As the market sell-off beats down share valuations, some cheap stocks could trend higher…
For the month, the S&P 500 and the Nasdaq are down by 3.6% and 4.65%. Meanwhile, the Dow Jones and the Russell 2000 have declined by 4.5% and 0.91%, respectively.
Fueling this fall is ongoing volatility surrounding the Russia-Ukraine crisis. After Russia declared war against Ukraine, the U.S., European Union, and other allies enacted a series of severe economic sanctions against Russia.
This sent the market into a panic, resulting in a massive sell-off over supply-chain uncertainty and the availability of much-needed materials. It also reversed the market’s brief rally following pandemic-related woes.
As a result, several major companies have once again reported hits to their financials and share values – as many industries were already struggling to overcome inflation, labor shortages, and supply-chain disruptions.
And the situation may worsen. Many companies have warned that energy costs, metal prices, and the availability of soft commodities may exacerbate global issues.
Even so, opportunities remain for investors. When certain parts of the market struggle, other areas often benefit. This is particularly true for stocks that provide necessary services. And the three stocks below fit the bill…
FedEx
Anyone who’s ever sent a package or purchased an item online knows FedEx (FDX). It's an American shipping and delivery company with a variety of transportation fleets that played a major role in ensuring products made it to consumers during the worst of the pandemic.
And while its share value has since plummeted by 15.2% this year, tailwinds remain for the company. That’s because even with geopolitical tensions, consumers and companies remain reliant on delivery and shipping services.
This will remain true regardless of supply-chain disruptions and economic uncertainty. So, while it may see some problems moving forward, its cheap price could offer an attractive entry point for future gains.
Lennar
Lennar is the largest home construction and real estate company in the U.S. During the peak of the pandemic, it was one of the biggest benefactors of the low-interest fueled housing boom.
Of course, it has since pulled back. In fact, its share value is now down by 21.1% in 2022 due to tighter supply chains and the likelihood of rate hikes by the U.S. Federal Reserve.
Even so, the company forecasts first-quarter home deliveries of 12,500. Lennar also expects new orders in the range of 14,800 and 15,100, with a potential gross margin of 26.75%.
Meanwhile, it forecasts it will deliver 67,000 homes in 2022, an increase from 2021’s 59,825 units. And with solid housing starts data from the U.S. Census Bureau, Lennar could realistically achieve these figures.
So, while there is a supply and demand imbalance, Lennar is putting in the effort to alleviate these issues.
Delta Air Lines
Since the onset of COVID-19, Delta Air Lines (DAL) and its competitors have been some of the hardest-hit stocks. That’s because, with lockdowns and restrictions, carriers were unable to host flights. This resulted in companies burning billions in cash to stay afloat.
Eventually, these problems gradually subsided, and the industry clawed its way back to near-pre-pandemic passenger-traffic levels. And with it, shares of Delta slowly improved as well.
However, with Russia’s invasion of Ukraine, many experts once again voiced fears that elevated jet fuel costs may weigh on the sector’s fragile recovery – driving a year-to-date decline of 19.2% in the company’s shares.
But travel is a pivotal part of modern society. This includes leisure, business, and everything in between. And even with global concerns and elevated costs, many experts anticipate a drastic increase in flights for the spring and summer seasons.
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