The equity markets have turned volatile in the last few trading sessions as investors are worried about rising inflation and interest rates as well as a slower than expected economic recovery.
But a market pullback also allows investors to buy additional shares of fundamentally strong companies. Here are three large-cap stocks that have fallen into the oversold category due to recent market turbulence.
Adobe Inc
PDF creator Adobe (NASDAQ: ADBE) is a cloud software powerhouse that makes various kinds of creative and designing software. Its portfolio of offerings includes popular software such as Photoshop, InDesign, Premiere, etc. With a market cap of nearly $270 billion, the company is a market leader in the creative cloud space, a sector that is gaining significant traction from the explosive growth of digital marketing.
This large-cap stock has been a pretty good performer and over the past 5 years has even returned 440% to investors. However, since last year the stock has been lagging well behind the benchmark, and is oversold right now, given shares are down 15% from record highs.
ADBE stock is currently trading at 46 times its forward earnings, making it less attractive to value investors. Yet, most market analysts expect its earnings per share to grow by more than 23.5% this year. In the next five years, Adobe’s earnings are forecast to rise at an annual rate of 18.5%.
Johnson & Johnson
Johnson & Johnson (NYSE: JNJ) is a mature company that manufactures and sells a range of healthcare products. It is popular among value investors due to reasonable metrics and a strong balance sheet, allowing the stock to return over 50% in the last five years.
Despite delivering impressive quarterly performances, the stock has barely moved this year, and its year-to-date gains is less than impressive. It is also one of the oversold stocks in the market at present and is trading 11% below all-time highs.
The company expects its current year sales to range between $93.8 billion and $94.6 billion, indicating a year-over-year increase between 13.5% to 14.5%. Also, last month, the company announced it would issue booster doses for its COVID-19 vaccine, which will continue to be a key driver of top-line growth.
Johnson & Johnson is a strong brand with even stronger cash-generating abilities. The company is consistently profitable and offers investors a forward yield of 2.7%, making JNJ stock attractive to income investors.
Abbott Laboratories
Abbott Laboratories (NYSE: ABT) is a highly reputed medical device specialist company that has soundly outperformed the market over the past few decades and has a strong track record of delivering solid returns.
As the healthcare sector in the U.S. is fairly saturated, the company faces lesser threats, making it a top stock to buy in the dip. Abbot stock has almost tripled in market value in the last five years and has returned over 500% to investors since October 2011.
But it’s also down 10% from all-time highs and seems oversold right now. Moreover, the healthcare stock is reasonably valued and is trading at 26 times its forward earnings. Abbot is forecast to grow its revenue by 15% year over year to $39.85 billion while earnings are forecast to rise by 21.6% year over year in 2021. Its bottom-line is in fact expected to increase at an annual rate of 13% in the next five years.
Wall Street expects ABT stock to gain over 10% in the next 12-months. After accounting for its dividend yield of 1.55%, total returns will be closer to 12%.
Disclaimer: The writer is an experienced financial consultant who writes for Finscreener.org. The observations he makes are his own and are not intended as investment or trading advice.
