The S&P 500 has been doing well recently, as stocks are rallying since March’s crash and investors shrug off the COVID-19 pandemic and the current economic recession. That makes it difficult to find stocks to buy on the dip, especially ones that aren’t speculative investments. But there are still deals out there.
For investors looking for discounted but resilient stocks, here are two that are down more than 10% in the past month that are also attractive buys right now.
1. Barrick Gold
Barrick Gold (NYSE:ABX) is a top mining company that, as its ticker symbol suggests, mines for gold. It also generates revenue from copper, but that’s a relatively small part of its business. In the company’s first-quarter results of 2020, which Barrick released on May 6, copper-related revenue made up just 3.6% of its total sales. And that’s par for the course, as this is primarily a gold stock.
The downside of being a gold stock is that Barrick’s share price is at the mercy of gold prices. It’s no coincidence that as the price of gold has been dropping over the past month, so too has Barrick’s share price — it’s down almost 13% while the S&P 500 is up nearly 6%. Generally, when investors are bullish about the markets, as they’ve been in recent weeks, demand for gold starts to soften.
For long-term investors, the stock can serve two purposes. The first is that it can provide stability and balance out other stocks in their portfolios that are struggling. Since the stock isn’t volatile and typically runs in the opposite direction of the broader market, it’s a good way to add diversification to your portfolio and to provide balance.
Second, the stock also pays a dividend. The Canadian miner pays its dividend payments in U.S. dollars, so American investors won’t see fluctuations in their payouts from foreign exchange. And with quarterly payouts of $0.07, investors can earn a modest annual yield of around 1.2%. It’s below the S&P 500 average dividend yield of 2%, but the dividend’s grown in recent years. Dividend payments of $0.07 are more than double the $0.03 that Barrick was paying in 2018.
Although investors will see some volatility from this stock, it’s still a fairly stable investment. In each of the company’s past four quarters, Barrick’s reported a positive profit margin, and only once during that time has it been below 10%.
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