8 High-Conviction Stocks to Buy on the Market Dip – Yahoo Finance Australia

A shopping list for the dip

If there's one thing lacking in the stock market these days, it's conviction. Long-term investors are likely looking for stocks to buy to take advantage of the market weakness, but they may not know which stocks are safe to start buying and which ones could still be headed much lower. The Bank of America analyst team has compiled a list of 55 stocks that have recently sold off but have limited exposure to China, have secular demand and are valued well below their historical levels. Here are eight high-conviction stocks to buy with the most price target upside.

Exxon Mobil Corp. (ticker: XOM)

A pricing war between Saudi Arabia and Russia, fears of an imminent global recession and travel bans and quarantines related to the coronavirus outbreak have created a perfect storm to send the oil market crashing once again. Exxon Mobil shares are down 45.3% year-to-date, but analyst Doug Leggate says the stock is a "counter-cyclical yield play." At the company's recent meeting with analysts, CEO Darren Woods said Exxon's strong balance sheet will be a key advantage as it looks for potential opportunities to invest in distressed energy assets. Bank of America has a "buy" rating and $75 price target for XOM stock.

CarMax (KMX)

CarMax is the largest U.S. specialty retailer of used cars. Analyst John Murphy says CarMax is one of his top overall stock picks for 2020. Despite a slumping overall auto market, Murphy says CarMax should benefit from peak levels of off-lease and trade-in vehicles returning to the market in 2020 and beyond. He says this massive vehicle churn should drive same-store sales growth for CarMax. In addition, he says new store openings and more online sales are secular growth drivers for the stock. Bank of America has a "buy" rating and $150 price target for KMX stock.

Tempur Sealy International (TPX)

Tempur Sealy is a global leader in mattresses and bedding accessories. Analyst Curtis Nagle says the 36.7% year-to-date sell-off in Tempur Sealy reflects too much pessimism. Earlier this month, Tempur Sealy reported first-quarter North American sales were tracking ahead of the company's guidance. Management also spoke positively about its supply chain in China, and the company committed to doubling its first-quarter buybacks to $100 million. Mattress competitors Culp and Sleep Country have also said the coronavirus hasn't impacted their revenues as of early March. Bank of America has a "buy" rating and $120 price target for TPX stock.

Sarepta Therapeutics (SRPT)

Sarepta Therapeutics is a biopharmaceutical company developing exon-skipping therapeutics and gene therapy treatments for Duchenne muscular dystrophy and limb-girdle muscular dystrophy. Analyst Tazeen Ahmad says the company's current portfolio of drugs has a $1 billion peak valuation and should provide downside support for the stock. In addition, Ahmad says Sarepta's development pipeline could make the company the global leader in rare central nervous system-related disease treatment. Sarepta's pipeline also provides potential near-term bullish catalysts for the stock in 2020. Bank of America has a "buy" rating and $184 price target for SRPT stock.

Jazz Pharmaceuticals (JAZZ)

Jazz Pharmaceuticals is a pharma company focused on developing specialty drugs to treat orphan conditions related to sleep, hematology and oncology. Analyst Jason Gerberry says Jazz shares are trading at three-year lows based on its enterprise multiple, yet the company's development pipeline presents near-term catalysts for significant upside. Gerberry says Jazz's pipeline should help it diversify away from its Xyrem sleep treatment program. Bank of America has a "buy" rating and $178 price target for JAZZ stock.

Citigroup (C)

Big U.S. banks have plummeted in 2020, and Citigroup has taken a particularly hard hit. Shares are down 36.1% year-to-date on fears that a flattening yield curve will eat into net interest margins and a recession will slow loan growth. Analyst Erika Najarian named Citigroup her top big bank stock pick of 2020 and says investors are overestimating the risks associated with the bank's international operations. She says Citigroup doesn't get enough credit for its long-term U.S. earnings growth potential. Bank of America has a "buy" rating and $94 price target for C stock.

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General Electric Co. (GE)

Incredibly, General Electric has gone from a stock few analysts would touch during a roaring bull market to one of Bank of America's highest conviction investment ideas at the beginning of a new bear market. Analyst Andrew Obin says internal restructuring, deleveraging and painful asset sales have finally put GE in a position to grow its free cash flow. Obin says the sale of GE's biopharma business and the return of the Boeing Co. (BA) 737 Max could also be bullish catalysts for GE in the near term. Bank of America has a "buy" rating and $16 price target for GE stock.

Target Corp. (TGT)

The discount retail group is one of the few classes of stocks that perform relatively well during economic downturns. In 2008 and 2009, the S&P 500 dropped 24% overall, but Target shares were down just 3.2%. Analyst Robert Ohmes says Target is one of his top stock picks for his Discount Store Decade theme, a belief that discount retailers are significantly insulated from Amazon.com (AMZN) and could benefit from shrinking brick-and-mortar competition and a younger generation of bargain-hunting consumers. Bank of America has a "buy" rating and $150 price target for TGT stock.

High-conviction stocks to buy on the market dip:

-- Exxon Mobil Corp. (XOM)

-- CarMax (KMX)

-- Tempur Sealy International (TPX)

-- Sarepta Therapeutics (SRPT)

-- Jazz Pharmaceuticals (JAZZ)

-- Citigroup (C)

-- General Electric Co. (GE)

-- Target Corp. (TGT)

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8 High-Conviction Stocks to Buy on the Market Dip - Yahoo Finance Australia