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This big tech stock looks way oversold. Here's your best strategy for buying it now in this volatile market. - MarketWatch

This big tech stock looks way oversold. Here's your best strategy for buying it now in this volatile market. - MarketWatch

This big tech stock looks way oversold. Here's your best strategy for buying it now in this volatile market. - MarketWatch
Oct 03, 2022 2 mins, 18 secs

The month looks ready to kick off with gains, as the stock market appears ready to shake off a few troubling headlines.

Tesla shares are tumbling after not-good-enough quarterly sales, and another crisis may be brewing over the health of a big European bank.

government to put out a market fire it started recently.

To be sure, a never-ending supply of crisis headwinds may make the S&P 500.

That brings us to our call of the day, from Miller Tabak + Co.’s chief market strategist Matt Maley, who sees Google parent Alphabet?

He admits that the overall market doesn’t look that cheap yet, while Alphabet faces some headwinds, but its search engine business “is still a monster…with ad sales growth of more than 13% last quarter.”.

The stock trades at 17 times forward earnings, and 18 times reported earnings, he notes.

“Since the company went public in 2005, it has only been cheaper at the bottom of the Great Financial Crisis and after two dips in 2011 and 2012, during the European crisis of that time (Greece),” said Maley.

Maley suggests buying the Google parent gradually over the coming months, similar to “dollar-cost averaging” — investing a fixed amount in a security or asset on a regular basis, no matter what market are doing.

That strategy works well when companies get cheap and is an excellent one to use during bear markets, “especially after the ‘bear’ has already done a lot damage,” said Maley.

But the stock of a good company can get even cheaper before it bottoms, which is why they need to buy gradually — for individual investors that may mean once a month for nine to 12 months.

The average price of Alphabet — down nearly 34% year to date — should look good a year from now and even better in three to five years, because decent names that get tossed out in a bear episode often rally back stronger than the broader market in the years after, he adds.

Note, the strategist is a firm believer that more froth needs to come out of this market, possibly another 15% into the low 3,000s for the S&P 500.

The market had gotten too pricey versus the economy, which “had become pushed to a level that it could not maintain without steroids.”.

Don’t fight the Fed,” says Maley.

Credit Suisse stock

Auto sales and a speech from New York Fed President John Williams also are on the docket

But a global energy body has warned Europe faces an “unprecedented” shortage of natural gas this winter, if it doesn’t cut usage by 13%

Our chart from Matt Fox, founder/president of Ithaca Wealth Management, discusses important levels to watch on the S&P 500

Either way, keep an eye on how this test plays out in the coming weeks,” said the Chart Report

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