4 WallStreetBets stocks to buy on the downside
Some of the names discussed on the WallStreetBets (WSB) subreddit continue to attract the attention of retail investors due to their strong upside potential. Frequently mentioned WSB stocks Microsoft (MSFT), International Business Machines (IBM), Dow (DOW) and ON Semiconductor (ON) have seen recent price declines but are expected to generate strong near-term returns. So we think they might be great bets now.
Although the major stock indices have been hit hard since the start of the year, shares jumped for a second day on Monday. Moreover, despite growing uncertainties related to record inflation, supply chain issues and a poor labor market report, many analysts expect the market to end higher in 2022. David Kostin. the chief U.S. stock market strategist at Goldman Sachs, expects the market will end the year up 15% from where it closed last week.
While the WallStreetBets (WSB) community on Reddit generally targets fundamentally poor stocks with a high level of short interest, we believe that some highly discussed WSB stocks have enough fundamental strength to generate excellent returns in the current scenario.
Frequently Discussed WSB Actions Microsoft Corporation (MSFT), International Business Machines Corporation (IBM), Dow Inc. (DOW) and ON Semiconductor Corporation (TO) have recently suffered significant price cuts. However, based on their strong growth attributes, we believe they should experience a substantial rebound in the coming months.
Microsoft Corporation (MSFT)
MSFT, based in Redmond, Washington, has a market capitalization of $2.33 trillion. the the company is ranked number 15 in the 2021 Fortune 500. Last month, MSFT announced plans to acquire Activision Blizzard Inc., a publisher of game development and interactive entertainment content, in a $68.7 cash transaction. billions of dollars. The acquisition is expected to accelerate the growth of MSFT’s gaming business across mobile, PC, console and cloud and provide building blocks for the Metaverse.
MSFT’s revenue increased 20.1% year-over-year to $51.73 billion in its fiscal second quarter, ended December 31, 2021. The company’s gross margin increased by 20.4% from its value a year ago to $34.77 billion. His operating result grew 24.3% from the prior year quarter to $22.25 billion. Additionally, the company’s net profit rose 21.4% year-over-year to $18.77 billion.
Analysts expect MSFT’s revenue for its fiscal year 2022 to be $198.87 billion, an 18.3% year-over-year growth. The company has an impressive track record of earnings surprises; it has beaten consensus EPS estimates in each of the past four quarters. MSFT’s EPS is expected to grow 16% in the current year. The stock has gained 34.1% over the past year and is currently trading 11.1% below its 52-week high of $349.67, which it reached on November 22, 2021.
MSFT’s strong fundamentals are reflected in its POWR Rankings. The stock has an overall B rating, which equates to a buy in our proprietary rating system. POWR ratings rate stocks on 118 separate factors, each with its own weighting.
Also, the stock has a B rating for sentiment, stability, and quality. We also rated MSFT for Momentum, Value and Growth. Click here to access all MSFT assessments. MSFT is ranked #19 out of 171 stocks in the Software app industry.
Click here to view our Software Industry Report for 2022
International Business Machines Corporation (IBM)
IBM is a Based in Armonk, NY multinational information technology company that offers cloud computing, artificial intelligence, data analytics, IoT, IT infrastructure, digital workspace and cybersecurity. The company also provides hosting and consulting services in areas ranging from mainframes to nanotechnology and operates in more than 171 countries.
Last month, IBM acquired Envizi, a provider of data and analytics software for environmental performance management. The acquisition is expected to bolster IBM’s growing investments in AI-powered software solutions and help organizations build more resilient and sustainable operations and supply chains.
During the fourth quarter, ended December 31, 2021, IBM’s total revenue increased 6.5% year-on-year to $16.7 billion. The company’s revenue in the software segment rose 8.2% from its value a year ago to $7.27 billion. Its gross profit rose 2.8% from the year-ago quarter to $9.5 billion. Additionally, the company’s net profit rose 72% year-over-year to $2.33 billion.
IBM’s revenue is expected to grow 5.8% year-over-year to $60.65 billion in its 2022 fiscal year. The company has an impressive track record of earnings surprises ; it has exceeded consensus EPS estimates in each of the past four quarters. Moreover, its EPS is expected to increase by 24% in the current year. IBM has gained 11.8% in price over the past three months. Moreover, it is currently trading 8.6% below its 52-week high of $146.12, which it reached on June 10, 2021.
IBM’s POWR ratings reflect this promising outlook. The stock has an overall B rating, which equates to a buy in our proprietary rating system. Also, the stock has a B rating for value and quality.
In addition to the POWR ratings I just highlighted, one can see IBM’s ratings for Growth, Stability, Momentum, and Sentiment here. The title is ranked 14th out of 80 in the Technology – Services industry.
Dow Inc. (DOW)
Incorporated in 2018, Based in Midland, Michigan DOW is a holding company of The Dow Chemical Company and its subsidiaries that provides various materials science solutions. DOW’s portfolio of plastics, industrial intermediates, coatings and silicones businesses offer a range of science-based products and solutions to customers in various market segments.
Last month, DOW and New Hope Energy, which creates solutions to the plastic waste crisis, formed a strategic partnership to provide pyrolysis oil feedstock derived from recycled plastics collected in North America. Through this partnership, the companies are expected to scale up technology to deliver greater quantities of circular oils to markets.
DOW’s net sales increased 34.2% year-over-year to $14.36 billion for the fourth quarter ended December 31, 2021. The company’s net income increased 40.4 % over the previous year’s value to reach $1.76 billion. And its EPS rose 40.6% from the year-ago quarter to $2.32.
The DOW has exceeded consensus EPS in each of the past four quarters. Its EPS is expected to grow at an annual rate of 56.8% over the next five years. YELP’s stock price has jumped 15.1% over the past year. Moreover, it is currently trading 16.3% below its 52-week high of $71.38, which it reached on May 18, 2021.
It’s no surprise that DOW has an overall rating of B, which equates to a buy in our POWR rating system. Also, the stock has an A rating for value.
Click here to see additional POWR ratings for DOW (Growth, Momentum, Quality, Stability and Sentiment). DOW is ranked No. 21 out of 90 A-rated stocks Chemical products industry.
ON Semiconductor Company (TO)
ON offers a portfolio of sensors, power management, connectivity, custom devices and system-on-chip (SoC), analog, logic, timing and discrete. the Based in Phoenix, Arizona the Company operates in three segments: Power Solutions Group (PSG); Advanced Solutions Group (ASG); and Intelligent Sensing Group (ISG). ON serves original equipment manufacturers, distributors and electronics manufacturing service providers.
Last November, ON acquired GT Advanced Technologies, a producer of silicon carbide (SiC). The acquisition is expected to strengthen ON’s ability to secure and expand SiC supply. After the acquisition, ON should be able to provide end-to-end power solutions, from growing SiC crystals to fully integrated smart power modules.
ON’s revenue for the third quarter, ended October 1, 2021, increased 32.2% year-over-year to $1.74 million. The company’s gross profit rose 12.6% from its value a year ago to $720.8 million. Its operating profit rose 235.5% from the year-ago quarter to $399.2 million. And the company’s net income rose 92.6% year over year to $310.4 million.
ON’s revenue for fiscal 2022 is expected to be $7.13 billion, representing 6.6% year-over-year growth. The company has exceeded consensus EPS in each of the past four quarters. Its EPS is expected to increase at a rate of 229.4% in fiscal 2021 and 16.4% in fiscal 2022. The share price jumped 71.1% during the year. past year. Moreover, it is currently trading 17.2% below its 52-week high of $71.26, which it reached on January 4, 2022.
ON’s POWR ratings reflect this promising outlook. The stock has an overall B rating, which equates to a buy in our proprietary rating system. Additionally, the stock has an A rating for growth and a B rating for value.
In addition to the POWR ratings I just highlighted, one can see the ON ratings for Quality, Stability, Feeling, and Momentum. here. ON is ranked No. 38 out of 100 A-rated shares Semiconductor and wireless chip industry.
Click here to view our Semiconductor Industry Report for 2022
MSFT shares were trading at $306.56 per share on Tuesday morning, down $4.42 (-1.42%). Year-to-date, MSFT is down -8.85%, compared to a -5.44% rise in the benchmark S&P 500 over the same period.
About the Author: Priyanka Mandal
Priyanka is a passionate investment analyst and financial journalist. After earning a master’s degree in economics, her interest in financial markets motivated her to begin her career in investment research.
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