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7 Best Stocks to Buy for a Sideways Market

From nowhere in late February to a sudden drop in March, investors still interested in staying in the market educated themselves on the best stocks to buy in the dire circumstances. Here, some of my colleagues have been playing around with ChatGPT, asking the AI ​​platform all kinds of market-related questions.

Personally, I 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 offers a stock filter called “Probability of Financial Distress (%).” Naturally, I entered the lowest possible range: 0% to 5% risk of distress. If this platform is worth anything, it should capture at least some of the best stocks to buy now. Also, I didn’t enter any other filters other than not including OTC securities, trusts, and Master Limited Partnerships (MLPs). Other than that, what you see is what you get. Below are the best stocks to buy for a sideways (or even falling) market.

Apple (AAPL)

Source: Vytautas Kielaitis / Shutterstock.com

Unless you froze for later resuscitation, you know the consumer tech giant Apple (NASDAQ:AAPL). While the discretionary space isn’t usually the arena to hunt for the best stocks to buy in a downturn, Gurufocus.com disagrees. Based on its distress probability indicator, Apple is the public company least likely to fail. Financially, it is difficult to discuss with the platform. Of course, it’s not the discounted offer it once was. Currently, the market price of AAPL is at a forward multiple of 26.32. As a profit bonus, Apple ranks worse than 84.26% of the competition.

That said, it delivers the goods operationally. For example, the company’s three-year revenue growth rate is 20%, higher than the competition’s 85.09%. Moreover, its free cash flow (FCF) growth rate over the same period is 29.2%. Finally, Wall Street analysts back AAPL, tying it to a consensus Moderate Buy. Moreover, their average price target sits at $170.40, implying more than 9% upside potential.

Microsoft (MSFT)

The Microsoft logo outside a building representing MSFT stock.

Source: Asif Islam / Shutterstock.com

A solid company in every way, I’m not at all shocked to see Microsoft (NASDAQ:MSFT) rank so highly among the best stocks to buy. Of course, it’s a technology company and the underlying industry doesn’t always offer the greatest security. However, Microsoft has become so entrenched in everything we do professionally and personally that it’s a prudent choice.

Financially, it is also difficult to argue that MSFT is one of the best stocks to buy in difficult circumstances. Of course, that’s not much anymore on an objective basis. For example, the market values ​​MSFT at a forward multiple of 25.52, which ranks slightly better than average.

However, the business comes alive operationally. Notably, its three-year revenue growth rate stands at 17.4%, ranking above 71.36% of its peers. Its FCF growth rate over the same period stands at 20.5%, beating 62% of the industry. Moreover, Microsoft is a profitability machine, with a net margin of 33%. Finally, coverage analysts view MSFT as a strong consensus buy. Moreover, their average price target stands at $292.07, implying nearly 6% upside potential.

Alphabet (GOOG, GOOGL)

Alphabet Inc. (GOOG, GOOGL) and Google logos displayed on smartphones. The Google stock split takes place today.

Source: Igor Golovniov / Shutterstock.com

Once a dominating presence in the charts, Alphabet (NASDAQ:GOOGNASDAQ:GOOGL) suffered a few humiliations recently. Granted, GOOG Class C stock has gained nearly 13% so far this year. However, in the past 365 days, GOOG has lost 25% of its net worth. Nevertheless, the underlying fundamentals of digitized innovations may be too compelling to ignore. Moreover, the financial data more than sufficiently justifies Alphabet’s ranking among the best stocks to buy. Operationally, the tech giant is posting a three-year revenue growth rate of 22.9%, outpacing 74.35% of its peers. Moreover, its FCF growth rate over the same period reached 27.2%, above the industry’s 69.61%.

In addition, its operating and net margins amount to 26.46% and 21.2%. Both stats rank among the top half of the industry. To boot, the company’s Altman Z-Score is 9.11, indicating a very low risk of bankruptcy. When it comes to Wall Street, analysts consider GOOG a strong unanimous buy. Moreover, their average price target stands at $123.78, implying more than 22% upside potential.

Amazon (AMZN)

Close-up of the Amazon logo on the Amazon campus in Palo Alto, California. The Palo Alto site hosts the A9 Search, Amazon Web Services and Amazon Game Studios teams. AMZN Stock

Source: Tada Images / Shutterstock.com

Synonymous with the mercurial growth of the e-commerce space, 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 humble pie. Yes, shares have gained nearly 17% in stock value since the January open. However, the previous year, they fell by more than 36%.

Nevertheless, Gurufocus.com is confident that AMZN will prove to be one of the best stocks to buy. This is a quirk of the system as the platform also sees AMZN as a possible value trap. In addition, Amazon’s three-year revenue growth rate stands at 21.9%, outpacing the competition’s 84.24%. Moreover, its book growth rate over the same period is 31.8%, higher than 87.54% of industry rivals. If there’s a major knock against AMZN right now, it’s valuation. At a forward multiple of 60.11, it’s a costly affair.

Still, covering analysts love AMZN, putting it close to a strong consensus buy. Additionally, they forecast the shares to hit $136.86, implying nearly 37% upside potential.

Berkshire Hathaway (BRK.B)

The Berkshire Hathaway logo displayed on a smartphone screen.

Source: Igor Golovniov / Shutterstock.com

I believe it’s my InvestorPlace colleague Dana Blankenhorn who pointed out something to the effect that if you are facing unknown circumstances, it is wise to place your bets on a broad canvas. This way, at least one of your bets should go up. Basically, this could be the selling point of Berkshire Hathaway (NYSE:BRK-B). The industrial conglomerate led by legendary investor Warren Buffett bets on virtually anything viable. Thus, it is difficult to lose.

As one of the most popular investments, I’m not at all shocked that Gurufocus.com identified it as a candidate for the best stocks to buy. To be fair, Berkshire doesn’t feature the out-of-control financial moves that some of the company’s star competitors do. However, it holds its own on some metrics, like a three-year book growth rate of 7.4% outpacing the competition’s 62.58%. Primarily, I believe Berkshire made it to this list because of Warren Buffett’s proven wisdom and advice. Few other investors can claim this man’s extraordinary breadth of knowledge.

Additionally, analysts consider BRK.B a Moderate Buy. Their average price target stands at $353, implying nearly 17% upside potential.

Nvidia (NVDA)

Nvidia (NVDA) logo and sign on corporate headquarters. Blurred foreground with green trees

Source: Michael Vi / Shutterstock.com

For the last two ideas on the best stocks to buy, we have some controversial ideas, starting with Nvidia (NASDAQ:NVDA). Basically, I can appreciate Nvidia’s myriad strengths. 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 gaming. machine learning.

Still, it’s a controversial idea for the best stocks to buy because, again, tech companies tend to be cyclical. Also, it wouldn’t necessarily be one of my top picks for investors looking for stability. That said, Nvidia offers some attractive financial metrics. Its three-year revenue growth rate is 34.5%, outpacing most of the competition. Additionally, its book growth rate over the same period was a robust 21.6%. In addition, the company has a profitable framework. For example, its net margin is 16.19%, ranked higher than 67% of semiconductor companies.

On the street, analysts covering NVDA are rated as a consensus Moderate Buy. However, their average price target is $257.88, implying only 1% upside potential.

Tesla (TSLA)

Interior of the Tesla Model 3

Source: Khairil Azhar Junos/Shutterstock.com

To be honest, the inclusion of You’re here (NASDAQ:TSLA) as one of the best stocks to buy at this point surprised me. While Tesla represents the king of electric vehicles – and could maintain that status for years to come – the segment is also aligning itself with consumer economy. Unfortunately, consumers just don’t feel very motivated to buy expensive electric vehicles, especially with the fallout from the banking sector.

Yet operational statistics can attract contrarian investors. For example, Tesla’s three-year revenue growth rate is 36.4%, which is just monstrous. Its FCF growth rate over the same period came out at 81.4%, also ridiculously high. In terms of profitability, the company’s net margin is 15.45%, surpassing nearly 94% of its rivals. If that wasn’t enough, the EV maker also boasts a strong balance sheet. With a cash-rich account, Tesla’s Altman Z-Score hits 11.38, indicating extremely low bankruptcy risk.

Finally, analysts rate TSLA as a consensus Moderate Buy. Their average price target stands at $212.89, implying nearly 16% upside potential.

As of the date of publication, Josh Enomoto had no position (directly or indirectly) in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.

A former senior business analyst for Sony Electronics, Josh Enomoto helped negotiate major contracts with Fortune Global 500 companies. Over the past several years, he has provided critical and unique insights to investment markets, as well as various other industries including law, construction management and healthcare.


Not all news on the site expresses the point of view of the site, but we transmit this news automatically and translate it through programmatic technology on the site and not from a human editor.
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