The markets are bleeding. We've reached bear-market territory. For investors, this means there may be no better time to scoop up some bargains as a result of the recent sell-offs. While this may seem like an unnerving time to buy, it's important to remember that over the long term, stocks will recover -- and that investors who buy now could be thanking themselves in a few years. Here are three potentially attractive buying opportunities today that investors shouldn't ignore:
1. Johnson & Johnson
Johnson & Johnson (NYSE: JNJ) may appear to be a risky buy given all the litigation it's facing. The company has recently had to deal with lawsuits relating to its vaginal mesh products in Australia, opioids (in multiple states), and its talc baby powder products, which are perhaps its most high-profile problem. Its ongoing legal battles are far from over.
While Johnson & Johnson has challenges ahead, it would be far too early to predict doom and gloom for a company that in 2019 reported free cash flow of $20 billion. The healthcare giant remains strong and financially sound. Lawsuits may chip away at its bottom line, and negative press may harm its value with some investors, but there are still some very good reasons to invest in the stock today.
Image source: Getty Images.
For one, Johnson & Johnson is making efforts to help prevent the spread of the coronavirus by donating surgical masks and sanitizing supplies, as well as making other contributions to help hospitals battle the fast-spreading virus. This could go a long way toward repairing the company's image. And with its offerings including many medical devices and pharmaceuticals that may prove very helpful in a difficult time across the globe, Johnson & Johnson's products could be heavily in demand, especially as a brand consumers are familiar with.
The stock is trading near its 52-week lows, making this an excellent time to buy shares Not only is it a good value, trading at a forward price-to-earnings (P/E) ratio of about 14, but its quarterly dividend of $0.95 is now yielding about 3% per year. That's well above the S&P 500 average of 2%, and given Johnson & Johnson's status as a Dividend Aristocrat, investors can benefit from possible dividend hikes in the future.
2. FedEx
FedEx (NYSE: FDX) is another stock that could be an attractive buy during this crash. Like Johnson & Johnson, it's a dividend stock, and although it hasn't raised its payouts in more than a year, it does pay $0.65 every quarter, representing a 2.6% yield per year. It's also trading near its 52-week low, and at a forward P/E of less than 10, it's looking cheaper by the day.
FedEx is a good bet during the coronavirus situation -- as COVID-19 continues to spread, there will be demand for more deliveries as consumers look to avoid crowded stores. That's where the freight and logistics company can benefit from an uptick in traffic, which could make for some strong quarters ahead. Online shopping plays a big role in the economy, and while there might be some short-term pain for FedEx's stock, over the long term it may recover a lot sooner than others will.
3. Amazon
Amazon (NASDAQ: AMZN) is a good buy for very similar reasons. It doesn't pay a dividend, but the tech stock is near its 52-week low as well. It still has a high forward P/E of more than 50, but that's not unusual for the online retailer, which investors typically value highly thanks to its growth. It's also doing its part to try and help battle the coronavirus, partnering with the Gates Foundation to help deliver test kits in the Seattle area.
And as people struggle to find household supplies in their local stores, Amazon may also see a greater influx of traffic on its website. With same-day shipping available in many cities in the U.S., it may be the best option for consumers who don't want to or aren't able to leave their homes. Amazon's PillPack is also convenient for patients who need their medication delivered to their door.
Amazon's not a stock that investors should count out for long. It's one of the top stocks on the NASDAQ for a reason, and as calmer heads prevail, it likely won't take long for investors to buy up the stock again.
Which stock is the best buy of the three?
Here's a glance at how all three stocks have fared year-to-date:
Data by YCharts
If you're looking for one stock out of the three to buy today, I'd lean toward FedEx. It pays a good dividend while also benefiting from any boost in online sales, whether via Amazon or anywhere else. While it's had the biggest decline of the three stocks of late, that could also be a sign of more room to bounce back over the short term, as well. Amazon's stock may be a bit expensive for investors wary of buying at high valuations, and Johnson & Johnson's stock may not have as much growth potential as FedEx, given its legal challenges and the negative press it's faced in recent years.
Either one of the three look like they could be good buys on the dip, but FedEx may offer the best overall mix of value, dividends, and potential growth.
10 stocks we like better than Johnson & Johnson
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. David Jagielski has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon and FedEx. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
