There's no sugarcoating it -- it's been an utter beatdown for investors over the past three weeks.
Since the major U.S. stock indexes hit their all-time closing highs, they've shed more than 25% of their value in a span of just 16 trading sessions (about 3.5 weeks, including the Presidents Day holiday). That's by far the quickest the market has pushed into bear market territory, easily surpassing the 35 trading days it took during the Great Depression crash.
Investors have also dealt with some of the wildest volatility on record. Seven of the Dow Jones Industrial Average's (DJINDICES:^DJI) nine largest single-session point declines on record have occurred since Feb. 24, along with the three biggest single-day point increases in the Index's history. Two of the declines have also registered among the 12-steepest single-day percentage drops in the Dow's storied history.
You could rightly say that things are a bit scary, but there is light at the end of the tunnel. That's because every single bear market and stock market correction has eventually been erased and put into the rearview mirror by a bull-market rally. If you buy high-quality companies allow your investment thesis the proper amount of time to come to fruition, you typically come out a winner.
The best part is that you don't need to have Warren Buffett-type cash lying around to invest in this market and generate meaningful long-term wealth. If you have even $1,000 in disposable income available right now, then you should seriously consider putting it to work in one or more of the following top stocks.
One of the best consumer goods names investors can consider right now is appliances giant Whirlpool (NYSE:WHR). This isn't to say that Whirlpool won't have a rough quarter or two with a significant portion of China affected by coronavirus disease 2019 (COVID-19) during the first quarter, and now the U.S. (Whirlpool's core market) taking drastic measures to mitigate the spread of this illness. Rather, it's to point out that Whirlpool has seen and survived adversities before, and ultimately come out stronger.
Perhaps what's been most exciting over the years for Whirlpool is how little trouble it's had adjusting its pricing when faced with rising raw material costs. Rarely has it taken more than a year if Whirlpool lifts its appliance prices for sales to pick right back up. There's definitely an advantage to being the No. 1 name in appliances, and historically low lending rates may give consumers the proper incentive to buy some of Whirlpool's pricier products.
Currently crossing the ticker tape at less than eight times 2021's forecast earnings per share (EPS), Whirlpool looks worth a nibble.
Bank of America
Bank of America (NYSE:BAC) is the most interest-sensitive of all money-center banks, which is bad news with the Federal Reserve lowering its federal funds target rate. However, lower interest income shouldn't be keeping opportunistic long-term investors away from a money-center bank that's made significant strides since the financial crisis in 2008.
This is a company that's worked diligently to improve the credit quality of its loan portfolio, as well as reduce its noninterest expenses. The easiest way to do this has been by closing underperforming bank branches and focusing its efforts on digital banking and mobile apps. It's substantially less-costly to BofA for consumers to transact online than it is within a bank branch. Plus, digital banking and mobile apps speak to a younger generation of consumers.
BofA has also been piling on the capital returns in recent years. In June 2019, it announced a $37 billion dividend and share buyback program, which followed a $26 billion capital return in June 2018. These buybacks have made a real difference in improving Bank of America's EPS.
As the icing on the cake, BofA is also now going for less than its book value. It looks capable of providing long-term returns you can bank on.
Philip Morris International
If we've learned anything as investors, it's that vice stocks are relatively immune to recessions. That's why international tobacco giant Philip Morris International (NYSE:PM) should be considered for your portfolio.
The obvious knock against Philip Morris is that it's likely to face increasing pressure in developed markets around the world. More stringent labeling on packaging is one of the advertising obstacles it'll have to overcome. But with nicotine being an addictive chemical, it means Philip Morris has had no trouble passing along price increases to more than offset any weakness in cigarette shipments in developed markets. Further, with China, India, and other developing markets giving rise to growing middle class, tobacco is a simple luxury which many can afford.
Philip Morris is also investing in smokeless options, including its IQOS heated tobacco system. IQOS got off to a bit of a slow start following a test run in Japan, but registered a 44% improvement in heated tobacco unit shipments during the fourth quarter from the previous year. IQOS has also gobbled up 5% market share of heated tobacco units in markets that IQOS operates (sans the United States).
With a yield that now surpasses 6%, it's the perfect safe investment to consider buying right now.
Another no-brainer buy as the market heads south is rare-disease drug developer Alexion Pharmaceuticals (NASDAQ:ALXN), which has shed roughly a quarter of its value in less than three weeks.
Alexion is insanely profitable because of its focus on ultra-rare diseases. With very little in the way of competition for it indications, the company has been able to charge exorbitant prices for its treatments. More important, Alexion has a high rate of coverage by insurers for its treatments, so there's been little concern about receiving pay for patients currently taking the company's lead drug.
It also can't be overlooked that Alexion is covering its behind -- as well as improving the quality of life for its patients -- by introducing a next-generation treatment for indications currently covered by its blockbuster drug Soliris, known as Ultomiris. Ultomiris is a protein that's recycled within a patient's body, and it's given in a larger dose than Soliris. This means it only has to be administered every eight weeks as opposed to every two weeks with Soliris. The introduction of this novel therapy essentially restarts the patent exclusivity clock for Alexion on a host of important indications.
Currently valued at less than nine times forward earnings, and with virtually no direct exposure to coronavirus-related issues, Alexion looks to be a top stock to buy.