Major companies are trading at a discount right now, resulting in several large-cap stocks to buy before the bull market returns. While nearer-term momentum has brought some bullishness into the arena, the benchmark S&P 500 is down 15% on a year-to-date basis, presenting opportunities for contrarian investors.
By now, you’ve likely heard financial advisors imploring that time in the market is better than timing the market. In other words, over the long run, you’re better off putting your money to work in viable organizations with a strong track record. However, if you happen to have been sitting on the sidelines, now is your chance to consider large-cap stocks to buy before the next bull wave.
Because for all the discussions about bear markets being the time when investors make the most money, you must remember the obvious: You must be in the market before the buying volume surges.
Therefore, forward-thinking investors should look into these large-cap stocks to buy. Chances are, they won’t be on discount for too long.
Large-Cap Stocks to Buy Before the Bull Market Returns: Rivian Automotive (RIVN)
One of the hardest-hit companies in the large capitalization sector, electric vehicle manufacturer Rivian Automotive (NASDAQ:RIVN) has dropped a startling 65% YTD. One of the major problems afflicting Rivian is a familiar headwind impacting other EV players: inflation.
According to Kelley Blue Book, the average transaction price for an EV this year is a staggering $62,876. When you consider that the median household income in the U.S. is about $70,000 right now, it’s an incredibly difficult proposition for families to turn over roughly 90% of their earnings for a car. Sure, EVs will save on skyrocketing gasoline bills but again, 90% is a steep figure.
Fortunately, Rivian isn’t really interested in catering to middle-income customers right now. With its incredibly attractive EVs geared toward affluent buyers, management at least isn’t wasting time attempting to fit a square peg in a round hole. Therefore, RIVN may be one of the large-cap stocks to buy before the bull market returns.
When Covid-19 began disrupting the global economy, countries with adequate digital infrastructure saw a significant increase in contactless transactions, such as content streaming or food-delivery services. This enthusiasm for digitalization benefitted technology conglomerate Sea (NYSE:SE), which offers digital entertainment, e-commerce and financial technology (fintech) services.
However, SE stock suffered the same erosion of market value that negatively affected U.S.-based public tech firms. Since the start of 2022, SE has hemorrhaged nearly 61% of its value. For Sea, investors have started to sound the alarm on profitability concerns. Despite tremendous revenue growth, net losses continue to expand, which is a distraction.
Still, over the long run, the focus should be on the Southeast Asia internet economy. Experts project that this segment will command a gross merchandise volume of $1 trillion by 2030. That’s a powerful reason to consider SE as one of the large-cap stocks to buy before the bull market returns.
Large-Cap Stocks to Buy Before the Bull Market Returns: Block (SQ)
Perhaps best known for leveling the playing field between small businesses and their larger counterparts, Block (NYSE:SQ) – which formerly operated under the brand Square – began heavily embracing the cryptocurrency sphere. The wager paid off substantially when the going was good. Throughout much of 2021, SQ shares were trading hands at well over $200. But then came the crypto collapse and with it, enthusiasm for Block.
You can clearly see it in the numbers. Under Block’s Cash App business, in the first quarter of 2021, the crypto revenue segment generated $3.5 billion. Fast forward to Q1 2022, the crypto segment only generated sales of $1.73 billion. Presumably, should the digital asset market continue to flounder, this segment will be an eyesore for Block’s financials.
Nevertheless, the market has likely already digested the worst of this crypto corrosion. In other words, the focus for analysts will be back to Block’s core platforms for small businesses. In that case, patient investors should consider SQ as one of the large-cap stocks to buy prior to broader circumstances improving.
MGM Resorts (MGM)
Although the consumer economy presents a shaky narrative with inflation and other economic headwinds, revenge travel remains a powerful force. Therefore, you might assume that high-profile entertainment centers and gaming facilities like MGM Resorts (NYSE:MGM) would be a viable place to make your investment funds work. However, MGM is down 23% YTD.
What gives? Although interest in social events and memory-making opportunities have grown tremendously due to the relaxing of Covid-19 protocols, the casino industry’s main money maker is not renting out rooms to families and pensioners, but rather games of chance. That’s why top casino gaming companies have a significant presence in Macau, China, where people there go to gamble, not to eat lobsters or attend concerts.
Unfortunately, harsher Covid-19 restrictions have hurt the Macau business arms of U.S.-based casinos.
However, this headwind might not last indefinitely. Therefore, MGM makes for one of the large-cap stocks to buy before the bull market returns.
Large-Cap Stocks to Buy Before the Bull Market Returns: Meta Platforms (META)
Social media is in major trouble at the moment and Meta Platforms (NASDAQ:META) presents confirmation of the pessimism. Since January, META stock is down more than 50%. While it hasn’t quite come full circle with the spring doldrums of 2020, shares are getting uncomfortably close to giving up all their post-Covid gains.
Indeed, Meta has been sounding the alarm recently. Several weeks ago, Meta CEO Mark Zuckerberg told employees that the company would be slowing hiring this year. He also mentioned that a growth pullback could turn severe over the coming months.
Further, rival social media network Snap (NYSE:SNAP) warned in late May that the advertising market is slowing down. Given that internet-tethered companies live and die based on ad revenue, investors took a dim view on META stock.
Still, META may be one of the large-cap stocks to buy before the bull market returns on the basis that the underlying Facebook network is too important to ignore. With monthly active users approaching three billion, META appears to be a long-term winner.
Among the companies that made their public market debut in 2021 – which happened to be a record for initial public offerings – Olaplex (NASDAQ:OLPX) entered the arena with high hopes. Specializing in premium haircare products, Olaplex seemingly made its transition to a public company at the right time. With people desiring to get out of the house due to two years of collective cabin fever, OLPX presented an intriguing idea.
Unfortunately, things didn’t turn out that way. Shares are down almost 45% YTD while against its first public close, they’ve declined 30%. Given that OLPX’s initial offering price was $21 a pop, Olaplex is an example of how participating in an IPO early doesn’t always guarantee upside success. Sometimes, you have to know when to take profits off the table.
Having said that, OLPX could be one of the large-cap stocks to buy on discount because the return to normal may be intensifying, especially in the workforce. While there might be a standoff right now between management and employees, businesses tend to have far greater financial resources than individuals. Therefore, continued normalization trends may cynically benefit OLPX.
Large-Cap Stocks to Buy Before the Bull Market Returns: Uber (UBER)
One of the riskiest large-cap stocks to buy ahead of a bull market resurgence, ride-hailing platform Uber (NYSE:UBER) isn’t the most confidence-inspiring choice for conservative investors. Down 24% YTD, Uber is admittedly dependent on the health of the consumer economy. Should we hit a recession, you’d expect spending to decline significantly, which will hurt ride-hailing volume.
Now, the revenge travel component is an intriguing case because it can go either way. On one hand, the rush of travelers to make up for vacations previously denied to them because of Covid-19 restrictions presents a substantial boon. But on the other hand, rising inflation could impede momentum.
For contrarians, though, they may be eyeballing the aforementioned pivot back to the office. Should economic realities force worker bees back to their cubicles, the company’s Uber Eats platform could rise in prominence.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.