Yesterday was a bad day for the US stock market. As a result of a higher-than-expected inflation reading, investors panicked and share prices fell heavily. At the end of the day, the S&P 500 was down 4.3% while the Nasdaq Composite was down 5.1%. For long-term investors such as myself, big market falls like this can create excellent buying opportunities. As Warren Buffett says, the best time to buy stocks is when others are fearful. With that in mind, here are three beaten-up US shares I plan to buy more of shortly.
Let’s start with Microsoft (NASDAQ: MSFT), which was down 5.5% yesterday. It’s one of the world’s largest technology companies.
Microsoft is one of the first shares I’d buy if I was building a portfolio from scratch today. That’s because it offers both growth and defence.
On the growth side, the company has exposure to several high-growth industries including cloud computing, the metaverse, and video gaming. So, it’s well placed to increase its revenues and profits in the years ahead.
On the defensive side, many of its products are essential for businesses today. So revenues should hold up if economic conditions deteriorate.
Of course, there are risks to consider. If tech stocks continue to fall, returns could be disappointing.
However, with the stock now trading on a P/E ratio of 25, I like the long-term risk/reward skew here.
Next up, athletic footwear and apparel giant Nike (NYSE: NKE), which declined 5.9% yesterday.
Nike has experienced some supply chain and cost challenges recently. And these issues may persist in the short term. However, given that the stock has fallen from around $180 in November to $106 today, I think a lot of the risk is now largely factored into the share price.
When these short-term challenges do subside, Nike should be well placed to grow its sales and profits. Not only is it likely to benefit from its shift to selling direct-to-consumer, but it’s also likely to benefit from the ‘casualisation’ fashion trend, which is showing no signs of slowing down.
Nike shares currently sport a forward-looking P/E ratio of about 28. That does look high at face value. However, given the company’s incredible brand power, I’m comfortable with the higher valuation.
Finally, I’d also buy shares in Lam Research (NASDAQ: LRCX), which fell 5.6% yesterday. It makes semiconductor manufacturing equipment.
This is a stock I’m quite excited about. In the years ahead, many countries are planning to build semiconductor manufacturing plants on home soil in an effort to avoid chip shortages. The US is one such country that’s set to increase domestic manufacturing significantly. Recently, it announced $53bn in government funding to get the ball rolling.
This ‘reshoring’ of semiconductor manufacturing should provide a huge boost for Lam as its technology is crucial for chip manufacturers. So, the future here looks very bright, to my mind.
It’s worth pointing out that the semiconductor sector, as a whole, is experiencing weakness now. This could persist for a few more quarters and potentially have a negative impact on this stock.
However, in the long run, I expect Lam Research to do well. With the stock trading at just 11 times this year’s forecast earnings, I see it as a bargain.
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Edward Sheldon has positions in Lam Research, Microsoft, and Nike. The Motley Fool UK has recommended Lam Research, Microsoft, and Nike. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.