Always pay close attention to excessive fear in large-cap stocks. For us today, that includes some of the most undervalued large-cap stocks to buy in April.
Given their stability and reputation, many will likely bounce back from temporary pullbacks. Two, fear will often lead to opportunity. As we learned from Sir John Templeton, buy excessive pessimism. Or, as Baron Rothschild would say, “The time to buy is when there’s blood in the streets, even if the blood is your own.”
Or, as Warren Buffett once explained at an annual shareholder meeting: “During such scary periods, you should never forget two things: First, widespread fear is your friend as an investor because it serves up bargain purchases. Second, personal fear is your enemy. It will also be unwarranted,” as quoted by MarketWatch.
It’s also important to pay close attention to what technical indicators are saying.
Look at Advanced Micro Devices (NASDAQ:AMD), for example.
Over the last year, every time the stock pulled back, we could tell it was excessively oversold just by watching relative strength (RSI), Full Stochastics and Williams’ %R. For example, each time RSI would dip to or below its 30-line, when Full Stochastics would dip to or below its 30-line, and when Williams’ %R dipped to or below its 80-line, we knew the stock was brutally oversold and was likely to bounce back.
Granted, fear and technical pivot points won’t always lead to success with large-cap stocks. But it’ll help show you where fear may get out of hand.
Here are some of the most undervalued large-cap stocks to buy in April.
Adobe Systems (ADBE)
Over the last few days, Adobe (NASDAQ:ADBE) gapped lower on weak quarterly revenue guidance.
In its current quarter, the company expects adjusted earnings per share of $4.35 to $4.40, while analysts expect $4.38. ADBE also said revenue will total $5.25 billion to $5.30 billion, below estimates for $5.31 billion.
I’d buy the weakness, though. The stock now sits oversold at support dating back to October. It’s over-extended on RSI, MACD and Williams’ %R. And three, as Barclays recently noted, they would “be buying this dip because pricing is masking the underlying strength in Creative Cloud,” as quoted by CNBC.
In addition, as Seeking Alpha noted, “Adobe currently offers a huge opportunity to capitalize on the pessimism that followed the slight miss in the Q2 2024 forecast.”
From its current price of $502.09, I’d like to see ADBE initially refill its bearish gap around $568.88. From there, I’d like to see it again challenge the $625 resistance.
Snowflake (SNOW)
Another of the most undervalued large-cap stocks to buy in April is Snowflake (NYSE:SNOW), which recently gapped from about $240 to a low of $160.52 a share.
All after issuing guidance that fell short of expectations and the departure of CEO Frank Slootman. However, most of the negativity has been priced into the stock. Most concerns appear to have been overblown, presenting us with an opportunity.
Insiders are buying the dip. Company director Mark McLaughlin paid $501,300 on March 6 for 3,030 Snowflake shares, an average price of $165.45 each. The new CEO, Sridhar Ramaswamy, also bought $5 million of SNOW stock.
According to the new CEO, “There’s no AI strategy without a data strategy. And this has opened a massive opportunity for Snowflake to address,” as noted in the company’s most recent quarterly call. Even better, analysts at Guggenheim upgraded SNOW to neutral from sell, citing the company’s “attractive” near-term setup.
Advanced Micro Devices (AMD)
After pulling back from $227.30, Advanced Micro Devices found support at $183.34. From here, I’d like to see it again challenge its prior high. It’s also over-extended on RSI, Full Stochastics and Williams’ %R with a good deal of upside remaining.
AMD has massive exposure to artificial intelligence, which could be worth more than $2 trillion by 2030. It also just launched its MI200X AI GPU, which competes with Nvidia’s (NASDAQ:NVDA) offerings and is expanding into AI-personal computers. If AMD can corner that AI PC market, it could greatly boost its revenue.
Better, it’s also benefiting from an improving PC market, where sales were up 0.3% in the fourth quarter, according to Gartner.
Plus, according to analysts at Melius Research, AMD could see another 20% upside, as noted by Barron’s. The firm increased its price target on AMD to $265 from $192, with a buy rating. “With Microsoft as an anchor—and other clouds now picking up—AMD can generate more upside in AI vs. prior estimates,” they added.
On the date of publication, Ian Cooper did not hold (either directly or indirectly) any positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
