In this article, we discuss the 10 stocks that analysts say you should buy on the dip. If you want to read about some more stocks that analysts say you should buy on the dip, click Analysts Say You Should Buy These 5 Stocks on the Dip.
In a recent report, Bloomberg Economics claimed that the United States Gross Domestic Product (GDP) growth would be around 2.8% in 2022, above 0.8% compared to the 2% GDP growth forecast for China, the main economic rival of the US. Per the authors of the report, this would be the first time in more than three decades that the GDP growth of the US is higher than China. The report underlined the impact of increasing COVID restrictions in China as one of the main reasons behind this forecast.
The administration of US President Biden is using the report to highlight the success of the economic policies of the government, especially as rising inflation numbers and the threats of more rate hikes this year bring the economy closer to a recession. White House press secretary Karine Jean-Pierre tweeted about the report on May 20, stressing that the best way to tackle inflation while competing with the rest of the world was to “respect the independence of the Fed, lower costs and lower the deficit”.
The US economy is dangerously close to a recession as all benchmark indexes are down year-to-date. The S&P 500 Index is down over 17.88% year-to-date, the NASDAQ Composite is down nearly 28%, while the Dow Jones Industrial Average is down by 13%. The turmoil has resulted in a mass selloff in the market, lowering the valutions of prominent stocks with strong business models like Meta Platforms, Inc. (NASDAQ:FB), Alphabet Inc. (NASDAQ:GOOG), and Tesla, Inc. (NASDAQ:TSLA).
Our Methodology
The companies that have been rated as ‘Buy’ by an investment advisory from May 1 onwards were selected for the list. The decrease in share price over the past month as of May 25 is also mentioned. Data from around 900 elite hedge funds tracked by Insider Monkey in the first quarter of 2022 was used to identify the number of hedge funds that hold stakes in each firm.
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Analysts Say You Should Buy These Stocks on the Dip
10. SL Green Realty Corp. (NYSE:SLG)
Number of Hedge Fund Holders: 18
Decrease in Share Price Over Past Month: 17.60%
SL Green Realty Corp. (NYSE:SLG) is a New York-based real estate investment trust. The company has an impressive dividend history stretching back over two decades. On May 18, it declared a monthly dividend of $0.3108 per share, in line with previous. The forward yield was 5.71%. The dividend is payable to shareholders by mid-June. The firm owns and runs superior properties in New York and has lower vacancy rates that fall below even the city and state averages in this regard.
On May 25, Goldman Sachs analyst Caitlin Burrows maintained a Buy rating on SL Green Realty Corp. (NYSE:SLG) stock and lowered the price target to $79 from $90, noting that there was a “constructive view on the long-term demand for recently built/renovated office space”.
At the end of the first quarter of 2022, 18 hedge funds in the database of Insider Monkey held stakes worth $130 million in SL Green Realty Corp. (NYSE:SLG), compared to 19 in the preceding quarter worth $143 million. Among the hedge funds being tracked by Insider Monkey, New York-based investment firm LDR Capital is a leading shareholder in SL Green Realty Corp. (NYSE:SLG), with 613,009 shares worth more than $49 million.
Just like Meta Platforms, Inc. (NASDAQ:FB), Alphabet Inc. (NASDAQ:GOOG), and Tesla, Inc. (NASDAQ:TSLA), SL Green Realty Corp. (NYSE:SLG) is one of the stocks that elite investors are flocking to as potential growth plays in a volatile market.
9. Best Buy Co., Inc. (NYSE:BBY)
Number of Hedge Fund Holders: 25
Decrease in Share Price Over Past Month: 15.86%
Best Buy Co., Inc. (NYSE:BBY) retails technology products. The company posted earnings for the first fiscal quarter on May 24, reporting earnings per share of $1.57, beating analysts’ expectations by $0.01. The revenue over the period was $10.6 billion, down 8.5% compared to the revenue over the same period last year but beating estimates by $220 million. For the 2023 fiscal year, the firm guided revenue to around $49.9 billion, compared to the prior outlook of $50 billion and consensus predictions of $50.1 billion.
On May 25, Guggenheim analyst Steven Forbes maintained a Buy rating on Best Buy Co., Inc. (NYSE:BBY) stock but lowered the price target to $100 from $130, noting that the shares were trading in line with valuation levels.
Among the hedge funds being tracked by Insider Monkey, Connecticut-based investment firm AQR Capital Management is a leading shareholder in Best Buy Co., Inc. (NYSE:BBY), with 983,888 shares worth more than $89 million. Overall, at the end of the first quarter of 2022, 25 hedge funds in the database of Insider Monkey held stakes worth $251 million in Best Buy Co., Inc. (NYSE:BBY), compared to 29 in the preceding quarter worth $386 million.
8. Abercrombie & Fitch Co. (NYSE:ANF)
Number of Hedge Fund Holders: 26
Decrease in Share Price Over Past Month: 39.57%
Abercrombie & Fitch Co. (NYSE:ANF) is an Ohio-based specialty retailer. In mid-March, the company had launched Your Personal Best, an all-new activewear sub-brand. The new brand was targeted at customers that wanted fashion-forward yet functional activewear. The company beat market expectations on revenue for the first quarter of 2022 by over $13.4 million. Fran Horowitz, the CEO of the firm, said on the results that the firm had registered an eighth consecutive quarter of AUR improvement but margins were offset by higher costs.
On May 25, B Riley analyst Susan Anderson maintained a Buy rating on Abercrombie & Fitch Co. (NYSE:ANF) stock and lowered the price target to $35 from $48, appreciating the first quarter results of the firm that had beaten market expectations on sales.
At the end of the first quarter of 2022, 26 hedge funds in the database of Insider Monkey held stakes worth $310 million in Abercrombie & Fitch Co. (NYSE:ANF), compared to 29 in the previous quarter worth $455 million.
Among the hedge funds being tracked by Insider Monkey, California-based investment firm Paradice Investment Management is a leading shareholder in Abercrombie & Fitch Co. (NYSE:ANF), with 1.8 million shares worth more than $59 million.
7. AutoZone, Inc. (NYSE:AZO)
Number of Hedge Fund Holders: 38
Decrease in Share Price Over Past Month: 11.63%
AutoZone, Inc. (NYSE:AZO) markets automotive replacement parts and accessories. Supply chain problems and inflation have hit auto firms in the past few months, presenting both challenges and opportunities. The increase in prices of cars has forced many to opt for driving their cars longer instead of going for a new purchase, indirectly benefiting firms like AutoZone that provide the parts for these cars. The return of pre-pandemic commuting and travel trends has also helped the stock in recent weeks.
On May 13, Citi analyst Steven Zaccone maintained a Buy rating on AutoZone, Inc. (NYSE:AZO) stock and raised the price target to $2,250 from $2,210, while acknowledging the recession risk at large retailers.
Among the hedge funds being tracked by Insider Monkey, Boston-based investment firm Arrowstreet Capital is a leading shareholder in AutoZone, Inc. (NYSE:AZO), with 148,531 shares worth more than $303 million.
At the end of the first quarter of 2022, 38 hedge funds in the database of Insider Monkey held stakes worth $1.5 billion in AutoZone, Inc. (NYSE:AZO), compared to 45 in the previous quarter worth $1.9 billion.
In its Q4 2021 investor letter, Weitz Investment Management, an asset management firm, highlighted a few stocks and AutoZone, Inc. (NYSE:AZO) was one of them. Here is what the fund said:
“The Fund’s investments in auto-related businesses were consistent top performers in 2021. Shortages of new vehicles have driven buyers into the used car market. AutoZone, Inc. (NYSE:AZO) has won new customers who need to maintain vehicles they now plan to own longer (and federal stimulus checks have given car owners some extra cash to spend on car maintenance).”
6. McDonald’s Corporation (NYSE:MCD)
Number of Hedge Fund Holders: 58
Decrease in Share Price Over Past Month: 4.04%
McDonald’s Corporation (NYSE:MCD) owns and runs fast food restaurants. The company has taken a hit to revenues since it announced in March that it would be shutting down operations at more than 850 outlets across Russia in the wake of the Ukraine invasion. The firm cited “unpredictable operating environment” as one of the reasons behind the Russia exit in a letter to employees. On May 19, the firm announced that it had entered into an agreement with existing licensee Alexander Govor to sell the entire restaurant portfolio in Russia.
On May 2, Guggenheim analyst Gregory Francfort maintained a Buy rating on McDonald’s Corporation (NYSE:MCD) stock and lowered the price target to $290 from $300, noting that the defensive nature of the business model of the firm would “continue to drive relative outperformance compared to restaurant peers”.
At the end of the first quarter of 2022, 58 hedge funds in the database of Insider Monkey held stakes worth $2.7 billion in McDonald’s Corporation (NYSE:MCD), compared to 57 the preceding quarter worth $2.2 billion.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Renaissance Technologies is a leading shareholder in McDonald’s Corporation (NYSE:MCD), with 2.5 million shares worth more than $625 million.
In addition to Meta Platforms, Inc. (NASDAQ:FB), Alphabet Inc. (NASDAQ:GOOG), and Tesla, Inc. (NASDAQ:TSLA), McDonald’s Corporation (NYSE:MCD) is one of the stocks that hedge funds are monitoring as a selloff makes valuations in the market more appealing.
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Disclosure. None. Analysts Say You Should Buy These 10 Stocks on the Dip is originally published on Insider Monkey.
