A key consideration in selecting a stock is its ability to perform after it takes a dip. Even the best-performing stock does not climb up forever. It has dips along the way. Whether those dips are mild or severe, the question is not how to avoid them, but how do they respond?
Some stocks move in a slow, steady pace with no long corrections. Others can be more volatile – like a roller coaster – moving up and down in predictable patterns, but still finding a way to achieve long-term growth. Depending on your risk tolerance, either – or both – approaches can work well for your portfolio.
In this presentation, we’ll take a look at ten stocks that have shown the ability to continue on a profitable trajectory even when they drop in price. These stocks may not be dropping now, but are certainly worth keeping an eye on during this time of market volatility.
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- Johnson & Johnson
- WEC Energy Group
- Verizon Communications
- Salesforce
- Facebook
- Dollar Tree
- Coca-Cola
- Micron Technology
- United Parcel Service
- Medtronic
#1 - Johnson & Johnson (NYSE:JNJ)
Johnson & Johnson (NYSE: JNJ) - Defensive stocks are one of the first places to look for quality growth stocks that manage to avoid prolonged declines. One reason for this can be their tendency to pay dividends. But that's not the real story with J&J. While it's true that 56 consecutive years of dividend increases makes them not only a Dividend Aristocrat but a Dividend King, the dividend yield of 2.7% is not in and of itself something that will move the needle for many investors. The bigger story for J&J is their slow, steady growth that comes because of, or maybe in spite of, their massive size. Johnson & Johnson has a $360 billion market cap with revenue of over $81 billion stemming from their core business units in pharmaceuticals (50%), medical devices (33%), and consumer health products (17%). Some analysts are projecting a long-term target for J&J stock to be over $148. That’s a nice gain from the stock’s current price of $137.20 per share and the company currently has an impressive 25.40 P/E value and annual earnings-per-share growth of 7.6%.
About Johnson & Johnson
Johnson & Johnson, together with its subsidiaries, researches, develops, manufactures, and sells various products in the healthcare field worldwide. The company's Innovative Medicine segment offers products for various therapeutic areas, such as immunology, including rheumatoid arthritis, psoriatic arthritis, inflammatory bowel disease, and psoriasis; infectious diseases comprising HIV/AIDS; neuroscience, consisting of mood disorders, neurodegenerative disorders, and schizophrenia; oncology, such as prostate cancer, hematologic malignancies, lung cancer, and bladder cancer; cardiovascular and metabolism, including thrombosis, diabetes, and macular degeneration; and pulmonary hypertension comprising pulmonary arterial hypertension through retailers, wholesalers, distributors, hospitals, and healthcare professionals for prescription use.
Read More - Current Price
- $144.47
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 7 Buy Ratings, 7 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $174.73 (20.9% Upside)
#2 - WEC Energy Group (NYSE:WEC)
WEC Energy Group (NYSE: WEC) - Speaking of dividends…utility stocks are always an attractive choice for long-term growth in any market because of their ability to pay a dividend. WEC is a small player but has seen its share price increase by nearly 80% in five years. That means $10,000 invested in 2014 would be worth almost $18,000 at present stock prices and that doesn't factor in the ability to reinvest dividends. The dividend yield for WEC is a modest 2.95%, but that's not what has caused it to grow. The secret, in WEC's case, is in its relative obscurity. WEC doesn’t face the same buying and selling pressures as larger utilities such as Duke Energy (NYSE: DUK) and Southern Co. (NYSE: SO), giving it the ability to grow at a comfortable pace. The downside for this stock is that it does trade within a defined range for quite some time before breaking out to the upside.
About WEC Energy Group
WEC Energy Group, Inc, through its subsidiaries, provides regulated natural gas and electricity, and renewable and nonregulated renewable energy services in the United States. It operates through Wisconsin, Illinois, Other States, Electric Transmission, and Non-Utility Energy Infrastructure segments.
Read More - Current Price
- $94.50
- Consensus Rating
- Hold
- Ratings Breakdown
- 3 Buy Ratings, 5 Hold Ratings, 2 Sell Ratings.
- Consensus Price Target
- $98.00 (3.7% Upside)
#3 - Verizon Communications (NYSE:VZ)
Verizon Communications (NYSE: VZ) - Another trait to look for in companies that achieve sustained success is innovation. And, the telecom industry is all about innovation. In fact, without meaningful innovation to draw investor interest, the industry can largely become a sparring match with companies competing on price for what can seem like a race to the bottom. The next innovation in the telecom industry is coming in the form of a 5G revolution and, as we’ve mentioned before, Verizon is well-positioned to take a leadership position as this new technology rolls out across the United States. In addition to being in a position to capitalize on the 5G revolution, one of the competitive advantages that Verizon enjoys within this highly competitive sector is that, aside from their acquisition of Yahoo, the company doesn’t stray too far outside the telecom industry. However, like a lot of companies in this space, Verizon has had uneven income growth that has weighed on the stock. Despite that, the company manages to show steady revenue growth and investors seem to be rewarding the stock which has posted a gain of over 17% over the last 12 months.
About Verizon Communications
Verizon Communications Inc, through its subsidiaries, engages in the provision of communications, technology, information, and entertainment products and services to consumers, businesses, and governmental entities worldwide. It operates in two segments, Verizon Consumer Group (Consumer) and Verizon Business Group (Business).
Read More - Current Price
- $39.93
- Consensus Rating
- Hold
- Ratings Breakdown
- 8 Buy Ratings, 10 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $46.51 (16.5% Upside)
#4 - Salesforce (NYSE:CRM)
Salesforce (NYSE: CRM) - Another good indicator of a strong growth stock is how quickly it recovers compared to the broader market. While the S&P 500 is still finding resistance as it tries to push past its peak, Salesforce has recently passed a technical level of resistance at $150 and is now poised to continue its forward movement. In addition to having a good technical outlook, the stock benefits from the company’s leadership position in the consumer relationship management (CRM) software industry. A good deal of credit for this leadership position stems from the company’s commitment to constant innovation – which is expected, and rewarded, by its key demographic – the millennial customer and salesperson who are changing the traditional sales model. As part of the broader technology sector, Salesforce shows a higher volatility than other stocks and carries a beta of 1.4 which means it is likely to have highs and lows that are larger than the broader market. Nevertheless, if you can handle the occasional dip, this seems like a strong stock to buy and hold.
About Salesforce
Salesforce, Inc provides Customer Relationship Management (CRM) technology that brings companies and customers together worldwide. The company's service includes sales to store data, monitor leads and progress, forecast opportunities, gain insights through analytics and artificial intelligence, and deliver quotes, contracts, and invoices; and service that enables companies to deliver trusted and highly personalized customer support at scale.
Read More - Current Price
- $343.65
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 33 Buy Ratings, 8 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $378.86 (10.2% Upside)
#5 - Facebook (NASDAQ:META)
Facebook (NASDAQ: FB) - To paraphrase the old song, “For all your faults, we love you still”. That’s the message that sellers of Facebook should ignore at their own risk. To say the stock has been beleaguered these last few months is a massive understatement. However, just when the stock looked like it might be ready to suffer a long correction, they delivered a positive first-quarter earnings report that has sent the stock back towards its all-time high. As of this writing, it still had a bit to go, but it has momentum on its side. Since a nearly 11% rise after the earnings report, the stock has settled into a comfortable, bullish pattern. Facebook bulls have long held the mantra that 2,000,000 users can’t be wrong. And this seems to be the case for the stock going forward. Plus, in comparison to its FAANG stock brethren, Facebook looks like a downright bargain. While this stock certainly bears watching, it is still showing exceptional growth potential.
About Meta Platforms
Meta Platforms, Inc engages in the development of products that enable people to connect and share with friends and family through mobile devices, personal computers, virtual reality headsets, and wearables worldwide. It operates in two segments, Family of Apps and Reality Labs. The Family of Apps segment offers Facebook, which enables people to share, discuss, discover, and connect with interests; Instagram, a community for sharing photos, videos, and private messages, as well as feed, stories, reels, video, live, and shops; Messenger, a messaging application for people to connect with friends, family, communities, and businesses across platforms and devices through text, audio, and video calls; and WhatsApp, a messaging application that is used by people and businesses to communicate and transact privately.
Read More - Current Price
- $585.25
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 37 Buy Ratings, 4 Hold Ratings, 2 Sell Ratings.
- Consensus Price Target
- $638.00 (9.0% Upside)
#6 - Dollar Tree (NASDAQ:DLTR)
Dollar Tree (NASDAQ: DLTR) - Consumers love a bargain. That seems to be the case with Dollar Tree and its family of companies. The discount retailer doesn't require a sputtering economy to make a solid case for investors. Consider these numbers. In 2017, the company's annual revenue increased by 33.69% year-over-year. They followed that up with a 7.37% year-over-year increase from 2017 to 2018. And so far 2019 is showing a similar story with the stock up almost 3% on a year-over-year basis. You get the point, despite competing in a competitive retail space, the company is finding a way to maximize shareholder value. Ironically, one of the more appealing aspects of the stock moving forward is their initiative to raise prices on select items which should produce a short-term bump in revenue. Dollar Tree is not a smooth ride. When their stock price does pull back it tends to do so in a big way. However, the trend of the stock has been consistently positive, a fact that is not lost on investors.
About Dollar Tree
Dollar Tree, Inc operates retail discount stores. The company operates in two segments, Dollar Tree and Family Dollar. The Dollar Tree segment offers merchandise at the fixed price of $ 1.25. It provides consumable merchandise, which includes everyday consumables, such as household paper and chemicals, food, candy, health, personal care products, and frozen and refrigerated food; variety merchandise comprising toys, durable housewares, gifts, stationery, party goods, greeting cards, softlines, arts and crafts supplies, and other items; and seasonal goods that include Christmas, Easter, Halloween, and Valentine's Day merchandise.
Read More - Current Price
- $72.94
- Consensus Rating
- Hold
- Ratings Breakdown
- 5 Buy Ratings, 16 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $85.58 (17.3% Upside)
#7 - Coca-Cola (NYSE:KO)
Coca-Cola (NYSE: KO) - Coca-Cola fits the model of a stock that moves upwards, albeit sometimes in fits and starts that is consistent with the beverage industry. Like virtually every player in this space, KO is turning the classic image of a soft drink company on its head. And with brands such as Dasani water, Zico coconut water, and Honest T tea in their portfolio, there's room for growth without relying on the fluctuations that can come from their iconic brand. Sales and earnings continue to grow and propel the stock forward. Over the past several years, the stock has had some sharp pullbacks, but in every case, it has led to the stock ascending to higher highs. The future continues to look bright as Warren Buffett's investment firm Berkshire Hathaway (BRK) recently announced it was maintaining a sizable stake in the manufacturer. There is also speculation that KO will be one of the first beverage makers to introduce CBD products that will tap into the growing cannabis market.
About Coca-Cola
The Coca-Cola Company, a beverage company, manufactures, markets, and sells various nonalcoholic beverages worldwide. The company provides sparkling soft drinks, sparkling flavors; water, sports, coffee, and tea; juice, value-added dairy, and plant-based beverages; and other beverages. It also offers beverage concentrates and syrups, as well as fountain syrups to fountain retailers, such as restaurants and convenience stores.
Read More - Current Price
- $62.55
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 14 Buy Ratings, 2 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $72.50 (15.9% Upside)
#8 - Micron Technology (NASDAQ:MU)
Micron Technology (NASDAQ: MU) - Do you enjoy roller coasters that go up and up and up and then down and down and down? If so Micron may be the stock for you. The last six years have been marked by long uptrends and long downtrends. Fortunately for investors, the higher highs have outweighed the higher lows. But riding out a pullback that can last over a year is not a pleasant experience for some investors. However, what investors should know is that the pullbacks in the stock price correspond to the cyclical nature of RAM production capacity. With that in mind, however, investors need some assurance that the stock is likely to bounce back. MU showcases an outstanding balance sheet that demonstrates financial health with operating cash levels that are nearly 3x their total debt. This lends further support to a stock that climbed 37% in 2018, more than doubling the industry average of 15%.
About Micron Technology
Micron Technology, Inc designs, develops, manufactures, and sells memory and storage products worldwide. The company operates through four segments: Compute and Networking Business Unit, Mobile Business Unit, Embedded Business Unit, and Storage Business Unit. It provides memory and storage technologies comprising dynamic random access memory semiconductor devices with low latency that provide high-speed data retrieval; non-volatile and re-writeable semiconductor storage devices; and non-volatile re-writable semiconductor memory devices that provide fast read speeds under the Micron and Crucial brands, as well as through private labels.
Read More - Current Price
- $90.12
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 23 Buy Ratings, 2 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $135.24 (50.1% Upside)
#9 - United Parcel Service (NYSE:UPS)
United Parcel Service (NYSE: UPS) - Executing a "buying on the dips" strategy requires commitment. Because of some of the best short-term, and even long-term, buying opportunities can be hidden in stock charts that show wild fluctuations. That's the case with UPS. There are many factors such as fuel costs that can have a negative influence on this stock. Not to mention it is in a highly competitive industry with the likes of FedEx and DHL. This means that sometimes the stock can be punished on news that is "just OK" – which seems to be the case after its last earnings report. Analysts were expecting more and as a result, they sent the stock plummeting. To be fair, UPS has short-term challenges, and perhaps their largest challenge is looming in the form of Amazon who is projected to compete directly with FedEx and UPS. But the long-term trend for the stock has been consistently positive and there’s no reason to believe anything different in the near term.
About United Parcel Service
United Parcel Service, Inc, a package delivery company, provides transportation and delivery, distribution, contract logistics, ocean freight, airfreight, customs brokerage, and insurance services. It operates through two segments, U.S. Domestic Package and International Package. The U.S. Domestic Package segment offers time-definite delivery of express letters, documents, small packages, and palletized freight through air and ground services in the United States.
Read More - Current Price
- $125.68
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 14 Buy Ratings, 7 Hold Ratings, 2 Sell Ratings.
- Consensus Price Target
- $151.29 (20.4% Upside)
#10 - Medtronic (NYSE:MDT)
Medtronic (NYSE: MDT) - Many of the stocks in this presentation may require a certain degree of investor patience. Although they show a consistent pattern of growth, the time may not be right. That is not the case with Medtronic. The manufacturer of medical devices delivers solid results over any time frame. However, although the stock has grown nearly 50% in five years, the growth has come in small bursts – with some pullbacks in between. This is because, like many companies in this industry, they fall victim to unrealistic expectations that, when not meant, lead to irrational corrections. One of those corrections started in the fourth quarter of 2018 when the stock fell from its high of over $97. It is now trading at just over $87 and looks like it is primed to make a challenge of the previous high. Even if this isn't the perfect time, Medtronic is "trend-friendly" meaning that they are poised to service the market of consumers 65 and older who will be in need of their services in the coming years.
About Medtronic
Medtronic plc develops, manufactures, and sells device-based medical therapies to healthcare systems, physicians, clinicians, and patients worldwide. Its Cardiovascular Portfolio segment offers implantable cardiac pacemakers, cardioverter defibrillators, and cardiac resynchronization therapy devices; cardiac ablation products; insertable cardiac monitor systems; TYRX products; and remote monitoring and patient-centered software.
Read More - Current Price
- $81.03
- Consensus Rating
- Hold
- Ratings Breakdown
- 7 Buy Ratings, 9 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $95.00 (17.2% Upside)
Buying on the dips is a tried-and-true investment strategy. But like any investment strategy, the success or failure frequently comes down to the assets you select. Some stocks are declining for reasons that will cause the stock to face selling pressure for quite a long time. In this case, buying on a dip can be like trying to catch a falling knife – and no investor wants that. However, there are many companies that seem to thrive when their stock pulls back. In fact, for them, it’s just the kind of pause that can propel them to higher growth. Whether it’s due to innovation, being an industry or sector leader, being committed to a regular dividend, expanding into new markets, or their ability to profit in any economy, these stocks have shown an ability to withstand the dips and come back stronger.
We encourage you to look into these stocks. Not ready to pull the trigger now? If you’re a subscriber to MarketBeat Premium, you can add these stocks to your watch list and get real-time updates when there’s breaking news on analyst ratings and other news that may push the stock forward.
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