Stocks that are cheaper aren’t necessarily cheap. Sometimes, oversold stocks aren’t necessarily the best stocks to buy. Sometimes, fallen angel stocks have fallen for good reason.
But in the broad market selloff in the fourth quarter, it does look like investors dumped some good names. Housing and construction stocks, for instance, seem to be pricing in a recession. Semiconductor stocks have plunged, with investors reverting from pricing in secular growth to believing the sector is the same old cyclical story. In both cases — and in many other stocks’ cases — investors have sold first, and asked questions later.
These 5 oversold stocks are among that group. And all five are among the best stocks to buy right now, particularly for investors who believe the market has more upside coming in 2019. Each stock is down at least 30% over the past year. And each of these fallen angels has a path to recover those losses — and perhaps reach new highs.
It’s strange to start earnings season without Alcoa (NYSE:AA), who not that long ago led off the quarterly barrage of corporate earnings reports. But the change highlights the lower importance of the former Dow Jones Industrial Average component (it was removed in 2013).
Indeed, at this point, Alcoa seems not only like a fallen angel — but a forgotten one. AA stock soared on the ‘Trump trade’ in 2017. It’s pulled back steadily since, falling by nearly half over the past year and touching a 2-year low in December.
There’s reason to see a bounce on the way in 2019, however. Earlier this month, InvestorPlace’s Nicholas Chahine highlighted a strong technical setup. Fundamentally, the lower price seems to incorporate at least some of the cyclical risk here.