Waiting To Buy? It’s Time To Start Pulling The Trigger

Don’t Chase Prices, Let Prices Come To You

If you missed out on the rebound or have chosen not to chase prices the market is giving you what you wanted; a pullback. The futures are indicating a decline of -1.75% to -3.5% across the major indices (SPY)  and offering the first really attractive entry point for several weeks. What I’m saying is, if you been waiting to buy now is the time to start pulling the trigger.

Today’s move is driven not by fundamentals so much as fear. In light of the recent melt-up in stocks, it is no surprise to see the market taking a bit of profit. Add to that the fact that this week is quadruple-witching and the odds of a major pull-back and/or some serious volatility only increases. What investors need to remain focused on is the fact we are in recovery, the economy is beginning to heal, and the long-term outlook is positive. A correction in index prices isn't something to fear, it should be embraced as a chance to buy good stocks at a cheaper price point.

The question is, which stocks to buy? Today’s downdraft is dominated by the reopening trade, as in, those names tied to the reopening are seeing the biggest declines, but they may not be the best choices. If there is anything I can predict about the future with any certainty is that there will be some more volatility. The COVID-19 pandemic is not over and there are signs the reopening is not off to a great start. If a rising tide of new cases sends us back into shut-down mode today’s correction will lead to a much bigger market decline. What this means for me is blue-chip quality dividend payers insulated from the crisis.

Target Raises Its Dividend

Target (TGT) has been one of the better-performing retail stocks since the correction set in. The company is a major player in consumer staples, housewares/home improvement, pet care, and eCommerce segments, all of which are seeing robust growth across their respective industries. Today’s action has the stock down about -1.50% despite an increase to the dividend. Target raised its dividend by 3.0%, not much I grant you, extending its history of consecutive increases to 53 years. Target pays about 2.25% at today’s prices.

On a technical basis, shares of Target are trading just above a key support level for the bulls. Support is at the convergence of a previous resistance line and a rising 30-day EMA where a bounce is likely to form. Looking forward, calendar Q2 earnings are expected to fall short of the previous year’s results but not by so much to guarantee a decline. Target has a history of outperforming expectations that, if repeated, could easily make up the difference.

Apple Up On Analyst Support

Shares of Apple (AAPL) are also moving lower in today’s trade despite some positive news from the analyst’s community. Three separate analysts raised their price target and/or their rating based on the tech-giants position and outlook. Apple is not a great dividend payer in terms of yield, less than 1.0%, but it is one of the safest payouts in the market and backed up by a robust outlook for capital growth.

Wells Fargo, citing Chinese smartphone data, raised its rating to overweight and price target to $385 and just shy of the Wall Street High. According to them, China’s phone registration data shows a strong recovery in demand over the past two months. The high price target, held by, Bank of America, was also set today when it reiterated a buy rating. HSBC, not to be left out of the action, upped its rating to hold from reduce based on an expected successful launch of 5G later this year.

On a technical basis, shares of Apple are pulling back from a freshly set all-time high but still look bullish. The stock is in a strong uptrend that is supported by the indicators so I will not be surprised to see this move become a consolidation and continuation pattern.