A growing coronavirus threat is no laughing matter. But with risk-off behavior finally worthy of healthy extremes and contrarian lore on Wall Street, it’s time to consider these three stocks to buy. All three appear well-suited to survive today’s diseased market and possible future pandemics.
The broader market is officially in panic mode with the S&P 500 giving up nearly 6.5% in back-to-back sessions by Tuesday’s close. Moreover, selling pressure has allowed the index to correct by a significant 8% in less than a week. At the same time, the market’s ‘fear gauge’ CBOE VIX finally spiked briefly above 30% and levels historically indicative of overly-bearish sentiment.
Bottom-line, with the investing environment finally rattled sufficiently to be compared to past incidences of risk-off behavior and visible signs of fabled and opportunistic blood in the streets, investors should have a watch list of select stocks to buy ready at their disposal.
To that end, below are three stocks to buy which are well-positioned for upside, even if this time proves tryingly different.
Streaming giant Netflix (NASDAQ:NFLX) is the first of our stocks to buy. In the realm of large-cap tech names that got hammered this past week, NFLX stock is one of the best-positioned names that I’ve come across to move higher. So, what does Netflix have that others don’t?
For one, Netflix easily beat Street forecasts in late January. What’s more, after a brief ‘pause and rewind’ reaction, Wall Street ultimately applauded the results and paid for admission into shares. Also and not to knock the Covid-19 virus, this stock to buy stands to do even better if consumers are forced to quarantine themselves with their electronic devices and catch up on their favorite shows and movies.
There’s more good news, too. Technically, Netflix’s formidable monthly chart with its ton of solid pattern work under its belt continues to hold up strongly. With support having been challenged after a brief breakout attempt above a pattern “W” mid-pivot and stochastics trending nicely inside neutral territory, this is a stock to buy.
Netflix Stock Strategy: Buy shares of Netflix above $384.80. This entry requires shares to clear the pattern mid-pivot for a second attempt play at breaking out. I like the additional price confirmation given today’s trading environment. My thought is the strategy should only trigger if volatility turns bullishly decisive. Lastly, this purchase looks even more compelling on and off the price chart using a nicely-positioned stop-loss below $357 as the potential upside rewards tower over the position’s risk.
Canopy Growth (CGC)
Canopy Growth (NYSE:CGC) is the next of our stocks to buy. Not to beat a dead horse as I just finished writing a bullish article on the cannabis producer, but shares are an absolute buy right now.
Aside from CGC stock’s recent strong and well-received earnings beat, shares continue to hold onto a formidable Fibonacci-based Gartley bottoming pattern. It’s a potent combination. Further, with low correlation to the broader market offering additional diversification and investors collectively in need of ingesting some of Canopy’s product, this is still a stock to buy.
CGC Stock Strategy: I’ll stand by prior advice in this stock to buy and suggest investors can do better purchasing the July $22.50 / $30 call spread. Now priced for about 95 cents, this position offers the benefits of ironclad and reduced risk and sufficient time to maturity realize potentially huge upside leverage.
Grayscale Bitcoin Trust (OTCMKTS:GBTC) is the last of our stocks to buy. Similar to Canopy Growth, this highly-liquid, exchange-traded proxy for the notorious cryptocurrency giant has a history of low-correlation with the broader equity market. Likewise, last month I also defended shares as a buy based on its own durable bottoming pattern.
Now and after a nice rally, Tuesday’s more universal risk-off environment which even saw gold stocks stumble has GBTC pulling back aggressively. More intriguing, the sell-off has landed this stock to buy inside its engulfing January candlestick pattern and shares’ bullish higher-low formation that has slowly developed after the cryptocurrency crashed out of its 2017 market bubble.
GBTC Stock Strategy: With the monthly stochastics just now signaling a bullish crossover, today’s price weakness in this stock to buy isn’t likely to last. For a bit of extra confirmation, investors might consider a purchase if shares can reclaim the January high of $11.38 and under the condition the higher-low bottom remains intact.