Adding These FAANG Stocks on Dips Makes a Lot of Sense
What are some of the qualities that make a stock a great option to consider buying on dips? It’s usually a company with such a strong business and so many attractive growth prospects that investors wouldn’t mind holding it over the long term. After all, there’s always a chance that shares could continue falling after a purchase. With the market off to a bumpy start in 2022, it’s all the more important for investors to be extremely selective about where they are putting their capital to work. This is especially true for the technology sector, which continues to face selling pressure as yields rise.
If investors want to consider buying the dip in tech companies that have faced selling pressure to begin the year, FAANG stocks are a good area of the sector to consider. After all, these are some of the strongest companies in the world. With earnings season coming up quickly and the potential for even more volatility in equity markets, investors should be prepared to scoop up shares of some of the best FAANG names at a discount, especially if we see a capitulation type move in the NASDAQ.
Here are 3 FAANG stocks that are strong ‘buy the dip’ candidates going forward:
If you’re looking for the ideal buy the dip tech stock, look no further than consumer electronics powerhouse Apple. The company’s products consistently rank highly in terms of customer loyalty and engagement, and a steady stream of new products and services including Apple Watch, Apple TV+, AirPods, and Apple Pay should keep consumers coming back for more for years to come. With qualities including relative strength among FAANG names, a resilient underlying business, and a rock-solid balance sheet, put it at the top of your shopping list if shares continue to pull back in the coming weeks. Apple
has a huge opportunity to expand into emerging markets with it’s iconic iPhone devices, and there are likely to be plenty of existing customers that are looking to replace older smartphones as 5G networks continue to expand. The company puts up quarter after quarter of impressive earnings results, including recent Q4 revenue growth in double digits across all regions in every product and services category. There’s also a good chance that the supply chain issues that impacted roughly $6 billion in Apple’s sales last quarter are going to improve in the coming months, which could ignite another leg up for the stock.
While Amazon has been a major underperformer in the FAANG group over the last year or so, a sharp dip in the share price could be a fantastic opportunity to add shares of one of the most innovative and exciting companies in the world. The stock might be a sleeping giant that only needs a powerful catalyst to get going again, and the recent weakness is likely an overreaction to near-term issues like higher costs for goods and labor and supply chain issues. Keep in mind that those problems are only temporary, and Amazon’s long-term business will continue benefitting from tailwinds like the rise of cloud computing and consumers favoring e-commerce as the primary way to shop.
Other factors that support accumulating shares on weakness here include Amazon Prime, which is a brilliant way that the company generates recurring revenue and maintains customer loyalty, and a massive amount of data that the company can leverage to grow its advertising business. Don’t let the stock’s recent underperformance and Amazon’s
weak Q4 guidance distract you from the fact that this is the true leader in the e-commerce industry with numerous competitive advantages which will fuel the company’s growth for years to come. While we could see more downside in Amazon stock from current levels, adding shares of this incredible company below $3000 a share could provide an ideal buying opportunity for long-term investors.
Meta Platforms, the company formerly known as Facebook, is no stranger to controversy. That’s why it’s not surprising to see reports that the company’s Virtual Reality division is under investigation by the Federal Trade Commission and several U.S. states. While this is certainly not good news for the company, it might lead to lower share prices for savvy investors to consider taking advantage of. The stock has been a choppy mess since pulling back from all-time highs back in September, yet investors might be overlooking the fact that Meta Platforms shares are trading at the lowest forward P/E ratio in the FAANG group and that it is still the strongest social media company on the planet.
The recent name change and pivot towards virtual and augmented reality platforms is an intriguing move that could pay off in a big way, while strong cash flow generating assets like Instagram, Facebook
, Whatsapp, and Messenger are reliable sources of revenue that investors should be able to count on for the long-run. Adding shares of a company that is a powerful force in the online and mobile advertising market on dips could be a rewarding game plan, even with the continued controversies.
Before you consider Apple, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Apple wasn't on the list.
While Apple currently has a "Buy" rating among analysts, top-rated analysts believe these five stocks are better buys.
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