From first going nowhere in late February to suddenly falling in March, investors still interested in staying in the market have been asking about the best stocks to buy in the challenging circumstances. Here, some of my colleagues have had fun with ChatGPT and asked the artificial intelligence platform all sorts of market-related questions.
Personally, I did something similar. But instead of artificial intelligence, I decided to “ask” investment resource Gurufocus.com what it thinks is the most robust company. Fortunately, the platform has a stock filter called “Probability of Financial Distress (%).” Naturally, I went into 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. Further, I did not enter any other filter other than not including over-the-counter 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.
Unless you’ve frozen yourself for later revival, you’re familiar with the consumer tech giant Apple (NASDAQ:AAPL). While the discretionary space isn’t typically the arena for looking for the best stocks to buy during a downturn, Gurufocus.com disagrees. Based on its distress probability indicator, Apple represents the public company least likely to fail. Economically, it is difficult to argue with the platform. Of course, it’s not the discounted deal it once was. Currently, the market price of AAPL is at a forward multiple of 26.32. As a premium to earnings, Apple ranks worse than 84.26% of competitors.
That said, it delivers the goods operationally. For example, the company’s three-year revenue growth is 20%, above 85.09% of competitors. Also its free cash flow (FCF) growth rate in the same period is 29.2%. Finally, Wall Street analysts support AAPL, giving it a consensus moderate buy. Likewise, their average price target is $170.40, implying over 9% upside potential.
A thoroughly solid company, I’m not at all shocked to see Microsoft (NASDAQ:MSFT) ranks so high for the best stocks to buy. Of course, it’s a technology company, and the underlying sector doesn’t always offer the greatest security. However, Microsoft has become so ingrained in everything we do professionally and personally that it is a wise choice.
Financially, it’s also hard to argue with MSFT as one of the best stocks to buy in difficult circumstances. Of course, it’s not that much anymore on an objective basis. For example, the market is pricing MSFT at a forward multiple of 25.52, which is slightly better than average.
However, the company is coming to life operationally. Notably, its three-year revenue growth rate is 17.4%, ranking above 71.36% of its peers. Its FCF growth over the same period comes in at 20.5%, beating out 62% of the industry. Microsoft is also a profitability machine with a net margin of 33%. Finally, coverage analysts maintain MSFT as a strong consensus buy. Furthermore, their average price target is $292.07, implying almost 6% upside potential.
Alphabet (GOOG, GOOGL)
Once a dominant presence on the charts, Alphabet (NASDAQ:GOOGNASDAQ:GOOGLE) a little humble recently. It’s true that Class C GOOG stock is up nearly 13% so far this year. In the past 365 days, however, GOOG gave up 25% of its equity value. Nevertheless, the fundamental principles of digitized innovations may be too compelling to ignore. Moreover, the economics provide more than enough justification for Alphabet’s ranking among the best stocks to buy. Operationally, the tech giant has three-year revenue growth of 22.9%, outperforming 74.35% of its peers. Furthermore, its FCF growth rate during the same period of 27.2% pings, above 69.61% of the industry.
In addition, operating and net margins come in at 26.46% and 21.2%. Both statistics are among the top half of the industry. To boot, the company’s Altman Z-Score is 9.11, indicating very low bankruptcy risk. As for Wall Street, analysts list GOOG as a unanimous strong buy. Furthermore, their average price target is $123.78, implying over 22% upside potential.
Synonymous with the mercurial growth in 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 been eating humble pie. Yes, shares gained nearly 17% of equity value since opening in January. But in the following year, they have fallen more than 36%.
Nevertheless, Gurufocus.com has confidence that AMZN will prove to be one of the best stocks to buy. It is a system quirk because the platform also considers AMZN to be a possible value trap. On top of that, Amazon’s three-year revenue growth rate is 21.9%, outpacing 84.24% of its competitors. Also, its book growth over the same period is 31.8%, above 87.54% of sector rivals. If there’s a big knock against AMZN at the moment, it’s the valuation. With a forward multiple of 60.11, it is an expensive affair.
Still, coverage analysts love AMZN, giving it a strong consensus buy. Additionally, they expect shares to hit $136.86, implying nearly 37% upside potential.
Berkshire Hathaway (BRK.B)
I think it’s mine InvestorPlace colleague Dana Blankenhorn, who noted that if you’re faced with unknown circumstances, it’s wise to place your bets on a broad canvas. That way, at least one of your bets should go higher. Basically, that could be the selling point for Berkshire Hathaway (SNEEZE:BRK-B). The industrial conglomerate under legendary investor Warren Buffett bets on practically anything viable. Therefore, it is difficult to lose.
As one of the most popular investments, I’m not the least bit shocked that Gurufocus.com identified it as a contender for the best stocks to buy. To be fair, Berkshire doesn’t have the wild financial metrics that some of its star competitors do. However, it stands its ground on certain metrics, such as three-year book growth of 7.4%, which outpaces the 62.58% of competitors. Primarily, I think Berkshire made this list because of Warren Buffett’s proven wisdom and guidance. Few other investors can claim this man’s extraordinary breadth of knowledge.
Analysts also rate BRK.B as a moderate buy. Their average price target is $353, implying nearly 17% upside potential.
For the last two ideas for 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 machine learning.
Still, it’s a controversial idea for the best stocks to buy because, again, tech companies tend to be cyclical. Plus, it wouldn’t necessarily be one of my top picks for investors looking for stability. That said, Nvidia offers attractive financial metrics. Its three-year revenue growth rate is 34.5%, which is soaring above most of the competition. Its book growth in the same period also came in at 21.6%, a robust number. In addition, the company has a profitable framework. For example, its net margin is 16.19%, ranking better than 67% of semiconductor companies.
Looking to the Street, coverage analysts maintain NVDA as a consensus moderate buy. However, their average price target is $257.88, implying only 1% upside potential.
To be honest, inclusion of Tesla (NASDAQ:TSLA) as one of the best stocks to buy at this time surprised me. While Tesla represents the king of electric vehicles – and may hold that status for many years to come – the segment is also aligned with the consumer economy. Unfortunately, consumers just don’t feel much motivation to buy expensive EVs, especially with the fallout from the banking sector.
Still, the operational statistics may attract conflicting investors. For example, Tesla’s three-year revenue growth is 36.4%, which is simply monstrous. Its FCF growth during the same period came out to 81.4%, also a ridiculously high figure. In terms of profitability, the company’s net margin is 15.45%, outperforming nearly 94% of its competitors. If that wasn’t enough, the electric car maker also enjoys a solid balance sheet. Along with a cash-rich account, Tesla’s Altman Z-Score hits 11.38, indicating extremely low bankruptcy risk.
Finally, analysts peg TSLA as a consensus moderate buy. Their average price target is $212.89, which implies almost 16% upside potential.
On the release date, Josh Enomoto did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication Guidelines.