The 7 best stocks to buy in August 2024

Markets are in turmoil as the sell-off in mega-cap technology stocks that began in July accelerates. On August 5, the mega-cap technology companies known as the “Magnificent Seven,” widely considered the best stocks to buy, collectively lost $1 trillion in value in a global stock market crash. The sell-off caused the Dow Jones Industrial Average lost more than 1,000 points in a single day and the technology-heavy Nasdaq entered a correction, defined as a decline of 10% from recent highs.

Japan’s Nikkei 225 Index plunged 12%, the worst day since Wall Street’s “Black Monday” in 1987. The sharp sell-off was triggered by fears that the U.S. economy is slipping into recession and that the U.S. Federal Reserve has been too slow in cutting interest rates. The result is that the Cboe Volatility Indexcommonly known as Wall Street’s “fear barometer,” is at its highest level since the outbreak of the pandemic in 2020.

So what’s an investor to do in the face of current market turmoil? Look for bargains, of course, and the best stocks to buy cheap. As Warren Buffett once said, “Be greedy only when others are fearful.” Here are the seven best stocks to buy in August 2024.

Caterpillar (CAT)

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Caterpillars (NYSE:CAT) shares rose 4% after the construction and mining equipment maker reported its second-quarter financial results. While the numbers were mixed, they showed that demand for the company’s larger excavators and other construction equipment remains strong. The company also continues to benefit from higher prices. Caterpillar reported second-quarter earnings per share of $5.99, beating Wall Street forecasts of $5.54.

Revenue of $16.70 billion was below consensus expectations of $16.80 billion, and sales were down across all business segments. However, Caterpillar continues to thrive as infrastructure spending increases across the U.S. The $1 trillion the federal government is spending to upgrade and improve roads, bridges and other infrastructure is helping to boost Caterpillar’s finances. CAT stock is up 17% over the past 12 months.

Palantir (PLTR)

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Shares of Palantir (NYSE:PLTR) rose 13% after the software and data analytics company reported second-quarter financial results that beat Wall Street forecasts. Palantir reported earnings per share of 9 cents, above analysts’ consensus expectation of 8 cents. Spring quarter revenue was $678 million, beating Wall Street’s estimate of $653 million. The strong results were attributed to demand for the company’s artificial intelligence software products.

Palantir also reported that its number of customers in the U.S. commercial market increased to 295 in the second quarter, up 83% year over year, as the company looks to reduce its dependence on government contracts. As for guidance, Palantir said it expects revenue in the current third quarter to be between $697 million and $701 million. The third-quarter revenue forecast beat the consensus expectation of $681 million on Wall Street. PLTR stock has gained 50% over the past 12 months, putting it firmly on my list of best stocks to buy.

Dick’s Sporting Goods (DKS)

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Shares of Dick’s Sporting Goods (NYSE:DKS) have been falling lately as fears of a recession have hurt retail stocks. Since August 1, DKS stock has fallen 7%. The sporting goods retailer’s share price is now 15% below its 52-week high. This offers a chance to buy one of the best-in-class stocks on a dip. Dick’s Sporting Goods stock has proven to be a long-term winner for shareholders, rising 510% over the past five years.

The company’s most recent financial results, reported in late May, were typically strong. For the first quarter of this year, Dick’s reported earnings per share of $3.30, beating analysts’ expectations of $2.95. Revenue was $3.02 billion, compared to $2.94 billion, the Wall Street consensus forecast. Sales rose 6% year over year. Management attributed the results to consumers spending more on sneakers and sporting goods.

Due to the strong first quarter numbers, Dick’s raised its full-year guidance. The retailer now expects earnings of $13.35 to $13.75, compared to the previous forecast of $12.85 to $13.25. The new forecast is above the $13.25 that analysts expected for the company. Dick’s will release its second quarter financial results on September 4. DKS stock is up 36% over the past 12 months.

Pfizer (PFE)

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US pharmaceutical company Pfizer (NYSE:PFE) has been on a roll since it reported better-than-expected second-quarter financial results and raised its guidance. PFE stock is up 6% over the past month despite the market turmoil. However, the share price is still down 17% over the past 12 months. Concerns about declining Covid-19 vaccine sales have dragged the share price down. But those concerns now appear to have been put to rest.

Pfizer reported second-quarter earnings per share of 60 cents, significantly better than Wall Street’s forecast of 46 cents. Revenue of $13.28 billion beat the $12.96 billion expected by analysts. Revenue rose 2% year over year. It was the first time Pfizer’s revenue increased since late 2022, when the company’s Covid-19 sales peaked. The positive results were attributed to cost-cutting measures and improved sales of the Covid-19 antiviral pill “Paxlovid.”

Chipotle Mexican Grill (CMG)

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The stock of Chipotle Mexican Grill (NYSE:CMG) hasn’t been the same since the company undertook a massive 50-for-1 stock split in June of this year. Over the past month, CMG stock has fallen 8% and shares are now trading 21% below their 52-week high. In addition to the stock split, Chipotle has also been impacted by recession fears and its potential impact on consumer spending at restaurants.

CMG stock has also taken a hit due to an online controversy over the perception that the company has reduced its portion sizes. Management vehemently denies that portions have been reduced. Chipotle’s quarterly results certainly do not reflect a decline in customer visits to its restaurants. The company reported second-quarter earnings per share of 34 cents, versus 32 cents, the consensus analyst forecast. Revenue for the quarter was $2.97 billion, versus $2.94 billion, as Wall Street had expected.

Sales rose 18.2% year over year, while comparable-store sales rose 11.1%, beating estimates of 9.2%. Management noted in the earnings report that despite the portion controversy, customer traffic at its restaurants increased 8.7% in the second quarter. Executives also emphasized that the company continues to gain market share and restaurant sales are increasing at all income levels. CMG is among the best stocks to buy, as it is up 45% over the past 12 months.

PayPal (PYPL)

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PayPal Holdings (NASDAQ:PYPL) is another beaten-down stock that appears to be recovering. Despite the crisis in tech stocks, PayPal’s share price is actually up 7% since the beginning of July. PYPL stock is still down 2% over the past 12 months, but a recovery is clearly underway, helped by better-than-expected second-quarter results and increased guidance.

PayPal reported second-quarter earnings per share of $1.19, beating Wall Street’s forecast of 99 cents. The company’s revenue of $7.9 billion beat Wall Street’s consensus estimate of $7.8 billion. PayPal’s total payment volume increased 11% to $416.80 billion in the quarter, while transaction volume increased 8% to $3.60 billion. The company is currently experiencing a turnaround thanks to innovations introduced earlier this year, including a faster checkout process and smart receipts that provide users with merchant recommendations.

Coca-Cola (CO)

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In case we actually enter a recession, there is a defensive strategy: Coke (NYSE:KO). The soft drink maker’s share price has soared as investors shift their money into value stocks. Coca-Cola is the kind of reliable blue-chip stock that investors flock to in times of market turmoil. Not only is KO stock stable, but it also pays a quarterly dividend payment of 49 cents, giving it a whopping 2.83% yield.

Coca-Cola stock has been on a roll since early July, when investors began shifting capital into value stocks. Over the past month, KO stock has risen nearly 10%, for a 15% gain for the year. The company recently reported its second-quarter financial results, which handily beat Wall Street forecasts, and raised its forecast. Coca-Cola now expects revenue growth of 9% to 10% this year, compared to a previous forecast of 8% to 9% growth. Earnings are expected to grow 5% to 6%, compared to the 4% to 5% growth previously expected. All of this makes KO one of the best stocks to buy, no matter which way the market goes.

As of the publication date, Joel Baglole had no position (either directly or indirectly) in the securities mentioned in this article. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com’s disclosure policies.

At the time of publication, the responsible editor had neither directly nor
indirectly) positions in the securities mentioned in this article.