Fear and greed tend to drive financial markets, especially in the short run. When stock markets soar, investors are often overwhelmed with the fear of missing out on investment growth. On the other end of the spectrum, when markets decline, many also get fearful about losing part of the investing capital. However, for those investors with a long-term horizon, daily choppiness should not matter much. That said, today’s article introduces seven stocks to buy if you have a two- or three-year horizon.
Warren Buffett once highlighted that when deciding which stocks to buy greed and fear go hand in hand in the financial markets. He said, “Our goal is more modest: we simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.”
In today’s turbulent environment, investors can take Buffett’s advice to heart. Investors need a healthy dose of caution to make sound decisions rather than getting caught up in the market frenzy. They need to focus on the long term by purchasing stocks with significant long-term upside and sell short-term winners with less upside potential.
Therefore, prudent investors shouldn’t completely surrender to greed and get caught up in the speculative hype. Maintaining a long-term mindset represents the most rational path to investing success. Against that backdrop, let’s take a look at these companies whose recent sluggish stock price performance may not necessarily reflect their true growth potential.
- Corning (NYSE:GLW)
- Defiance Nasdaq Junior Biotechnology ETF (NASDAQ:IBBJ)
- Invesco NASDAQ Next Gen 100 ETF (NASDAQ:QQQJ)
- iShares Gold Trust (NYSEARCA:IAU)
- Oracle (NYSE:ORCL)
- Silvergate Capital (NYSE:SI)
- Unum Group (NYSE:UNM)
Stocks to Buy: Corning (GLW)
52-week range: $25.11– $46.82
Dividend yield: 2.4%
New York-based Corning specializes in the production of glass, ceramics and optical fiber. The firm’s leading products include damage-resistant cover glass for mobile devices; precision glass for advanced displays; optical fiber, wireless technologies, and connectivity solutions for communications networks.
Corning announced first-quarter financial results in late April. Total revenue increased 38% year-over-year (YOY) to $3.29 billion. Adjusted net income stood at $599 million. Diluted net income per share was 67 cents, compared to a loss per share of 16 cents a year ago. Cash and equivalents ended the quarter at $2.87 billion.
CEO Wendell P. Weeks cited, “Our success in the first quarter is yet another proof point that we have built a stronger, more resilient company. And we’re confident that we can build on these results to maintain momentum throughout the year.”
Corning has a widely diversified business across various growing markets. Multiple tailwinds that include new phones and network upgrades led to a surge in the first-quarter revenue. The specialty materials segment grew as they provided specialty glass to protect smartphones and tablets. Optical revenue also rose significantly as network operators upgraded their infrastructure to deal with increasing bandwidth needs.
GLW stock currently hovers around $40, up over 13% year-to-date (YTD). For the second quarter, Corning expects core sales to be in the range of $3.3 billion to $3.5 billion and core earnings-per-share (EPS) in the range of 49 cents to 53 cents. Forward price-to-earnings (P/E) and current price-to-sales (P/S) ratios stand at 18.9 and 2.6, respectively. Buy-and-hold investors could regard a decline toward $38 as a better entry point.
Stocks to Buy: Defiance Nasdaq Junior Biotechnology ETF (IBBJ)
52 Week Range: $23.04 – $41.45
Dividend Yield: 0.45%
Expense Ratio: 0.45% per year
From stocks, we move onto an exchange-traded fund (ETF). Investing in a fund as opposed to individual shares could help take away some of the fear factor. The Defiance Nasdaq Junior Biotechnology ETF began trading in August 2020. It gives exposure to small-cap, in other words, “junior,” biotechnology or pharmaceutical companies.
A number of these businesses conduct research and development (R&D) and sell or license biological substances for drug discovery purposes. Others are pharmaceutical manufacturers of prescription or over-the-counter (OTC) drugs, including vaccines and development and manufacturing companies.
IBBJ, which tracks the Nasdaq Junior Biotechnology Index, includes nearly 240 stocks. The top 10 holdings constitute 20% of net assets of $7.72 million. In other words, it is a small and young fund. The largest five holdings are Zai Lab (NASDAQ:ZLAB), BridgeBio Pharma (NASDAQ:BBIO), Fate Therapeutics (NASDAQ:FATE), Immunitybio (NASDAQ:IBRX), and Medpace (NASDAQ:MEDP).
In terms of country weightings, the U.S. tops the list with over 86%, followed by China (3.69%), Great Britain (2.30%), Ireland (2.22%), and Canada (1.28%). Biotechnology companies weigh about 88%, while pharmaceuticals comprise 12% of the fund.
IBBJ hit an all-time high of $41.45 in February but could not hold on to that level for long. So far in the year, it is down about 7%. Long-term investors should consider investing at current levels.
Stocks to Buy: Invesco NASDAQ Next Gen 100 ETF (QQQJ)
52 Week Range: $24.67 – $35.18
Dividend Yield: 0.33%
Expense Ratio: 0.15% per year
Our next choice is another fund, namely the Invesco NASDAQ Next Gen 100 ETF. It provides exposure to the 101st to the 200th largest non-financial firms on the NASDAQ stock exchange.
Most InvestorPlace.com readers would be well familiar with the NASDAQ 100 index made up of the 100 top businesses listed on the NASDAQ exchange, except for firms from the financial industry. Our fund QQQJ, instead, invests in companies that could potentially move up to the NASDAQ 100. The ETF began trading in October 2020.
Information technology (IT) companies have the highest weighting (43%) in this fund, followed by healthcare (19%), communication services (14%), consumer discretionaries (14%) and others. The top 10 holdings comprise about 21% of net assets of $1.3 billion. In other words, short-term volatility in a single name would not affect the fund’s value much.
The leading names in the fund include Crowdstrike (NASDAQ:CRWD), Roku (NASDAQ:ROKU), Fortinet (NASDAQ:FTNT), Old Dominion Freight Line (NASDAQ:ODFL), and Zscaler (NASDAQ:ZS).
YTD, the fund has returned more than 9% and hit a record high in mid-February. Readers might be interested to know that the Invesco QQQ Trust (NASDAQ:QQQ) that tracks the NASDAQ 100 index is also up about 11%. It saw an all-time high in June. Interested investors could consider buying the dips in QQQJ. We’re likely to hear the names of many of these businesses in the coming years, too.
52-Week Range: $31.96 – $39.52
Expense Ratio: 0.25% per year
Many investors are worried about increasing levels of inflation. Thus, they have been looking at commodities, including precious metals such as gold. In addition to holding physical gold, investors could also consider buying an ETF. One example would be the iShares Gold Trust, which tracks the daily price movements in the bullion.
IAU uses the price of gold at the London Bullion Market Association (LBMA) as the reference benchmark. The fund has a current net asset value of $29 billion. It has over 16,000,000 ounces (or about 500 tonnes) of gold in the trust.
It started trading in January 2005. In late May, IAU had a 1 for 2 reverse stock split, which increased the share price and reduced the number of outstanding shares. Understandably, the total value of shares outstanding and the total value of an investment in IAU were not affected by this reverse split.
The ETF is roughly flat over the past year. Those investors expecting gold to appreciate could research IAU further.
Stocks to Buy: Oracle (ORCL)
52-week range: $53.54– $85.03
Dividend yield: 1.6%
Austin, Texas-based Oracle provides database technology and enterprise resource planning software to businesses around the world. Founded in 1977, Oracle pioneered the first commercial SQL-based relational database management system. Today, the company has 430,000 customers in 175 countries.
Oracle released fourth-quarter financial results on June 15. Total revenue increased 7.5% YOY to $11.2 billion. Adjusted net income was $4 billion, representing a YOY increase of 29%. Diluted net income per share stood at $1.37 compared to 99 cents in the prior-year period. Cash and equivalents ended the year at $30.1 billion.
CEO Safra Catz stated, “Our Q4 performance was absolutely outstanding with total revenue beating guidance by nearly $200 million, and non-GAAP earnings per share beating guidance by $0.24. Our multi-billion dollar Fusion and NetSuite cloud applications businesses saw dramatic increases in their already rapid revenue growth rates.”
Investors have bid ORCL stock up in 2021 due to growing excitement for its cloud computing business. However, the company continues to trail behind market leader Amazon (NASDAQ:AMZN) as well as competitors Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) in cloud infrastructure sales. To forge ahead in cloud computing, the company plans to increase spending on data centers, doubling capital expenditures to almost $4 billion.
ORCL stock plunged 5% after the release of Q4 results, as it failed to satisfy investor expectations for its cloud-computing segment. The shares currently trade around $78 territory, up almost 21% YTD. Forward P/E and current P/S ratios stand at 17.1 and 5.9, respectively. Buying the dips could appeal to a range of investors.
Stocks to Buy: Silvergate Capital (SI)
52-week range: $12.05– $187.86
Silvergate Capital, which went public in November 2019, operates the Silvergate Exchange Network (SEN), a a network of digital currency customers and exchanges. It also offers commercial banking services. Customers include U.S. exchanges as well as global investors in the digital currency industry.
The company released first-quarter financial results on April 20. Total revenue stood at $30 million. Net income was $12.7 million, up 189% YOY. Diluted net income per share surged 139% YOY to 55 cents. Cash and equivalents ended the year at $4.3 billion.
CEO Alan Lane said, “We kicked off 2021 on a very strong note, as highlighted by Q1 growth across all of our Silvergate Exchange Network (SEN) key performance metrics, including continued customer growth, a significant increase in transactions and over $7 million in transaction revenue.”
The cryptocurrency rally has led to a significant boost for the SEN platform. The SEN handled $166.5 billion in transfers during the quarter, representing a whopping 858% increase YOY. Client digital currency balances increased 278% YOY to $6.8 billion. The SEN serves a diverse list of customers, including Coinbase (NASDAQ:COIN) and Binance.
Silvergate is also well positioned to benefit from Facebook’s (NASDAQ:FB) experiment in digital payments. The company will be the exclusive issuer of Facebook’s U.S. dollar-backed digital coin Diem. 2.85 billion monthly active users imply explosive growth potential for the company.
SI stock hovers at $101 territory, up 36% YTD. Forward P/E and P/S ratios stand at 39.2 and 19.5, respectively. It does not look cheap at first glance, but it may be a reasonable valuation given the surging interest in cryptocurrencies as well as the announced Facebook deal. Investors could consider buying the dips.
Stocks to Buy: Unum (UNM)
52-week range: $15.21– $31.98
Dividend yield: 4.3%
Unum provides group and individual income protection insurance products in the U.S. and the U.K. It is the largest domestic disability insurer with the majority of premiums generated from employer plans. It also has other insurance products such as long-term care insurance, life insurance, and employer and employee-paid group benefits.
The company announced first-quarter financial results in early May. Total revenue soared almost 30% YOY to $3.1 billion. However, adjusted net income declined 5% YOY to $153 million. Adjusted net income per diluted share was 75 cents. Cash and equivalents stood at $1.7 billion at the end of the quarter.
CEO Richard P. McKenney remarked, “With vaccines rolling out and a better economy, the current trends show continued improvement. Looking forward, our market leadership and financial underpinnings position us well to drive growth as the recovery builds in the second half of the year.”
Unum’s earnings suffered significantly due to a significant rise in the number of deaths as well as increasing unemployment at the height of the pandemic. However, the company anticipates a strong recovery in after-tax adjusted operating income per share in the second half of 2021 as the expected impacts of the Covid-19 pandemic subside.
UNM stock hovers at $28 territory, up almost 22% YTD. It looks like an attractive value stock for dividend investors. The stock boasts a generous dividend yield of over 4%. Forward P/E and P/S ratios stand at 5.75 and 0.41, respectively. Interested investors could consider buying around these levels.
On the date of publication, Tezcan Gecgil did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Tezcan Gecgil, Ph.D., has worked in investment management for over two decades in the U.S. and U.K. In addition to formal higher education in the field, she has also completed all 3 levels of the Chartered Market Technician (CMT) examination. Her passion is for options trading based on technical analysis of fundamentally strong companies. She especially enjoys setting up weekly covered calls for income generation.
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