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Top 5 Stocks to Buy After the Black Monday 2024 Sell-Off
Top 5 Stocks to Buy After the Black Monday 2024 Sell-Off
An in-depth analysis of the top 5 stocks to buy after the Black Monday 2024 sell-off, focusing on undervaluation and growth potential. Learn why Nvidia, Robinhood, Vistra, Airbnb, and Visa should be on your buy list.
Two weeks ago, the stock market experienced one of its most severe crashes in recent history, now being dubbed "Black Monday 2024." On August 5th, global markets plummeted, with the U.S. markets, led by the Dow Jones dropping over 1,000 points, mimicking the volatility seen during the COVID-19 crash and the 2007-2009 financial crisis. This wave of panic selling was triggered by fears of a U.S. recession, exacerbated by negative labor market data, geopolitical tensions, and concerns over interest rates.
Reflecting on the events of the past two weeks, it's clear that anyone who had cash available should have considered buying during the dip, as prices have rebounded significantly—by at least 10% in many cases.
What’s more, my buy list has expanded from 7 to 19 stocks, reflecting a broader range of opportunities that have become attractive based on a combination of fundamentals, valuation, and technical analysis.
Fundamentals: The 19 stocks currently on my list have been carefully selected based on their strong financial health. These companies exhibit robust revenue growth, solid profit margins, manageable debt levels, and strong return on equity. They are fundamentally sound businesses that are well-positioned to weather economic downturns and thrive in recovery periods.
Valuation: Post-sell-off, many of these stocks are now trading at prices below their intrinsic value, making them excellent opportunities for long-term investors. I've refined my valuation models to account more heavily for U.S. bond yields, ensuring that these valuations are more conservative and reflective of current market risks. When these stocks dip below their calculated intrinsic value, it signals a true undervaluation, provided their growth prospects remain intact.
Technical Analysis: From a technical standpoint, the recent market dip has created new Fibonacci retracement levels, making these stocks even more attractive. The new lower levels indicate potential support zones, which could act as strong entry points for investors looking to capitalize on the recovery. These technical signals, combined with strong fundamentals and attractive valuations, make these stocks compelling buys.
Top 5 stocks to buy
In the aftermath, I’ve expanded my buy list to include 19 stocks that now present excellent value opportunities. However, I’ve narrowed it down to my top 5 based on a combination of fundamental strength, attractive valuation, and technical signals. These picks also reflect my own investment biases, which I'll explain below.
1. Nvidia
Reasoning:
Nvidia is currently too cheap to ignore. The stock’s recent drop to around $100 makes it an incredible buying opportunity, especially considering it should be valued at $150. With a projected 50% growth rate over the next five years, driven by its dominance in software, hardware, and applications, Nvidia is a powerhouse in the tech industry. I’ve been buying aggressively, seeing this as a chance to solidify my retirement before 50. Despite market fears, this is a train that’s not stopping, and I’m confident in Nvidia’s long-term potential.
2. Robinhood
Reasoning:
Robinhood is significantly undervalued, especially when compared to its competitor, Revolut, which is valued at $50 billion after securing a banking license in the UK. Robinhood, valued at under $17 billion, still lacks a banking license but has immense potential with its existing products in investments and savings. The platform is growing rapidly, and its young CEO, only 36, continues to innovate and attract a new generation of investors. I believe Robinhood could reach $41 per share by 2025, and potentially $120 ibefore 2030, which would give it a market cap comparable to the top five U.S. banks. This makes it a prime candidate for long-term accumulation.
3. Vistra
Reasoning:
Vistra is incredibly undervalued, especially considering the future energy demands driven by AI growth and the overall increase in electrical energy needs. The company recently reported strong earnings, with a significant boost in revenue and net income. Moreover, Vistra is making strategic investments in clean energy, including solar, battery storage, and nuclear power, positioning itself as a leader in the energy transition. The stock is well below its intrinsic value, making this a prime opportunity to buy before the market fully recognizes its potential.
4. Airbnb
Reasoning:
Airbnb had a rough quarter, but its revenue continues to grow, and the recent drop in share price has brought it below my buy trigger levels. This creates a compelling buying opportunity for long-term investors. Despite short-term challenges, Airbnb's innovative platform and global reach position it well for future growth. The current dip is likely temporary, making it an attractive entry point.
5. VISA
Reasoning:
Visa remains unmatched in the digital currency transaction space. The stock is nearing my buy trigger levels, signaling a great opportunity to add it to a diversified portfolio. While it may not offer double-digit growth, Visa is a steady performer, similar to Costco, with a reliable upward trend. Its dominant position in the payments industry makes it a cornerstone investment for those looking for stability in a volatile market.
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This blog post is for informational purposes only and does not constitute financial advice. The views and opinions expressed in this post are solely my own and are based on my personal analysis and experience. All information is provided on an as-is basis, and while I strive to ensure accuracy, I make no guarantees regarding the completeness, reliability, or accuracy of the information provided.
Investing in stocks and financial instruments involves risk, including the potential loss of principal. Always conduct your own research and consult with a qualified financial advisor before making any investment decisions. This blog is intended as a personal journal to document my thoughts and strategies, and should not be taken as a recommendation to buy or sell any securities.
By reading this blog, you acknowledge that I am not responsible for any investment decisions you make based on the information provided here. Please exercise due diligence and consider your own financial situation and goals before making any investments.
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