Focus on Strength in a Weak Market
Investors have certainly had their hands full to start the year, as volatility is hitting most areas of the market in a big way. It’s hard to tell just how long this weakness will last, but the great thing about investing is that there are always opportunities to be found regardless of volatility. Even in a market chalked full of uncertainty, several stocks are catching a bid as investors look to add shares of companies that could be in for a big 2022.
During sharp pullbacks, it usually pays off to focus on stocks that are showing relative strength, as it means that shares are still in demand even in a weak tape. Several names stand out as potential buys at this time given how well they are holding up during the current volatility. Oftentimes, the strongest stocks are the first to make new highs when the indices find their footing, so keep that in mind if you are interested in putting some money to work at this time.
Here are 3 strong stocks to buy in a weak market:
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Bristol-Myers Squibb (NYSE: BMY)
This high-quality biopharmaceutical stock just reclaimed the 200-day moving average with authority and could be a great name to look at adding to start the year. Bristol-Myers Squibb offers a variety of conventional prescription drugs and advanced biologic treatments and is primarily focused on developing therapies for oncology, immunology and inflammatory diseases, and cardiovascular and fibrotic diseases. Shares got a nice boost after the company recently announced its plans for a $5 billion share buyback program and provided 2022 financial guidance.
Bristol-Myers anticipates total company revenues of $47 billion in 2022, representing an increase in the low-single digits. The company will lose exclusivity on its best-selling drugs like Eliquis and Revlimid shortly, but Bristol-Myers has plenty of exciting new drugs like blood disorder drug Reblozyl and the recently launched drugs Zeposia, Breyanzi, and Abecma that should help to offset the revenue losses. With an increasingly diversified product portfolio, an attractive dividend yield of 3.44%, and a very appealing forward P/E ratio of 8.38, this is an underrated stock that has loads of upside in the coming years.
Teck Resources Limited (NYSE: TECK)
This metal and mining stock is hitting highs not seen since 2018 and has been a bright spot in an uncertain market, which is why it should be on your shopping list. Teck Resources is a Canada-based mining company that is one of the world’s largest producers of zinc and metallurgical coal. The company also mines copper, lead, silver, molybdenum, and bitumen. As the impacts of the pandemic continue to wane, investors can expect metals and mining companies like Teck to see increased demand as economic activity picks up around the world.
Commodity prices for resources like copper, zinc, and more should remain strong in the coming months, and the fact that Teck has operations in countries like Canada, the U.S., and Chile tells us that the country faces less country-specific risk than many of its competitors. The company also does a lot of business with China, so if you believe that China’s economy is going to rebound sharply this year Teck is a nice way to play that trend. Finally, a 0.51% dividend yield and forward P/E ratio of 6.35 make this stock a potential bargain even after its big performance last year.
If you haven’t picked up on a major theme in the market yet this year, it’s clear that investors are rotating into more value names and out of growth. One such name that has seen some strong inflows to start the year is Deere & Co. It’s the world’s largest producer of farm equipment and a manufacturer of construction machinery and lawn and garden equipment. Deere is the type of quality name that investors can feel comfortable adding during market weakness thanks to its strong recent earnings and the key role that the company plays in the global agriculture industry.
With Q4 EPS up over 70% year-over-year and a recent dividend boost of 15%, it’s clear that Deere has some momentum heading into 2022. While the stock has gone sideways for about 6 months, there are several factors that could lead the stock to new highs in the coming months. Deere should be set to benefit from all of the infrastructure spending both in the U.S. and abroad this year, while high crop prices could be another positive catalyst for the stock. This is clearly one of the relative strength leaders in the market to start the year and could be a smart buy if we continue seeing a rotation into value stocks.