Great Selloff Ushers in New “Golden Age” for Opportunity Stocks

Great Selloff Ushers in New “Golden Age” for Opportunity Stocks

Managing investments was so simple last year. Virtually everything went up in price, so rebalancing, regardless of strategy, always seemed to yield good results. Flaws that would be exposed during “normal” times were nonexistent while the world was emerging from the Covid-19 market crash of 2020. That’s changed in 2022.

The S&P 500 is down 6% since January 1st. Nasdaq has lost nearly twice that. Tech stocks that produced reliable returns for a decade have fallen out of favor with investors. In an industry that loves buzz words, analysts and stock promoters are calling this the “great selloff.” I’m looking at it as the beginning of a “Golden Age” for opportunity stocks.

A Perfect Storms Hits Only Once a Century

In meteorology, a “perfect storm is when warm air from a low-pressure system hits a flow of cool and dry air from a high-pressure system. The last time it happened was 1991. They made a movie about it. According to experts, it only happens once a century. The stock market is in the midst of a perfect storm right now. History is showing us what comes next.   

The last global pandemic happened in 1918. It was followed by the “Roaring Twenties,” a decade when the Dow increased by 500%. Some of the biggest winners back then are still going strong today. That list includes General Electric (GE) and Coca-Cola (KO), both of which are up almost 5% this year. Talk about withstanding the test of time. 

Which equities will be the big winners after this storm? I’m still bullish on Bitcoin (BTC), which I believe will hit $100K this year. Oil companies are reaping the benefits of rising fuel prices. ExxonMobil (XOM) and Chevron (CVX) are both showing double-digit returns. Will that last or will EV manufacturers like Tesla (TSLA) and Rivian (RIVN) post big numbers?

UBS Publishes Target List of Selloff Opportunity Stocks

The Union Bank of Switzerland released a list of selloff opportunities this morning. It includes some familiar names that we’ve covered here recently, like Microsoft (MSFT), my choice to win the Metaverse, and Costco (COST), my favorite dividend stock. UBS Group AG (UBS) is not on the list, probably because they’re up 15.56% this year.                   

These “opportunity stocks” are considered undervalued, making them a good buy right now. Predicting whether they will rise again is still a gamble, but UBS does solid research and I’ve relied on them in the past for recommendations. I couldn’t help but notice that Meta (FB) is not on this list. Apparently, they’re not considered undervalued, even after 35% YTD losses.

My top pick off the UBS list is a company I’d already been watching this week. TE Connectivity Ltd (TEL), formerly Tyco Electronics, is a manufacturer of connectors and sensors, primarily for the automotive and communication sectors. They’re trading at $146 today, which is a steal. Their previous high is $165 and demand for their product is high.      

It’s time to end the selloff and start buying again. Yes, Fed rate hikes will throw a wrench into the machine this year, but what did you expect? They should have acted last year to curb inflation. Now, they’re playing catch-up. That’s just fueling the storm. Use it to your advantage. Prices are low, the upside for many companies is high, and you can cash in on it. 

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About the Author

Great Selloff Ushers in New “Golden Age” for Opportunity Stocks

Kevin D. Flynn

Kevin D. Flynn is a former financial professional and founder of AdvisorScale Financial Writing. He lives in Leominster, Massachusetts with his wife Evelyn, two cats, and nine wonderful grandchildren.