUS) as it intends to buy back as much as $14 billion worth of stock by September 2023.

Of the 920 hedge funds in Insider Monkey’s database, T-Mobile US, Inc. (NASDAQ:TMUS) was held by 100 hedge funds as of Q3 2022.

3. Berkshire Hathaway Inc. (NYSE:BRK-B)

Number of Hedge Fund Holders: 104

Berkshire Hathaway Inc. (NYSE:BRK-B) is an Omaha, Nebraska-based diversified conglomerate that owns a broad portfolio of businesses in industries ranging from energy generation and distribution to insurance, manufacturing, and retailing.

Despite the broader market having a difficult 2022, Berkshire Hathaway Inc. (NYSE:BRK-B) has been able to post returns of 4.47% YTD. Analysts think the company is attractively valued, which makes it one of the best bear market stocks to invest in. The company led by the Oracle of Omaha, Warren Buffett, initiated a position in Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) on November 15. Experts think that the semiconductor industry has found its bottom, and this has caused the veteran billionaire investor to initiate a position in the stock. Overall, the net purchases of stock for Berkshire Hathaway were valued at $3.7 billion during Q3 2022.

Vltava Fund discussed its stance on Berkshire Hathaway Inc. (NYSE:BRK-B) in its Q4 2021 investor letter. Here’s what the firm said:

“BERKSHIRE HATHAWAY INC.

To the Shareholders of Berkshire Hathaway Inc.:

Charlie Munger, my long-time partner, and I have the job of managing a portion of your savings. We are honored by your trust.

Our position carries with it the responsibility to report to you what we would like to know if we were the absentee owner and you were the manager. We enjoy communicating directly with you through this annual letter, and through the annual meeting as well.

Our policy is to treat all shareholders equally. Therefore, we do not hold discussions with analysts nor large institutions. Whenever possible, also, we release important communications on Saturday mornings in order to maximize the time for shareholders and the media to absorb the news before markets open on Monday.

A wealth of Berkshire facts and figures are set forth in the annual 10-K that the company regularly files with the S.E.C. and that we reproduce on pages K-1 – K-119. Some shareholders will find this detail engrossing; others will simply prefer to learn what Charlie and I believe is new or interesting at Berkshire.

Alas, there was little action of that sort in 2021. We did, though, make reasonable progress in increasing the intrinsic value of your shares. That task has been my primary duty for 57 years. And it will continue to be.

What You Own

Berkshire owns a wide variety of businesses, some in their entirety, some only in part. The second group largely consists of marketable common stocks of major American companies. Additionally, we own a few non-U.S. equities and participate in several joint ventures or other collaborative activities.

Whatever our form of ownership, our goal is to have meaningful investments in businesses with both durable economic advantages and a first-class CEO. Please note particularly that we own stocks based upon our expectations about their long-term business performance and not because we view them as vehicles for timely market moves. That point is crucial: Charlie and I are not stock-pickers; we are business-pickers…” (Click here to see the full text)

2. Microsoft Corporation (NASDAQ:MSFT)

Number of Hedge Fund Holders: 269

Microsoft Corporation (NASDAQ:MSFT) is a Redmond, Washington-based diversified technology company with a presence in various segments. The tech giant is investing in the cloud services, enterprise software, and gaming segments as its next growth frontier.

Microsoft Corporation (NASDAQ:MSFT) is betting on the fast-growing gaming industry through its proposed acquisition of Activision Blizzard, Inc. (NASDAQ:ATVI) for $68.7 billion, announced in January 2022. The company already operates a gaming subscription business in the form of a Game Pass for its Xbox platform. The deal is in the middle of regulatory approval. The positive outlook on Microsoft Corporation’s (NASDAQ:MSFT) stock during these uncertain times can be gauged by the fact that Ray Dalio’s Bridgewater Associates increased its holding in the stock by 157% on a sequential basis.

Here’s what Carillon Tower Advisers said about one of the best bear market stocks to buy now in its Q3 2022 investor letter:

“Despite reporting very good quarterly results, Microsoft Corporation (NASDAQ:MSFT) underperformed the overall market in August. Technology stocks in general underperformed in August due to fears over slowing global economic growth, potentially leading to cuts in corporate information technology budgets.”

1. Amazon.com, Inc. (NASDAQ:AMZN)

Number of Hedge Fund Holders: 269

Amazon.com, Inc. (NASDAQ:AMZN) is a Seattle, Washington-based e-commerce giant providing cloud computing platform services through Amazon Web Services (AWS). Furthermore, the tech giant has also diversified into artificial intelligence, digital streaming, and online advertising.

Amazon.com, Inc. (NASDAQ:AMZN) announced on November 23 that it intends to invest $1 billion in making 12 to 15 movies annually for theatrical release. To streamline its cost and combat the impact of rising inflation, Amazon.com, Inc. (NASDAQ:AMZN) is working on lowering its employee headcount and making operations more efficient. Furthermore, hiring within the AWS segment is also on hold. In an update issued to investors on November 15, research firm MoffettNathanson termed the second-biggest retail company in the world a solid market share gainer and a winner in the e-commerce universe. The company’s solid business fundamentals make it one of the best bear market stocks to buy now.

Here’s what Baron Funds said about Amazon.com, Inc. (NASDAQ:AMZN) in its Q3 2022 investor letter:

“Amazon.com, Inc. (NASDAQ:AMZN) is the world’s largest e-commerce retailer and cloud services provider. Shares of Amazon increased 6% in the quarter after the company reported strong results with 7% year-over-year revenue growth driven by 33% growth in Amazon Web Services (AWS), Amazon’s leading cloud computing service, while guiding for an acceleration in third quarter revenue growth, which is expected to be between 13% and 17% year-overyear. Amazon’s share of e-commerce is roughly 40%, far ahead of competition, yet domestic e-commerce accounted for only 14.5% of total retail sales (according to U.S. Census Bureau data for the second quarter of 2022), implying durable growth opportunities ahead. Internationally, the opportunity remains large as Amazon still has less than a 2% market share of international retail spending. Its advertising share is also only 3% and growing, underpinned by the structural closed-loop systems it enables (merchants know exactly whether their ad dollars resulted in a purchase since they are all done on the Amazon platform), which enables accurate targeting and measurement. Lastly, AWS has a good runway for growth as the industry still represents only 9.5% out of the $4.3 trillion of global IT spending according to Gartner. Areas such as logistics and health care present additional optionality.”

You can also take a peek at the 15 Best Dividend Stocks For Passive Income and the 12 Safest Stocks To Invest In.

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