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Tags: Market Correction

The 3 Best Stocks to Add to Your Buy List Before Markets Bounce Back

By , Money Morning • March 11, 2020

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Market corrections are part of life.

The trick is knowing what to do next. Maybe you've been stockpiling cash for just this reason. Or maybe some of your stocks hit their trailing stops, and you're wondering where to put your money.

No matter your situation, you've come to the right place.

Dizzying Market Moves: It feels like the stock market changes course every time you blink, but you can limit risk and even line up profits. Find out just what to do (and not do). Click here now...

While the uninitiated may be scared out of the market altogether, smart investors like you are looking at share prices like a kid on Christmas.

You see, after 11 years of this bull market run, stocks were getting just a bit too pricey.

The S&P 500 was trading at 18.9 times projected earnings. That was up from 16.2 a year ago and - save for a brief moment in early 2018 - it was the highest forward P/E for the index since May 2002.

That meant all investors were paying a premium just to own shares of the top companies. That's a hard pill to swallow for many investors. But when stocks keep rising, there are few alternatives other than to fork over the cash.

But a correction is like putting stocks on sale.

We know that over time, the market's trajectory is always up. A correction like this one gives you the chance to make even more money by buying the dip.

Except not every stock is worth owning.

That's why we turned to Money Morning Chief Investment Strategist Keith Fitz-Gerald.

As Keith says, "Even a few hundred bucks or just 1% of your cash on hand could mean the difference between getting taken to the cleaners and fighting back profitably."

Keith laid out the six criteria he's using for finding the stocks with real profit potential right now.

Here's what the stocks on your buy list should have:

  • Market capitalization greater than $1 billion.
  • Altman Z-Score greater than 2.
  • Yield above the average S&P 500 stock.
  • Dividend payout ratio less than 60%.
  • Dividend growth greater than 5% over the past five years.
  • At least two consecutive years of dividend increases.

Stocks that fit the bill are stable, income-producing companies that are more likely to bounce back from a crisis like this. You'll not only be able to lock in an above-average dividend yield thanks to the correction, but stable stocks like these are where the money will head first once the rally ignites.

To help you get started on building your wish list, we've found three stocks that meet these criteria.

The 3 Best Stocks to Buy Right Now

Here Are 10 “One-Click” Ways to Earn 10% or Better on Your Money Every Quarter

Appreciation is great, but it’s possible to get even more out of the shares you own. A lot more: you can easily beat inflation and collect regular income to spare. There are no complicated trades to put on, no high-level options clearances necessary. In fact, you can do this with a couple of mouse clicks – passive income redefined. Click here for the report…

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leo hall
leo hall
3 years ago

i hope the roadmap will lead us to the promise land.

0
Reply
Victoria Fulgencio
Victoria Fulgencio
3 years ago

Thanks for the great money morning news

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Reply
Joseph DeLuca
Joseph DeLuca
3 years ago

Great newsletter!

0
Reply
Daniel Jenkins
Daniel Jenkins
3 years ago

Sounds great, but at $1600 it would drain all my money. Trades at $500, $1600 equals three or more trades.

0
Reply
Ian Marchanti
Ian Marchanti
3 years ago
Reply to  Daniel Jenkins

Daniel,

Thank you for being a Money Morning reader!

None of the three stocks recommended here have been valued at $500 at the time, or since, this story was published.

However, I understand your point that some of these stocks are price higher than others. In this circumstance you would want to keep your risk tolerance in mind, and be selective with your investment choices.

When selecting your own investments, it's important to remember never to invest more than you can risk losing, even on the most promising opportunities.

Best of luck!

–Money Morning Team Member

0
Reply


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