How are investors buying September’s dip?

Equities
Investments

In recent weeks, stock markets around the world dropped to new monthly lows. As ever, eagle-eyed investors were keen to buy the dip. Here are some stocks they were keen to snap up.

The September stock market dip: what caught investors’ eye

Market turmoil has been rocking the bourses in the wake of the Evergrande wobble and a general risky asset sell-off.

Although things have since stabilised, with the S&P 500, Nasdaq, and Dow Jones all up 1% this morning and the FTSE making gains, investors were still keen to take advantage of the dip.

In particular, many stocks on the S&P 500 have been subject of retail investor attention. The index experienced its largest drop since May at the start of the week.

A new report from Vanda Research suggests a $3bn spending spree occurred on Monday and Tuesday as stock buyers looked for some perceived bargains.

According to Vanda Senior Strategist Ben Onatibia, retail investor activity contradicts earlier statements that their appetite for stocks may have been waning. With indices down, this gave them a great opportunity to add to their portfolios.

The stocks investors were buying

Vanda Research shows the below individual stocks were retail customers’ favourites during the recent market downturn.

Stock Ticker Retail purchase volume (last 5 days from September 22nd)
Apple AAPL $362,100,000
Advanced Micro Devices AMD $154,5300,000
AMC Entertainment AMC $90,570,000
Microsoft MSFT $89,700,000
Alibaba BABA $83,420,000
Verizon Communications VZ $79,660,000
Wynn Resorts WYNN $73,700,000
Las Vegas Sands LVS $55,350,000
Nvidia NVDA $54,490,000
Intel INTC $53,900,000

 

Let’s start with Apple. The California tech giant is coming hot off announcing a fresh wave of iPad, iPhone and Apple Watch models at last week’s California Streaming event. The company continues to dominate in the smartphone field. As of June, sales of the latest iPhone 12 had already exceeded 100 million units, and Apple’s laptops and tablets continue to post similarly strong sales numbers.

No new AirPod headphones were released, despite markets thinking Apple would launch its next-gen EarPods at its most recent big conference. However, with such strong sales from the iPhone, it probably doesn’t need to launch them just yet. Consumer confidence in the brand is already exceptionally high.

We can see from the list a heavy leaning towards tech stocks. Excluding Apple, investors spent a combined $378.38m on companies within the tech sphere, including Microsoft, Verizon, and chip manufacturers AMD and Nvidia.

Computer chipsets are hot property globally right now. A general shortage means prices are up. Chipsets are used in practically all the modern conveniences of modern life. Everything from the aforementioned iPhone to cars and graphics cards needs these tiny pieces of electrical microengineering to work – hence their sky-high demand, and why investors are eyeing up companies like AMD.

Graphics cards in particular are coveted by cryptocurrency miners. Each powerful mining rig requires stuffing computers to the brim with components to solve the complex equations that result in fresh digital tokens like Bitcoin.

Speaking of Bitcoin, AMC Entertainment, the memestock and cinema chain, recently gave itself a boost. CEO Adam Aron has announced the company will soon start accepting Bitcoin and other cryptos as payment.

Aron also mentioned AMC is flirting with the idea of entering the burgeoning non-fungible token (NFT) market – possibly through offering commemorative digital cinema tickets.

AMC was already a popular stock for the younger breed of traders trying to shake up the traditional system. Its embracing of digital currencies may make it a more attractive prospect amongst new, Millennial investors.

But let’s not get too carried away with the tech-related stocks. Retail buyers also snapped up over $100m in travel-related stocks too. As you can see from the table above, the big winners here were Las Vegas Sands and Wynn Resorts.

The holiday firms will no doubt be bracing for a renewed wave in vacations as we approach the US holiday season. Thanksgiving and Christmas are just around the corner. Also, the US has given the green light to inbound travel for vaccinated EU and UK travellers, which could point towards an uptick in bookings for both firms.

As mentioned above, stocks have started to recover with major European and US bourses making ground in trading today. But retail investor activity goes to show that vigilance is required to spot opportunities in periods of volatility.