Today’s episode of Full Court Finance at Zacks explores the market downturn to start 2022. Despite the worries and economic setbacks, investors might want to start hunting for strong stocks to buy at significant discounts, especially for those with long-term investment horizons. Today, we dive into three large-cap stocks from three totally different sectors poised to grow for years, if not decades to come.
The market was closed on Monday in observance of Martin Luther King Jr. Day. Stocks then opened lower Tuesday after a rough report from Goldman Sachs spurred more selling far beyond the big Wall Street banks. The S&P 500 fell 1.8%, while the Nasdaq dropped 2.6%, and the Dow slipped 1.5% during regular hours Tuesday.
The tech-heavy index is trading below its 200-day moving average for the first time in a while. And traders are now looking for the S&P 500 to finally test the 200-day as well. The benchmark index is roughly 3.5% above that level at the moment, but a few more days of selling could take us to that technical threshold rather easily.
The wave of selling comes amid 40-year high inflation that could spur the Fed to lift rates even more quickly than previously projected. In fact, big Wall Street banks, including Goldman Sachs, are now calling for four hikes in 2022, up from three. And the 10-year U.S. Treasury yield hit two-year highs Tuesday at around 1.86%.
Still, it will take a lot higher rates to start making stocks look broadly unappealing, even if they send growth-focused tech stocks down further. Investors should also note that the S&P 500 earnings picture remains strong, with solid top and bottom-line growth projected in both 2022 and 2023 (also read:
Banks Provide Mixed Start to Q4 Earnings Season).
The market was due for a pullback following a blockbuster stretch of returns in the past several years. Clearly, the current wave of selling could continue. Yet, investors with long-term horizons might want to start buying strong stocks with proven business models that also pay a dividend, many of which are sitting at discounted levels ahead of their upcoming financial releases.
The first stock on our list today is
Microsoft (ahead of its Q2 FY22 earnings results that are due out on Tuesday, January 25. Microsoft recalibrated its long-term trajectory with its expansion into the booming cloud computing industry, and its recent growth and outlook showcases the strength and stability of the segment. MSFT Quick Quote MSFT - Free Report)
Microsoft’s other business units remain strong. Plus, it made headlines Tuesday as it used its growing cash pile to buy Activision Blizzard in what appears to be a big bet on the metaverse and the future of immersive VR gaming.
Elsewhere, inventors might want to think about scooping up a company that’s both one of the country’s biggest electric utilities and a leader in renewables.
NextEra Energy ( is set to report its Q4 FY 2021 financial results on Jan. 25. NextEra shares have tumbled in 2022 and it’s already fallen below some technical levels that might attract traders. NEE Quick Quote NEE - Free Report)
Let’s also remember NextEra has been one of the most stable and diversified names in the entire clean energy space and it pays a dividend. The last stock on the list today is
Starbucks (, which is tentatively set to release its Q1 FY22 results on Tuesday, February 1 (Zacks calendar says Jan. 25). SBUX Quick Quote SBUX - Free Report)
Starbucks adapted quickly to a more on-the-go model amid the pandemic, made possible by its already thriving mobile app that encouraged ordering ahead. Starbucks bounced back from a covid-hit 2020 in a big way in FY21, but it’s once again attempting to navigate around economic headwinds. Nonetheless, the recently beaten-down coffee titan could be worth adding at these levels.