Living through bear markets sure can be tough. Such environments can create a lot of emotional turmoil, heartache and painful losses. But on the positive side, bear markets also create some monstrous opportunities for investors. When a massive decline wreaks havoc on the overall market, cheap stocks abound for investors to buy. But it’s not just cheap stocks that we’re after. Like the saying often goes, many “cheap stocks are cheap for a reason.” Thus, stocks that exemplify value in this environment is what investors should be after. Many hardware stocks and energy companies carry a low valuation by nature. So, when a bear market comes storming by, many of these names get even cheaper, even if these companies’ cash flows continue to pour in and the dividends continue to pour out. With that in mind, let’s filter down the enormous market of stocks and look for companies with strong cash flows, fat dividend yields and low valuations.
Amid a bear market, investors are looking for cheap stocks with strong cash flows and big dividend yields: Broadcom (AVGO) trades at 12-times earnings, yields 3.6% and has positive growth forecasts for this year and next year. AbbVie (ABBV) trades at just 11-times earnings, with a similarly-strong yield of around 4%. Exxon Mobil (XOM) generated free cash flow of nearly $50 billion over the trailing 12 months and trades at 8-times next year's earnings.
Source: InvesorPlace
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