To address a market dominated by uncertainty and volatility, Citi offers a list of stocks to buy during a downturn in the stock market. Here are all the details.
Citi Research presented details of its investment strategy based on the Russell 1000® Growth Index. Despite the rally achieved since the beginning of the year, the index has fallen by more than 6% since its peak in mid-July. This drop has opened an interesting window of opportunity for those looking to “buy growth stocks during a retracement, according to Citi Research.
Here is the list of securities to buy as soon as possible, according to the investment bank.
Invest by taking advantage of the market decline
Citi has selected a series of stocks to consider in case of a market downturn. These belong to the Russell 1000® Growth index, which measures the performance of stocks listed on the Russell 1000 index that have the highest P/B ratios per share (ratio between the market price of a share and the value of the company’s equity capital resulting from the financial statements called book value). In addition to this requirement, growth forecasts are also taken into consideration, then selecting the highest.
- Russell 1000® Growth Index
The securities were evaluated by Citi according to a series of well-defined criteria:
- have been rated "buy" by Citi Research;
- have at least 76% of the market capitalization assigned to the Growth style according to the Russell index;
- have suffered a 10% decrease or more compared to the highs recorded since March 31st;
- present estimates of free cash flow per share higher than the values recorded as of March 31st and free cash flow per share projections in line with or above the five-year market-implied forecasts.
Citi’s top pick
Let’s now examine the top 5 stocks selected by Citi that meet the indicated criteria.
1) Apple
Apple shares, which recently launched its iPhone 15, have fallen 11% over the past three months. However, the Cupertino company’s full-year free cash flow per share estimate is up $10 since the end of the first quarter.
2) Lockheed Martin
The defense and aerospace company Lockheed Martin is currently down 18% from its 2023 highs in April. Despite challenges with suppliers and a reduction in delivery forecasts for F-35 jets, the company’s free cash flow per share estimate is rising, suggesting the company could weather the rough patch.
3) Pinterest
After a modest rally following investor day, Pinterest is still down 14% from its year-to-date highs. However, the company’s management expects revenue expansion this year, and its free cash flow per share estimate is rising, indicating a possible recovery.
4) and 5) Nvidia and KLA
Chipmakers Nvidia and KLA are two of the Nasdaq giants on Citi’s list. Despite an impressive 188% gain for Nvidia since the beginning of the year, some investors are concerned that the stock is overbought. However, the average target price suggests there is still room for growth. KLA, despite a 14% correction, also demonstrated solid performance over the year.
Future prospects
In volatile and uncertain market times, Citi’s stock selection helps investors identify companies with sustainable growth. Citi Research’s approach to choosing stocks to buy offers valuable guidance for those looking to capitalize on this Russell 1000® Growth Index retracement opportunity.
While challenges are present, Citi’s confidence in these stocks indicates that, with the right timing and a solid investment strategy, significant growth opportunities can still be found in the medium to long term.
| DISCLAIMER The information and considerations in this article should not be used as the sole or primary basis for making investment decisions. The reader maintains full freedom in his own investment choices and full responsibility in making them since only he knows his risk appetite and his time horizon. The information contained in the article is provided for informational purposes only and its disclosure does not constitute and should not be considered an offer or solicitation to the public for savings. |
Original article published on Money.it Italy 2023-09-27 16:11:00. Original title: 5 titoli da comprare il prima possibile, secondo Citi
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