The stock market has been experiencing a rollercoaster of ups and downs, with unpredictable movements that have left investors on edge. From record climbs in July to a steep global sell-off in early August followed by a rebound rally, the recent market action has been far from stable. The S & P 500 slipped on Thursday, deviating from levels near the mid-July peak, as traders eagerly await clues from Federal Reserve Chair Jerome Powell regarding the central bank’s rate-cutting path. Both the 30-stock Dow and Nasdaq Composite also took a hit, reflecting the overall uncertainty in the market.
Amidst this volatility, Wolfe Research has identified a selection of favorite long-term stock ideas that they believe can weather the storm. Chief Investment Strategist Chris Senyek expressed optimism in companies with solid fundamentals, anticipating that they will outperform the market in the long run. This sentiment is reflected in Wolfe’s “Greatest Hits List,” which showcases companies that have consistently appeared on the firm’s 31 long idea stock screens across various investment themes such as value, growth, capital creation, earnings quality, cash use, and dividends.
Among the ten stocks that have made Wolfe Research’s screening list, two stand out – Expedia and Walgreens Boots Alliance. Expedia, the online travel agency, has shown resilience despite challenges in the industry. With a modest return of 3% over the last twelve months and an attractive estimated 2024 price-to-earnings ratio of 10, Expedia has caught the attention of analysts. Despite a 12% decline in shares this year, analysts see an 11% potential upside, attributing it to the company’s strategic shift towards business-to-business sales and core brands.
On the other hand, Walgreens Boots Alliance has faced significant hurdles this year, with shares plummeting by 62%. Factors such as increased prices, theft, competition from online giants like Amazon, and lower reimbursement rates have contributed to the challenges faced by the retail pharmacy industry. Despite the setbacks, analysts believe that Walgreens has a 25.3% potential upside, with a consensus price target of $12.57. At 3.8 times the estimated 2024 earnings, Walgreens presents an intriguing opportunity for investors willing to weather the storm.
In addition to Expedia and Walgreens, Paramount Global has also captured Wolfe’s attention as a long-term favorite. Amid competing buyout offers from Skydance Media and an investment group led by Edgar Bronfman Jr., Paramount Global has announced a cost-cutting plan to streamline its operations. Despite a 24% decline in shares this year, investors seem optimistic about the company’s future prospects, especially after the recent bid to acquire National Amusements.
Other notable stocks that have made Wolfe’s “Greatest Hits List” include Starbucks, General Motors, and Medtronic. Each of these companies brings a unique value proposition to the table, demonstrating resilience and potential for growth in the face of market volatility. As investors navigate through uncertain times, the importance of long-term investment strategies and focusing on companies with strong fundamentals cannot be understated.
While the stock market’s summer volatility may continue to unsettle investors, Wolfe Research’s long-term stock ideas provide a ray of hope amidst the storm. By identifying companies with solid fundamentals and growth potential, investors can position themselves for success in the long run. As the market landscape evolves, staying informed and making strategic investment decisions will be key to navigating through the uncertainties and emerging stronger on the other side.