Growing fear over the spreading coronavirus has hit Wall Street with back to back days of big stock selling.
The Dow Jones dropped over 1,000 points on Monday and as of mid-day Tuesday the benchmark index was down another 600 points. For investors that have become accustomed to the strong bull market in recent years, the last two days have been hard to swallow.
For some investors, the market's dip is a welcome sight as it creates a decent buying opportunity, but for some investors, it is a sign of worse days to come.
There is growing concern that coronavirus will become a full-blown pandemic that could have material impacts on economies around the globe. The reality of the situation is likely somewhere in between. Scientists will likely get the virus under control, but depending on how it takes to control the virus will determine how big of an impact it will have on corporations.
If you want to use the current market weakness as a chance to buy into stocks while others are on the sidelines, here are a few stocks that still look great, and remain, solid buy candidates,
Home Depot (HD)
Home improvement goods retailer Home Depot (HD) has been a rare bright spot in the market during the first half of the week as coronavirus concerns rocked global markets. The company put up impressive fourth-quarter numbers that topped estimates on both the top and bottom line and kept strength in the stock as the major indexes extended previous losses. Strong overall economic conditions and low-interest rates have kept strength in the housing market, and housing-related retailers have shown continued strength. Home Depot has grown its profits by 19.7% per annum over the last five years, and analysts expect earnings to rise an additional 8.4% annually over the next five years. HD stock is trading at 24 times earnings at $242.21 with an average price target of $242.42.
Microsoft Corp. (MSFT)
The tech sector has not been immune to the recent selling pressure to hit the overall market, but cloud computing giant Microsoft (MSFT) has held up pretty well. The stock is up on Tuesday while the broader market continues to lose ground as Wall Street fears over a possible coronavirus pandemic have hurt the major indexes. Microsoft posted its latest set of numbers in the final week of January with top and bottom-line beats and strong year over year bottom-line growth. Microsoft continues to enjoy strong momentum in the fast-growing cloud computing market and profits are expected to continue to grow at an annual rate of 15% over the next five years, which is more than enough to keep the stock moving higher. Being a leader in the cloud space makes MSFT a great long-term hold as the market continues to grow and the leaders such as Microsoft continue to build their presence. MSFT trades at $170.51, with a P/E of 29, and analysts have an average price target of $194.23 on the stock.
Clorox (CLX)
Consumer goods maker Clorox (CLX) has not only avoided the market selloff, but the stock is also currently hitting a new all-time high as the rest of the market tries to find its footing. The company posted strong fiscal Q2 numbers in the first week of February which has kept the momentum in the stock and pushed shares higher. Clorox is a slow-growth stock, with earnings up 8.5% annually the last five years, and analysts forecast profits to grow at a modest 3.1% per annum over the next five years. Despite the modest growth forecast traders continue to push shares higher with the stock trading at 25 times future earnings. Clorox has posted three straight positive earnings surprises which have helped keep strength under the stock. Given the strong investor confidence and the company's consistent earnings track record the outlook remains favorable for the stock. The stock also has a solid capital program with a 2.5% yield and a 42-year streak of dividend increases.
