From the initial nowhere in late February to the sudden slump in March, investors still interested in staying in the market have been asking for the best stocks to buy amid the trying circumstances. Here, some of my colleagues have been having fun with ChatGPT and asking the artificial intelligence platform all sorts of market-related questions.
I personally did something similar. But instead of AI, I decided to “ask” investment resource Gurufocus.com what they think is the most resilient company. Luckily, the platform has a stock filter called “Probability of Financial Distress (%).” Of course, I entered the lowest possible range: 0% to 5% risk of distress. If this platform is worth anything, it should at least capture some of the best stocks to buy right now. Also, I didn’t enter any other filter other than not including over-the-counter securities, trusts, and master limited partnerships (MLPs). Besides what you see is what you get. Below are the best stocks to buy for a sideways (or even bearish) market.
Apple (AAPL)
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Unless you’ve frozen yourself for later revival, you’re familiar with the consumer tech behemoth Apple (NASDAQ:AAPL). While discretionary power isn’t typically the arena for searching for the best stocks to buy during a downturn, Gurufocus.com disagrees. Based on its likelihood of distress indicator, Apple represents the public company least likely to fail. Financially, it’s difficult to argue with the platform. Sure, it’s not the discounted offer it used to be. Currently, the market price of AAPL is at a forward multiple of 26.32. As a bonus to winnings, Apple ranks worse than 84.26% of the competition.
That is, it operationally delivers the goods. For example, the company’s three-year revenue growth rate is 20%, ahead of the competition at 85.09%. Also its free cash flow (FCF) Growth rate over the same period is 29.2%. Finally, Wall Street analysts support AAPL and consider it a moderate buy. Also, their average price target is $170.40, which means over 9% upside potential.
Microsoft (MSFT)
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An all round solid company, I’m not at all shocked to see Microsoft (NASDAQ:MSFT) rank this high for the best stocks to buy. Sure, it’s a tech company and the underlying sector isn’t always the most secure. However, Microsoft is so ingrained in everything we do professionally and personally that it’s a prudent choice.
From a financial standpoint, it’s also difficult to argue MSFT as one of the best stocks to buy during tough times. Of course, objectively speaking, that’s not much. For example, the market rates MSFT at a forward multiple of 25.52, which is slightly better than average.
However, the company comes alive operationally. Notably, its three-year revenue growth rate is 17.4%, ahead of 71.36% of its peers. The FCF growth rate over the same period is 20.5%, outperforming the 62% of the industry. Also, Microsoft is a profitability machine with a 33% net margin. Finally, cover analysts see MSFT as a buy by consensus. Additionally, their average price target is $292.07, which represents nearly 6% upside potential.
Alphabet (GOOG, GOOGL)
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Once a dominant presence on the charts, alphabet (NASDAQ:GOODNASDAQ:Google) recently suffered some humiliation. It’s true, GOOG Class C stock is up nearly 13% so far this year. However, in the last 365 days, GOOG gave up 25% of its stock value. Still, the underlying fundamentals of digitized innovation can be too compelling to ignore. Additionally, the financials provide more than enough justification for Alphabet being one of the best stocks to buy. Operationally, the tech giant boasts a three-year revenue growth rate of 22.9%, outperforming 74.35% of its peers. In addition, the FCF growth rate is 27.2% over the same period, above 69.61% of the industry.
Additionally, operating and net margins are 26.46% and 21.2%, respectively. Both stats rank in the top half of the industry. Additionally, the company’s Altman Z-Score is 9.11, indicating a very low risk of bankruptcy. As for Wall Street, analysts are unanimous in calling GOOG a Strong Buy. Additionally, their average price target is $123.78, which means over 22% upside potential.
Amazon (AMZN)
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Synonymous with the rapid growth in e-commerce, Amazon (NASDAQ:AMZN) is often ranked among the best stocks to buy. However, since the fallout that began in late 2021/early 2022, AMZN has eaten a modest pie. Yes, shares are up nearly 17% in share value since opening in January. In the last year, however, they have fallen by more than 36%.
Still, Gurufocus.com is confident that AMZN will prove to be one of the best stocks to buy. It is an oddity of the system as the platform also sees AMZN as a potential value trap. That aside, Amazon’s three-year sales growth rate is 21.9%, beating 84.24% of the competition. Also, the book growth rate over the same period is 31.8%, ahead of 87.54% of industry peers. If there’s one big hit against AMZN right now, it’s rating. With a forward multiplier of 60.11, it’s an expensive proposition.
Still, cover analysts love AMZN and think it’s a consensus buy. Furthermore, they expect the shares to reach $136.86, which means upside potential of almost 37%.
Berkshire Hathaway (BRK.B)
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I think it’s mine InvestorPlace Colleague Dana Blankenhorn, who remarked that when faced with unfamiliar circumstances, it is prudent to place your bets on a broad canvas. This way at least one of your bets should go higher. Basically, that could be the selling point of Berkshire Hathaway (NYSE:BRK-B). The industrial group around the legendary investor Warren Buffett relies on practically everything that is feasible. Therefore it is difficult to lose.
As one of the most popular investments, I’m not the least bit shocked that Gurufocus.com has identified it as a top stock contender. To be fair, Berkshire doesn’t have the runaway financial metrics that some of its star corporate competitors do. However, it can hold its own on certain metrics, such as B. A three-year book growth rate of 7.4%, outperforming 62.58% of the competition. I believe Berkshire made this list primarily because of Warren Buffett’s proven wisdom and guidance. Few other investors can claim this man’s exceptional knowledge.
Also, analysts rate BRK.B as a moderate buy. Their average price target is $353, which means almost 17% upside potential.
NVIDIA (NVDA)
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For the last two ideas for the best stocks to buy, we have some controversial ideas starting with NVIDIA (NASDAQ:NVDA). Basically, I can appreciate the myriad strengths of Nvidia. Of course, most people are familiar with the company’s graphics processing units (GPUs) for the gaming industry. Over the years, however, Nvidia has also invested heavily in relevant segments such as AI and machine learning.
Still, buying the best stocks is a contentious idea because, again, tech companies tend to be cyclical. Also, it wouldn’t necessarily be one of my first decisions for investors looking for stability. However, Nvidia offers attractive financial metrics. Its three-year revenue growth rate is 34.5%, beating most of its peers. The book growth rate over the same period was also 21.6%, a robust number. In addition, the company has a profitable framework. For example, its net margin is 16.19%, better than 67% of semiconductor companies.
Looking ahead, cover analysts think NVDA is a dovish buy. However, their average price target is $257.88, which means only 1% upside potential.
Tesla (TSLA)
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To be honest, the recording of Tesla (NASDAQ:TSLA) as one of the best stocks to buy at this point caught me by surprise. While Tesla is the king of electric vehicles — and may hold that status for years to come — the segment is also aligning with the consumer economy. Unfortunately, consumers just don’t feel very motivated to buy expensive electric vehicles, especially given the impact of the banking sector.
Still, the operating statistics may attract contrarian investors. For example, Tesla’s three-year sales growth rate is 36.4%, which is just monstrous. The FCF growth rate over the same period was 81.4%, also a ridiculously high number. In terms of profitability, the company’s net margin is 15.45%, beating nearly 94% of its peers. As if that wasn’t enough, the EV maker also enjoys a solid balance sheet. Coupled with a cash-rich account, Tesla’s Altman Z-Score reaches 11.38, indicating extremely low risk of bankruptcy.
Finally, analysts view TSLA as a consensus moderate buy. Their average price target is $212.89, which represents almost 16% upside potential.
On the day of publication Josh Enomoto had (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author and are governed by InvestorPlace.com Posting Policies.
