S&P 500 sell-offs aren’t much fun to go through, but they do show you one thing: Which stocks other investors are eager to buy on a dip.
Just 10 S&P 500 stocks, including industrials like Delta Air Lines (DAL), consumer discretionary firms like Wynn Resorts (WYNN) and consumer staples like Kroger (KRO), jumped 12% or more in the four days following the market’s maximum freakout moment amid the omicron variant outbreak, says an Investor’s Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith.
The powerful rally in these stocks tips the hands of other investors and shows what they’re prepared to buy on the dip. These stocks are the new favorites of S&P 500 investors pouring back into stocks. The S&P 500 surged more than 2% Tuesday and is now up nearly 4% in a mere four trading days.
“This is still an extremely fragile market but the early signs are offering some hope,” said Craig Erlam, senior market analyst at Oanda. And hope, it seems, is all some investors needed to jump in on some sudden bargains.
Tracking The S&P 500 Dip
Worries about omicron, a highly transmissible version of Covid-19, put investors in a sell first, ask questions later kind of mood earlier in the month. But now that those fears are subsiding. And stocks coming out of the hole the fastest are telling.
The S&P 500 itself dumped 4% from the Nov. 9 high until bottoming out most recently on Dec. 1. And that wasn’t even the worst of it. During that time, the small-company Russell 2000 tanked more than 10%. And the 10 S&P 500 stocks up the most from the Dec. 1 low sank an average of nearly 17% from the Nov. 8 until bottoming out on Dec. 1. That puts them nearly in a bear market.
Since then, though, investors are pouring in to scoop up big discounts on some S&P 500 stocks. This group of buy-on-the-dip champions are up an average of more than 12% in just four trading days.
Travel, Delta Leads Out Of Omicron
If you’re looking for the dip-buyer’s favorite pick, it’s got to be travel related stocks like casino operator Wynn Resorts.
Shares of the operator of casinos in Las Vegas and Macau soared more than 13% from the Dec. 1 low in the S&P 500. Seeing that infections from omicron appear to be less severe is a huge relief for investors. Shares initially tanked 19.8% from the S&P 500’s Nov. 8 to the Dec. 1 low as investors worried more lockdowns might be on the way. But with that fear largely out of the picture, shares soared out of the hold. They’re still down 23%, though, this year.
Delta Air Lines, too, was a stock that grabbed buying activity when it looked like omicron wouldn’t be devastating. Shares of the airline jumped 13.5% from the Dec. 1 hole, making it the No. 2 top S&P 500 in that time frame after Wynn. Delta had lost about a quarter of its value from the Nov. 8 high through the Dec. 1 low, making it ripe for a bump. It’s still down 5%, though, this year.
More Than Just Travel Jumping In The S&P 500
It might be tempting to assume just beat-up travel related S&P 500 stocks jumped out of the Dec. 1 lows. But it’s more than that.
Warren Buffett pick, the tried-and-true Kroger grocery store chain, is a big winner among consumer staples. The more than 12% jump in Kroger shares is all the more impressive given that it didn’t tank all that much during the sell-off. Shares of Kroger dropped less than 4% from the S&P 500’s high to its low, or less than the S&P 500.
Kroger is benefiting from the pandemic, whether it’s coming or doing. More people are working, and cooking, from home and they need to fill their pantries. That’s a trend seen continuing. Analysts think Kroger’s profit in fiscal 2022 ended in January will stay about the same as its pandemic-peak fiscal 2021. Keep in mind profit jumped by more than 58% in fiscal 2021 from 2020 during the most severe lockdowns.
It’s unclear if the S&P 500’s bounce will continue. Investors are still down 2.1%, or $1.1 trillion, from the Nov. 8 high, says Wilshire Associates. But if the rally does continue, investors are showing you where they think the dip is worth buying.
Dip Buying Favorites On The S&P 500
All are up 12%, or more, from the market’s panic low on Dec. 1
Company | Ticker | % ch. from market high to low | % ch. from market low | Sector |
---|---|---|---|---|
Wynn Resorts | (WYNN) | -19.8% | 13.6% | Consumer Discretionary |
Delta Air Lines | (DAL) | -24.9 | 13.5 | Industrials |
Norwegian Cruise Line | (NCLH) | -37.0 | 13.1 | Consumer Discretionary |
Carnival | (CCL) | -33.4 | 12.9 | Consumer Discretionary |
Howmet Aerospace | (HWM) | -16.3 | 12.5 | Industrials |
Tapestry | (TPR) | -8.2 | 12.4 | Consumer Discretionary |
Lamb Weston | (LW) | -13.6 | 12.3 | Consumer Staples |
Diamondback Energy | (FANG) | -11.0 | 12.2 | Energy |
Kroger | (KR) | -3.6 | 12.1 | Consumer Staples |
AutoZone | (AZO) | -0.8 | 12.0 | Consumer Discretionary |
S&P 500 | -4.0 | 3.8 |
Original Post Can be Found Here