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3 long-term stocks to buy on a dip: August 2024

3 long-term stocks to buy on a dip: August 2024

3 minutes, 23 seconds Read

Some of the best long-term stocks to buy on dips are back-to-school stocks.

Summer is almost over and school is starting again for millions of children. And that means billions are being spent on school supplies and, for many, even on dormitory supplies.

This year, according to the National Retail Federation (NRF)Back-to-school spending could reach $41 billion, not only more than last year but also more than the previous high of $37 billion in 2021.

In addition, college-going expenses could reach $86.6 billion, including spending on electronics ($22.8 billion total), dorm expenses ($12.2 billion), clothing and accessories ($10.9 billion), food ($9.5 billion), and even shoes ($7.1 billion), the NRF also noted.

With this in mind, investors should seriously consider investing in stocks of back-to-school retail companies, especially those that are heavily oversold, including:

Goal (TGT)

Image of the Target (TGT) logo on a store front.

Source: jejim / Shutterstock.com

Let’s start with long-term stocks like Goal (NYSE:TGT).

Over the past few days, TGT has risen from around $150 to $135.02, where it appears to have found strong support. It is also oversold on RSI, MACD, and Williams’ %R, which is a strong indication of a near-term trend reversal in the stock.

If you pull up a two-year chart, you can see that the stock rises when these three indicators are in oversold territory. This has happened about eight times in the last two years.

Yet, TGT’s rating by analysts at CFRA has just improved: They have upgraded the price target for TGT to $176. As Seeking Alpha notes, “the target should be able to return to an EBIT margin of +6% in the next fiscal year, driven by stronger operating leverage, improvements in shrink rates and productivity savings.”

Based on the current price of $135.02, I would like to see Target close its bearish gap to around $150 per share in the near term.

Walmart (WMT)

Image of Walmart (WMT) logo on a Walmart store with clear blue sky in the background

Source: Jonathan Weiss / Shutterstock.com

There are also Walmart (NYSE:WMT). Since WMT is oversold and starting to rise, I would like to see the current price of $68.70 retest the $71 level first.

Analysts at Evercore ISI see the company “confirming its status as a relative safe haven in a volatile consumer environment” when it reports its second-quarter results this week, TheStreet.com notes. The company also expects WMT to report revenue of about $168.5 billion in the quarter, up 4.3% year over year.

Analysts at UBS also raised their price target on WMT to $74 ahead of the results release. The firm expects the retailer’s second quarter to show continued “outperformance relative to the overall retail industry,” as TheFly.com noted. Morgan Stanley also expects another strong quarter for WMT despite weak consumer spending.

Current consensus estimates call for revenue of $167.3 billion, earnings per share of 65 cents and comparable sales growth in the US of 3.3 percent.

Amazon.com (Amazon)

Amazon (AMZN) logo on a company building

Source: Jonathan Weiss / Shutterstock.com

Another of the best long-term stocks to buy is Amazon.com (NASDAQ:Amazon).

The oversold e-commerce giant is just starting to turn higher after hitting a low of $151.61. It was last seen at $166.80, and I would like to see it close its bearish gap at $190 in the near term.

Admittedly, AMZN’s revenue was mixed.

In the most recent quarter, the company reported earnings per share of $1.26, a significant jump from 65 cents a year ago. Revenue was $148 billion, about $760 million below estimates. The company also forecast a lower revenue range of $154 billion to $158.5 billion, with the midpoint below estimates of $158.43 billion. AWS revenue actually rose 19% to $26.3 billion, compared to expectations for 17.6% growth.

With many negative results and forecasts priced in, I would use the e-commerce giant’s temporary weakness as a buying opportunity. AMZN will not only benefit from the back-to-school trend, but also as the holidays approach.

At the time of publication, Ian Cooper had no position (either directly or indirectly) in any securities mentioned. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com’s disclosure policies.

At the time of publication, the editor in charge did not hold any positions (either directly or indirectly) in the securities mentioned in this article.

Ian Cooper, a contributor to InvestorPlace.com, has been analyzing stocks and options for web-based advice since 1999.

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