The shares of great companies often fall for unjustified reasons. As a result, buying stocks on dips can be very profitable for investors
Many highly successful stock pickers, including Warren Buffett, often buy stocks on weakness. That’s largely because companies that are great or are on their way to greatness often sink for reasons that are not at all justified.
For example, on Feb. 21, Super Micro Computer (NASDAQ:SMCI) dropped to as low as $817.08 per share. Many investors wrung their hands about the stock’s valuation, even though it was not expensive, along with the firm’s decision to sell more shares of its stock. Of course, the latter decision ultimately did not greatly affect the company’s fundamentals. Anyone who bought the stock for just above $700 and sold it near its high of $1,033 on Mar. 28, a little over a month later, would have generated a profit of nearly 50% in a little over a month.
So Buffett’s belief that investors should “be fearful when others are greedy and… be greedy only when others are fearful” does work. For those who want to profit from that philosophy, here are three stocks to buy on dips.
Enphase Energy (ENPH)
Source: IgorGolovniov / Shutterstock.com
Enphase Energy (NASDAQ:ENPH), which sells inverters used in solar energy projects, tumbled over 10% on Apr. 5 compared to its highs on the previous day. The catalyst for the downturn was reportedly the decision by Chief Commercial Officer David Ranhoff leaving the firm “for personal reasons” effective Jun. 30.
But sometimes executives really do leave firms for personal reasons,…
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