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3 Recovery Stocks to Consider Buying Now

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3 Recovery Stocks to Consider Buying Now

Back in March, things were looking quite discouraging for the country and the stock market as a whole. The selling was relentless as many stocks went from 52-week highs to hit 52-week-lows or multi-year lows in a matter of weeks. You know what happened next, as many technology stocks and companies that were part of the “new economy” roared back from their March lows to reach new highs. With that said, there are plenty of stocks that got beaten up during the crash and have yet to fully bounce back. A lot of them are in industries that are being considerably impacted by the pandemic, which means they have a lot of potential once the country fully recovers.

With things looking up with regards to the pandemic, there are plenty of “recovery stocks” that investors should be eyeing for strong entry points. The idea here is that the country will be returning to normal at some point, and these stocks will benefit from pent up demand and strong revenue boosts when that occurs. Should things get back to normal sooner than the market is pricing in, these stocks will be even more valuable to have in your portfolio. Let’s take a look at 3 recovery stocks to consider buying now.

Starbucks (NASDAQ:SBUX)

This company offers a good example of a management team that knows how to adapt to adversity. With people fearful of heading into Starbuck’s iconic coffee shops for their caffeine fix thanks to the pandemic, the company was forced to find a way to ease their concerns and continue selling its famed coffee. CEO Kevin Johnson acted quickly to launch curbside pickup at all of its stores. The company also decided to require masks for all in-store customers nationwide along with specific sanitation and cleaning procedures.

Although revenue took a big hit as a result of COVID-19 and dropped 38% year-over-year in Q3, things could have been a lot worse had the company not acted quickly to make changes. Today, stores are reopening across the country and Starbucks still managed to open 130 new locations around the globe in Q3. The company is seeing business recovery and was able to pay out a cash dividend this quarter that accounted for 14% year-over-year dividend growth. Investors should also be excited about the company’s plans for expanding into China. This stock looks poised to recover nicely as things return to normal and should also continue to benefit from its implementation of remote ordering and curbside pickup.

MGM Resorts International (NYSE:MGM)

It’s hard to imagine a worse scenario than a global pandemic for companies that own and operate hotels. With occupancy rates at extremely depressed levels and people stuck at home for the majority of the year due to travel bans, stocks like MGM Resorts International have seen better days. With a year-over-year revenue drop of 91% last quarter, the company seriously suffered from having its casinos and resorts shut down in Las Vegas and Macau. However, there’s reason to believe that things could be turning around for hotels and casinos given how case counts of COVID-19 are in a downtrend.

Foot traffic in casinos and hotels will return to normal eventually, but there are some other great reasons why MGM Resorts international stock is worth a look at this time. First, you have the company’s expansion into online gambling and sports betting. This is a potentially massive market that could provide a lot of revenue for the company going forward.  You also have the fact that media mogul Barry Diller recently took a $1-billion-dollar stake in the company. Although this recovery stock does have significant risk, it is worth monitoring going forward and could end up being a smart buy.

Honeywell (NYSE:HON)

Industrial stocks are particularly vulnerable to a poor economy, but that doesn’t mean you should write them off entirely. Companies like Honeywell took a hit over the first half of the year as the pandemic negatively affected sales in some of its divisions. With second-quarter sales falling 19% year-over-year along with a year-over-year EPS decline of 40%, the multinational conglomerate has had a rough year so far. However, if you are a believer in a quick recovery and are interested in adding a diverse company, this stock is worth a look.

Honeywell made headlines today after an announcement which stated that the company would be added to the Dow Jones Industrial Average. Although the company has exposure to markets that could be in for a slow recovery like aerospace and oil & gas, there are still a lot of strong selling points here. The company has a solid balance sheet, reasonable valuation, and a dividend yield of 2.19% that make it one of the better recovery stocks to look at.

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Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Starbucks (SBUX)
4.902 of 5 stars
MGM Resorts International (MGM)
4.8473 of 5 stars
$39.72+2.0%N/A15.28Moderate Buy$54.83
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