The Tech Selloff Is Creating 3 Huge Stock Opportunities

Tech stocks are cratering left and right. We are talking about some of the biggest and most popular tech stocks giving back years worth of gains in just a few weeks time. So, does this mean you have to sell everything? Well, as the saying goes, history doesn't necessarily repeat, but does rhyme. So, I'm going to go back to the last time this exact scenario played out so we can appreciate what to expect moving forward. Be sure to stick around because I'm also going to share three stocks that fit the exact profile of the kind of uh companies that are rewarded in these kind of events. Now, if this kind of investment breakdown is useful to you, then tap that like button. It tells me to record more videos like this in the future. By the way, I'm Steve Raymeister, but all my friends call me Righty. I've been investing for over 40 years and currently a partner at Wall Streetzen.com, where our quant rating system analyzes a wide array of data points to locate the stocks with the highest likelihood to outperform. So, first, let's talk about the very real fears pervading the market. The most recent poster child for AI and tech rash fears is coming from IBM. So last week IBM pre-announced its earnings ahead of its scheduled date and as we all know companies mostly do that when there is bad news to share. Revenue and adjusted profit both came in well short of expectations. The reaction was swift and harsh. The stock lost roughly a quarter of its value in a single session. This was reportedly its worst trading day since the violent crash of 1987. So why did it happen? Now that's the interesting part. It's not because IBM is a broken business. It's about a spending shift. A global memory chip shortage driven by the AI buildout is pushing companies to dump budget into servers and storage right now before prices climb further. That's pulling money straight out of software spending. Now, IBM CEO even admitted they didn't see the scale of the shift coming. And as a side note, while IBM isn't actually the focus of this video, if there is any part of you thinking that this could be a great buy the dip opportunity, well, let me burst that bubble real right right now. IBM earns a lowly D from our Zen rings quant model. That puts in the bottom 20% of all stocks for its fundamental profile, which rightfully means is a sell recommendation. Now, to reach that letter grade, our quant system evaluated 115 different fundamental factors. Note that companies that fare the best in the model get the uh coveted A and B ratings, but even better is knowing they have a long history of outperformance. Now, in just a few minutes, I'll share a few stocks that enjoy a ratings our systems, which means they are in the top 5% of all stocks based upon this full 115 factor review. Back to IBM. The reason we are starring there is because some investors believe their earnings miss is the canary in the coal mine, signaling tougher times ahead for the industry. This is why the pain of this announcement spread like wildfire to other names in tech. As of the week I'm recording, Oracle is down roughly 30% this year. Even more shocking is watching the memory stock darlings go from drive to reverse so quickly. Micron has lost 32% from the recent highs and SanDisk has been chopped down about 43% in less than a month's time. Those numbers could move by the time you're watching this, but the direction is the point. This is a real structural pressure point. across enterprise tech, not a oneoff miss. And that's exactly the kind of news that makes investors nervous about the whole market, not just one stock or one group. Quick aside before I continue, if you enjoy market breakdowns like this, then the best thing you can do for yourself right now is to sign up for my next live training session this coming Monday. The focus is on timely market insights plus my top picks. It's totally free, but you do need to sign up. So do that now to join me this coming Monday at 7 p.m. Eastern time. just go to wall streetzen.com/live. Now, I want to go into some patterns from the past that could give you more clarity on how to look at all this going forward. Before I became a partner at Wall Street Zen, I spent many years at Zach's Investment Research. One of the studies we ran there uh was looking at stock performance based upon expected earnings growth. Amazingly, the higher the expected earnings growth, the lower the performance. Now I know that's counterintuitive as we are all hardwired to go after uh you know the the most impressive growth stocks but that's uh where the problem lies when you are expected to grow earnings at like 30% plus shares are bit up to a much higher PE that's fun for a while on the way up but once the growth party slows down even a little bit like going from 30% growth to 25 or 20 the stock implodes and that my friends is the problem that is why our Zen ratings model is focused on the consistency of growth. Now we're talking about the consistency across multiple metrics like earnings, revenue, profit, margins, IBIDA, and cash flow and then consistency over time. That's because the more consistent a stock grows earnings in the recent past, the more likely that will continue, the more likely it outperforms the market. So that's the lens we need to view things through for the next few minutes. It's not about avoid growth stocks. Rather, we are going to chase consistency. Let's put real numbers on this because I don't want to just talk about uh you know like take my word for it. I want you to see the last time the market truly tanked and how the this movie played out for investors. That brings us back to 2022 when we endured our last bare market. Here is how different corners of the market did that year. The uh S&P 500, you know, the broad market finished the year down 18%. Now it's its worst moment back in October that year was down about 28% year to date. The Russell 2000 tracking small caps fell about 22% on the year. And the one that matters most for today's topic, the Arc Innovation Fund, which is Kathy Wood's fund loaded with the highest growth stocks, uh, you know, the most popular names, it was actually down 65% on the year. Now, almost 23 of investors money's vanished in just one year. The scary thing about that is that you then need to triple your money to get back to break even. That's how scary that drop is. Now, now a consistency based approach like the one built inside the Zen rating has helped us meaningfully better uh that same year. It actually squeezed out a small gain of 0.22% on the year for the A-rated stocks. Now, even better was the 17.51% gain in 2022 for our growth stock portfolio inside the Zen Strategy Service. The point is that a focus on earnings consistency paid off during the worst of times and yes, it pays off in the best of times as well. So with a real warning sign flashing this week in IBM, that's the serious ripple effects in tech. Now I want to focus on three stocks I source from the Zen ratings with an eye towards this consistency and safety to better weather any storms ahead. Now again, we are not looking for the flashiest growth story. I specifically screen for stocks that land in the top 5% of all stocks in the Zen ratings database based upon their resilient fundamental profiles. I also focus on stocks with uh unique strengths in value, safety, and financial strength. Some of the areas that mattered the most the last time the economy widled in a bare market uh emerge. One more thing to point out here, none of the three stocks about to talk about are dependent on memory chips or software budgets. We are pretty much avoiding tech all together. That's part of the point. They're sitting far away from the class radius of what just hit IBM and their industry peers. Now, before I go further, I want to remind you that I'm not your personal investment advisor. Always do your own homework before buying or selling any stocks. The first stock we're going to talk about today is General Dynamics with a symbol of GD. This is an aerospace and defense giant that builds Gulfream business jets, nuclearpowered submarines, and ABS tanks. Uh it earned a spot on this list because defense and aerospace spending runs on government and corporate cycles that have little to do with a server budget squeeze or uh enterprise software budgets, right? And it has a solid fundamental foundations. Earnings came in at $4.3 billion over the trailing year and it continues to grow earnings. It consists in about 10% a year pace. Kind of a Goldilocks level that's not too hot and not too cold either. Now, as an added bonus, the dividends been raised consistently for 10 years straight without a single cut. That kind of track record matters looking ahead because it's not a surprise. Government [snorts] defense budgets don't swing quarter to quarter. It's a fairly consistent grower over time and General Dynamics is about as dialed into that as any company on the planet. Now, no doubt this consistent track record is why Wall Street is so keen on these shares, giving a consensus buy recommendation. Now, right now, several price targets suggest the stock could see significant upside in the year ahead. Now, as I noted earlier, all the stocks I picked today rank in the top 5% of our Zen ratings database and therefore have our highest possible rating of A, which amounts to a strong buy recommendation. Then, each overall rating is built on seven underlying component grades that let you see a stock's unique areas of strength and weakness. So, let's look at those for general dynamics. It's in the top 12% of stocks track for sentiment, reflecting the bullish analyst activity plus smart money interest in the shares. Better still, it's in the top 10% for financial strength, indicating it's an extremely well-run operation. Best of all, it's in the top 4% for safety. That last one's a standout built on years of low volatility and consistent performance. That's exactly the kind of profile I flagged earlier as one tends to hold up better when growth stocks get crushed between the steady defense demand. a dividend that just keeps climbing and an analyst point to shares being meaningfully higher. This is the kind of steady compounder built to survive whether the market's calm or chaotic. Before I move on to the next stock, if you're getting value out of this video, then it's a good time to hit that subscribe button and notification bell. I publish videos uh featuring telly stocks uh several times a week, and I'd hate for you to miss any of them in the future. So, hit that subscribe button and notification bell. Now, our second of the three stocks today takes us from defense to medical devices with the line technology symbol of ALGN. This is the company that makes the very well-known Invisalign dental product to straighten teeth. Now, this company is on a true hot streak given that earnings growth has been nearly 75% a year on average over the last three years. In fact, they have shown consistently impressive earnings growth going back the past decade. Moving forward, that track record matters because it's not just one good year. is the type of pattern that tends to keep compounding over time instead of heading into reverse gear. The future outlook is strong as well. Align's earnings are forecast to grow at about roughly 33% a year moving forward, far above the uh industry average. Now, the strong track record and future potential are a big part of why Wall Street is so bullish on these shares. Overall, it's getting consensus strong by recommendation with fair value price targets pointing to solid outperformance in the year ahead. Now indeed a line comes in with an overall Zen rating of A. In this case after the 115 factor review they proudly sit in the top 3% of all stocks right better than 97% of all stocks were reviewed. On the component grades it ranks in the top 12% of stocks based upon the financials indicating a very well-run business. The top 8% showing for value says the shares are quite undervalued right now which points to good time to start a new position. and top 8% for safety points to the kind of low volatility, financially stable profile I flagged earlier that tends to hold up well when growth stocks get uh get beaten behind the woodshed. Now, this is a very wellbalanced profile with no glaring weak spot in the mix. The beauty of a medical stock like this is that you can sometimes blend impressive growth with stability. That makes it a great pick in bullish and bearish times. So consider if this healthy position uh can help straighten out your portfolio, right? Puns intended. Before we get to that final pick, one quick thing. If you want to stay one step ahead of the market, then join me live every Monday at 7:00 p.m. Eastern time. That is when I share my updated market outlook and trading plan to outperform. It's also when I unveil my trade of the week based upon our proven Zen Ratings quant and my greater than 40 years of investing experience. It's a free event, but you do need to register. So, just go to wall streetzen.com/live or click the link in the description or scan the QR code on the screen. Just pause the video for a moment to sign up and then I look forward to seeing you on Monday. Closing us out today is Bristol Myers Squib with a symbol BMY, one of the largest pharmaceutical companies on the planet. Now, one reason why the stock hasn't been getting a lot of love lately is because uh the patents on two of its biggest drugs lose exclusivity around 2028. now, but the company's growth profile, which excludes those drugs, now accounts for 55% of total revenue. That's up 47% year-over-year. The point is that their thriving growth portfolio drugs has them well prepared for the years ahead. That also shows up in their impressive 33% earnings growth uh this past year, not the sleepy growth that you normally comes with big pharma. On top of that, the stock pays a whopping 4.34% dividend yield and they have increased that dividend for 17 consecutive years. Now, that combination matters as we look ahead because accelerating earnings paired with a dividend that management keeps raising is usually a sign the business itself is getting healthier, not just riding a good quarter or two. And no doubt that combination is a big part of why Wall Street's consensus here is a buy recommendation. Even better is the fair value price targets pointing to at least 25% share price gains in the year ahead. As you've come to expect, we are featuring stocks with scores of A from the Zen ratings. In this case, its fundamental profile ranks in the top 3% of all stocks. It's also the number one ranked stock in its entire industry, which is filled to the brim with consistent growth companies. On the component grades, it once again scores well across the three areas we noted. top 7% for financials, top 6% for safety, and yes, top 2% for value. What's not to like about that? Again, this is the number one ranked uh drug manufacturing stock with particular strength in the areas that count during the tough times like financials, value, and safety. Perhaps best of all is the 25% upside expected by analysts. And when you add that large dividend on top, you're talking about nearly 30% annual return that likely comes with a better night's sleep than your average stock and certainly better than your average tech stock of late. Now, I want to hear from you. Do you think the reason tech stocks sell off is the beginning of the end or just another in a long line of juicy buy the dip opportunities? Also, which of my three A-rated stocks do you like the best? Please share your thoughts in the comments section below. And if you like this video, then you will no doubt enjoy a companion video I recorded about stocks poised to benefit amid a potential AI crash.