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3 Buy the Dip Stocks: Apple, AbbVie, and Whirlpool

Stock market volatility has hit a multi-month high. Delayed government action on fiscal support and questions about the Federal reserve’s quantitative easing plans for the near future have added to rising uncertainty among investors, causing some investor-favorite stocks to decline lately. But, given their stellar track records and growth potential, recent price dips in Apple (AAPL), AbbVie (ABBV) and Whirlpool (WHR) could simply be a good buying opportunity. Let’s take a peek at these companies.

After an impressive run since the pandemic-driven market tumble  March 2020, U.S. stock markets are now experiencing a surge in volatility. The CBOE Volatility index has gained 12.4% over the past month, hitting a multi-month high of $37.21 on January 27.

The GameStop frenzy is one of the key drivers behind the rise in market volatility. The higher trading volume of these stocks has forced major retail trading platforms, such as Robinhood, to temporarily reduce trading limits, causing further market uncertainty. The power struggle  between  institutional and retail investors has raised concerns regarding the market’s future performance.

The slow pace of President Biden’s proposed $1.90 trillion fiscal stimulus package, which is currently being negotiated with Republican senators, has added to the market’s volatility. In fact, Biden has voiced concerns regarding the growing “cost” of the delay in the COVID relief plan. While the Fed aims to continue its quantitative easing policies through substantial asset purchases through at least the first half of the year, the possibility of tapering following an economic revival is causing a  “taper tantrum” that has contributed to market volatility.

These factors  have led some of the best performing companies to suffer a pullback, indicating the onset of a potential market reversal.

However, companies such as Apple, Inc. (AAPL), AbbVie, Inc. (ABBV) and Whirlpool Corporation (WHR) have surpassed analyst expectations to deliver impressive results. As leading companies in their respective industries, we believe these companies should rebound quickly as the markets stabilize.

Apple, Inc. (AAPL)

The stock market’s rising  volatility has affected nearly  all companies, with the tech behemoth being no exception. After gaining 74.5% over the past year, AAPL’s rally seems have slowed down;  the stock has advanced 1.7% year-to-date. However, several macroeconomic factors and broader market sentiment have driven a 5.3% decline by AAPL over the past five days.

This comes in on the heels of the company’s impressive quarterly results. AAPL’s revenues have increased 21% year-over-year to an all-time high of $111.40 billion for its  fiscal first quarter ended December 26, 2020. This can be attributed to a 21% rise in its product revenues and a 24% rise in its services revenues. Its net income has risen 29.3% from the year-ago value to $28.76 billion, while its operating income has increased 31.2% from the same period last year to $33.53 billion. AAPL reported record EPS of $1.70, up 25% from the prior-year quarter.

On February 1, AAPL was ranked #1 on Fortune’s “World’s Most Admired Companies 2021” list. The company has held this position for 14 consecutive years, reflecting its  global market reputation.

AAPL’s latest inventions and technological advancements position it to gain significantly in the future. The company recently started manufacturing its own chips to power the next generation of laptops, which have tested well in terms of speed and efficiency. In December, AAPL  launched its Apple Fitness+ service, which is integrated with Apple Watch. In terms of long-term expansion strategies, AAPL plans to enter the electric vehicle (EV)  market by 2024 with the launch of a lidar-powered fully autonomous EV .

A consensus EPS estimate of $0.98 for the fiscal second quarter ending March 31, 2021 represents a 53.1% improvement year-over-year. AAPL has an impressive earnings surprise history also; it beat the Street’s EPS estimates in each of the trailing four quarters. The consensus revenue estimate of $76.85 billion for the current  quarter represents  a 31.8% rise from the year-ago value.

AAPL has an overall rating of B, which equates to Buy in our POWR Ratings system. It has a grade of B for Sentiment and Quality. It is ranked #21 of 52 stocks in the B rated  Technology – Hardware industry. .

Click here to check additional POWR Ratings for AAPL (Growth, Stability, Momentum, and Value).

The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.

 

AbbVie, Inc. (ABBV)

ABBV is a research-based biopharmaceutical company involved in developing medication to treat life threatening diseases such as autoimmune and immunodeficiency illnesses and cancers. The company’s COVID-19  vaccine candidate, announced in June last year, drove its stock  to a  27.7% gain over the past year. However, a delay in the vaccine’s development and roll out has caused a sharp pullback. The stock has lost 3.4% year-to-date.

ABBV’s COVID antibody candidate 47D11 completed its phase 1 clinical trials, which demonstrated reflected the drug’s resiliency against the original virus as well as the new strains, last week .ABBV partnered with Illinois-based Harbour BioMed, Utrecht University in Netherlands and Erasmus Medical Center to develop the vaccine.

ABBV has simultaneously maintained its focus on developing drugs for treating a variety of chronic ailments. Over the past month, the company commenced clinical trials for its Alzheimer drug and  received European Commission approval for its Arthritis treatment drug pipeline.

ABBV’s revenues have increased 52.1% year-over-year to $12.90 billion in the third quarter ended September 30, 2020. This can be attributed to a 14.8% increase in revenues from its  immunology portfolio and a 16.5% rise in revenues from its  hematologic oncology portfolio. Its net income has grown 22.5% from the same period last year to $2.31 billion, while its EPS rose 21.5% from the prior-year quarter to $2.33.

A consensus EPS estimate of $2.85 for the fourth quarter ended December 31, 2020 represents  a 29% improvement year-over-year. In addition, ABBV surpassed the Street’s EPS estimates in each of the trailing four quarters, which is impressive. The consensus revenue estimate of $13.70 billion for the about-to-be reported quarter represents a 57.4% rise from the same period last year.

ABBV’s promising outlook is reflected in its POWR Ratings. It has an overall rating of A, which equates to Strong Buy in our proprietary rating system. It has a grade of B for Value and Quality. In the 239-stock Medical – Pharmaceuticals industry, ABBV is currently ranked #10.

In total, we rate ABBV on eight  different levels. Get all the ABBV ratings here (Momentum, Sentiment, Stability, Growth).

Whirlpool Corporation (WHR)

WHR is a globally renowned home appliance  manufacturer, known for its small domestic appliances for personal use. The company operates through four segments – North America, South America, Europe, Middle East and Africa (EMEA) and Asia. Given  increased demand for home appliances from people under locked in at home,  WHR’s stock has gained 69.5% over the past nine months. However, rising market volatility, combined with the country’s slow economic recovery, has caused the stock to dip in recent days. WHR has lost 10.6% over the past five days and 1.4% over the past three months.

Nevertheless, we think WHR is poised to make a strong comeback soon because  the gradual adoption of remote lifestyles should bolster the demand for personal appliances significantly post pandemic. The government's delivery of  fiscal stimulus checks should also drive a demand  rebound.

WHR has been named one of the “World’s Most Admired Companies 2021” by Fortune magazine, for 11th consecutive year. The company was awarded a perfect 100 in the Corporate Equality Index for 18 consecutive years. It was also included on the America’s Most Responsible Companies list 2021, as well as the 2020 Dow Jones Sustainability North America Index.

WHR’s net sales have increased 7.7% year-over-year to $8.8 billion in the fourth quarter ended December 31, 2020. Its organic net sales have risen 10.3% from its  year-ago value to $5.94 billion, while its EBIT has grown 68.9% versus the same period last year to $657 million. The company reported net earnings of $497 million over this period, a  71.9% increase from the prior-year quarter. Its EPS has risen  72% year-over-year to $7.77.

A consensus EPS estimate of $4.93 for the fiscal first quarter ending March 31, 2021 represents  a 74.8% improvement year-over-year. Moreover, WHR has beaten the Street’s EPS estimates in each of the trailing four quarters, which is impressive. The consensus revenue estimate of $4.72 billion for the current  quarter represents  a 9.2% rise from the year-ago value.

It is no surprise that WHR has an overall rating of B, which equates to Buy in our POWR Ratings system. It has a grade of B for Growth, Value and Quality. In the 64-stock Home Improvement & Goods industry, WHR is ranked #24.

To see additional POWR Ratings for Sentiment, Momentum, and Stability, click here.

The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.

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AAPL shares were trading at $133.94 per share on Wednesday afternoon, down $1.05 (-0.78%). Year-to-date, AAPL has gained 0.94%, versus a 2.13% rise in the benchmark S&P 500 index during the same period.



About the Author: Aditi Ganguly

Aditi is an experienced content developer and financial writer who is passionate about helping investors understand the do’s and don'ts of investing. She has a keen interest in the stock market and has a fundamental approach when analyzing equities.

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