Bear markets generally signal that investors’ overall sentiment is negative Such markets are usually, but not always, associated with recessions. And most of the statistics about the history of bear-market stocks don’t instill a lot of confidence in investors.
But there is reason for investors to be cautiously optimistic at this point. On the one hand, the 27 bear markets since 1928 have lasted for an average of 9.6 months, and stocks have declined 36% on average during those downturns.
While neither of those statistics is particularly encouraging, investors also know that bear markets provide them with great opportunities to find deals. As Warren Buffett famously said, “Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.”
Apple (NASDAQ:AAPL) stock is currently beset by volatility. Some believe that Apple is at a turning point signifying the beginning of the end of its stellar run. They contend that either AAPL’s revenue growth will dramatically slow or the shares’ valuation will drop.
The revenue-growth argument doesn’t seem to hold much water at all: Last quarter, its revenue rose 2% year-over-year to $83.0 billion, setting a record for the June quarter.
The argument that AAPL shares are overpriced is more nuanced. The stock’s current P/E ratio of 25.9 is higher than the ten-year median of 15.87. But the stock’s P/E ratio remains lower than its all-time high of 37.84.
However, Warren Buffett’s Apple shares are worth more than any of the other single stocks that he owns. And AAPL seems to be able to drive impressive revenue from its products, so AAPL stock is arguably as strong as ever.
There’s no doubt that the energy sector is rapidly shifting. Chevron (NYSE:CVX) is a good example of this evolution, which involves a shift from the traditional energy business, defined by oil and gas, to one that includes a far greater percentage of alternative energy.
Investors who believe that oil and gas will continue to be dominant because the excitement about renewable energy is overblown should consider Chevron. But it’s worth noting that the global investment in renewable energy did reach a record $226 billion in the first half of 2022.
But it’s clear that Chevron is booming: high energy prices enabled the firm to generate $11.62 billion of net income in its most recent, reported quarter.
Usually, the price of CVX stock isn’t volatile even as energy prices vacillate. The shares also pay a dividend that hasn’t been reduced since 1988. Combine those factors with a belief that oil isn’t dead in the U.S., and the shares’ outlook is strong.
Campbell Soup (CPB)
More and more financial and economic commentators are coming around to the idea that a recession is upon us or will arrive soon. That makes Campbell Soup (NYSE:CPB) stock, which is a play on impending hard times, attractive.
That said, evidence that consumers will buy more soup and broth to stretch their meals hasn’t exactly materialized yet. CPB’s sales increased in its most recent, reported quarter, but its sales volumes fell 3% as its prices climbed.
Campbell Soup also had to cope with higher costs as its net income decreased to $96 million last quarter from $288 million during the same period a year earlier.
So why should investors consider buying Campbell Soup’s stock? Its market share remains steady, and the company is investing in strengthening its supply chain. That should help it raise its margins. Further, CPB stock has provided 41% greater returns than the NYSE Composite over the past ten years.
Investors shouldn’t buy Coca-Cola (NYSE:KO) stock with the expectation that its price will rise quickly. That’s because Coca-Cola’s share prices hold very steady even in turbulent times. In 2022, its prices have only varied between $57 and $66, while the stock markets have fallen drastically.
Coca-Cola’s dividend should interest investors as much as the fluctuations of its stock price. Because it’s the dividend that really makes KO stock a long-term winner. It currently yields 2.85%. Add that to the slow, steady growth of its share price, and the beauty of compounding begins to become apparent.
Even if Coca-Cola doesn’t continue to benefit from the rebound of consumer spending during the global reopening, it will remain a defensive stock to which investors flee during hard economic times. As a result, KO stock should climb even if Coke’s best-case business scenarios fail to materialize.
That said, the company expects its revenue to increase by double-digit-percentages this year.
Ally Financial (ALLY)
Financial services firms like Ally Financial (NYSE:ALLY) tend to perform decently during tougher times. But ALLY stock is still down approximately one-third in 2022. But as another InvestorPlace columnist, Thomas Niel, recently noted, it’s the Buffett connection that makes Ally Financial interesting.
His firm increased its position in Ally Financial by 234% last quarter. That was despite the fact that there are concerns over a potential, impending auto-loan crisis. If those concerns are overblown, as Buffett’s investment suggests, then ALLY looks to be a great choice for value investors. Its P/E ratio of 4.8 has a lot to do with the latter thesis.
Ally Financial looks like a contrarian play on the digital finance space, and it appears to have a bright future.
Taiwan Semiconductor Manufacturing (TSM)
Taiwan Semiconductor Manufacturing’s (NYSE:TSM) foundries produce half of the chips used across the globe. Given the importance of microchips to our everyday lives, it’s easy to understand why TSM is a vitally important company. Many have even suggested that it is the most important firm in the world, period.
In accordance with the position of its home country, which is closely aligned with the U.S. and its allies, the chip maker plans to build new fabrication plants in America and Japan.
It is also investing heavily in developing chips that are smaller than 10 nanometers. Such chips are considered to be cutting-edge. These chips should generate higher sales volumes and more elevated prices .
TSM has long been the leading chip maker due to its technology that others cannot match. That, along with its partnerships, make TSM stock a winning bet.
Google (NASDAQ:GOOG,GOOGL) stock has fallen 24% in 2022, but that is little reason to abandon ship. Those who have lost money on the shares should hold onto GOOG stock. The investors who have no position in the name should consider establishing one.
Google’s business isn’t doing nearly as bad as you may have been led to believe. In fact, the company continues to grow on most fronts. The problem is that it isn’t growing as quickly as some might like. But that shouldn’t dissuade contrarian investors from buying GOOG stock.
Google search, network, YouTube, and Ads grew year-over-year in Q2, as did Google Cloud. The firm’s net income was nearly stagnant YOY, but that shouldn’t worry investors much. Its bottom line will rebound in time as the economy cycles out of this downturn. That could take awhile, but the shares will almost certainly reward their owners over the long-term.
On the date of publication, Alex Sirois 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.