Everyone should have these 3 stocks on their watch list! From The Variegated Fool


© Reuters. Big Crash in the Stock Market: Everyone Should Have These 3 Stocks on Their Watch List!

Stock market crash – 3 shares for the watch list. The downward trend in the financial markets continues. After a strong recovery in July and August 2022, the markets are again trending towards the familiar weakness.

What is causing some investors grief and worry is causing vigilant countercyclical investors to sit up and take notice. Heavily sold-out markets can also offer many opportunities. Stocks are no longer as expensive as they were a year ago.

Nevertheless, you should also take a closer look here, because many companies are still trading at P/E ratios of more than 20. However, growth is slowing, and if a recession were to develop, it should become more difficult for many companies to maintain the recent year’s high profits.

At least for companies with strong pricing, I’m sure that a large part of the increased cost burden will be passed on in time.

company which Microsoft (NASDAQ:) (WKN: 870747), Visa (NYSE: (WKN: A0NC7B) or Novo Nordisk (NYSE: (WKN: A1XA8R) has high pricing power. At the same time, they are in growth markets with their products.

This is how Microsoft benefits from the digitization trend. Visa is a recipient of cashless payments, and Novo Nordisk thrives on a growing obesity community.

Let’s take a look at the past growth and current valuations of the three stocks to make a final assessment.

Stock market crash: 3 shares to watch list
Microsoft stock
Microsoft is the first candidate that I not only have in my stash for a long time, but also willing to buy later.

The figures for the last quarter (Q4/2022) were robust. Sales growth of 12% to nearly US$52 billion was reported. Operating profit increased somewhat more slowly by 8%.

The software group from Redmont was hit particularly hard by the strong dollar. Adjusted for exchange rate fluctuations, sales increased by 16% and operating profit by 14%.

From my point of view, a look at the valuation does not yet allow for a definitive buy, especially since the stock is also technically ailing and has yet to find a bottom.

The expected price-earnings is just below 26, the dividend yield is 1.14% (as of 23/09/22, Reuters). In light of interest rates continuing to rise sharply, I do not think these are inviting buy signals.

Visa stock
The valuation of Visa shares is correspondingly high. It is currently available at an expected price-to-earnings ratio of 25.7 with a yield of 0.8% (as of 9/23/22, Reuters). Both are not cheap values.

But the growth is a little more convincing. Revenue rose 19% to $7.3 billion in the third quarter of 2022. It ended up reporting net income of $3.4 billion, up 32% year over year.

Novo Nordisk share
The last competitor, the Novo Nordisk share, trades at a price-to-earnings ratio of 31.4 and a dividend of 1.5 per cent.

In the first half of 2022, the Danes could report sales growth of 25%, benefiting from the weak euro. Adjusted for exchange rate effects, growth was significantly lower at 16%. Operating profit also rose sharply thanks to the weak euro. It increased by 26 per cent. Adjusted for currency effects, growth was only 14%.

Despite strong growth, the valuation of the three stocks is still too high for me in the current market environment. So I’ll stay on the sidelines for now and wait.

The article Big crash in the stock market: Everyone should have these 3 stocks on their watch list! first appeared on The Motley Fool Germany.

Frank Seehawer owns shares in Microsoft, Visa and Novo Nordisk. The Motley Fool owns shares in and recommends Microsoft and Visa, and recommends Novo Nordisk.

Motley Fool Germany 2022

This article first appeared on The Motley Fool

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