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2 Inflation-Fighting Stocks to Buy on the Dip

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Recent market volatility centered around the financial sector has spilled over to the broader market jeopardizing this year’s gains among the S&P 500.

With inflation remaining high quite a few stocks that have acted defensively against rising rates are becoming more attractive.

Here are two such stocks that investors may want to consider as they appear to be strong buy-the-dip candidates.

Deere & Company (DE - Free Report) )

Down -9% in March, the selloff in Deere & Company’s stock is starting to look like a buying opportunity as earnings estimate revisions continued to rise over the last 30 days.

Deere stock sports a Zacks Rank #1 (Strong Buy) at the moment with earnings estimates rising 9% for fiscal 2023 and 8% for FY24 throughout the quarter.

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The agricultural equipment manufacturer remains an industry leader and continues to stand out among the Industrial Products sector with many of these equities providing a hedge against inflation over the last year.

This could certainly continue with Deere’s earnings expected to soar 31% this year to $30.47 per share compared to $23.28 in 2022. Furthermore, the recent pullback in DE shares makes the company’s valuation very intruiging at 13.2X forward earnings which is 58% below its decade high of 31.8X and a 20% discount to the median of 16.6X.

Plus, Deere stock is still up +225% over the last three years to largely outperform the S&P 500’s +64% and top the Machinery-Farm Markets +211%.

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Nucor (NUE - Free Report) )

Also sporting a Zacks Rank #1 (Strong Buy) is steel producer Nucor which largely outperformed the broader market during the peak of inflationary concerns in correlation with higher commodity prices.

Nucor stock is still up +10% year to date but has drifted lower over the last few trading sessions. Despite short-term weakness in the broader market, Nucor’s earnings estimate revisions have continued to soar throughout the quarter.

Fiscal 2023 earnings estimates have soared 23% and FY24 estimates have jumped 14% as Nucor continues to stick out among the Basic Materials sector.

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This is also a great sign as Nucor's earnings are forecasted to drop -51% in FY23 to $14.12 per share after a very exceptional year with EPS at $28.79 in 2022. However, Nucor’s valuation also stands out at the moment at 11X forward earnings and 73% below its decade high of 41.4X while offering a 26% discount to the median of 15X.

More impressive, Nucor stock is still up a very stellar +373% over the last three years to crush the benchmark and beat the Steel-Producers Markets +250%.

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Bottom Line

The rising earnings estimate revisions make Deere and Nucor stock prime candidates to buy on the dip and their strong performances could continue as the recent market volatility subsides. Mild corrections can also be healthy for the long-term upward movement in quality stocks and shares of DE and NUE have proven this over the last three years.


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