3 Stocks Perfectly Positioned to Weather Market Swings in May

Stocks to buy

May has historically been a month of market uncertainty on Wall Street, often characterized by the adage “Sell in May and go away.” While this strategy might not always hold true, it highlights the potential for increased volatility. The prospect of a market correction can be daunting as investors grapple with ongoing geopolitical tensions, sticky inflation levels and interest rate uncertainties. However, periods of heightened choppiness can present valuable opportunities to patient investors with stocks to buy for market volatility.

Therefore, today, we explore three stocks to buy for market volatility. These companies boast proven business models, solid financials and a track record of delivering value to shareholders despite market turbulence. With that in mind, here are three stocks perfectly positioned to weather market swings in May.

3M Company (MMM)

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Topping our list of stocks to buy for market volatility is the industrial conglomerate 3M (NYSE:MMM). its business segments include Safety and Industrial, Transportation and Electronics, Health Care and Consumer. The company is known for its substantial R&D investments and has a history of pioneering new products and technologies.

Last month, 3M released strong financial results for the first quarter. Adjusted sales reached $7.7 billion, reflecting a modest year-over-year (YOY) increase of 0.5%, driven by strength in automotive and electronics businesses. Adjusted earnings per share (EPS) surged 21% YOY to $2.39.

Previously, at the start of the second quarter, 3M announced the successful completion of the spin-off of its healthcare business, Solventum (NYSE:SOLV). As a result, 3M received $7.7 billion in cash while retaining 19.9% of the outstanding shares of Solventum common stock. Wall Street expects Solventum to generate more than $8 billion in annual revenues, making it a significant player in the healthcare market. Thus, MMM investors will watch SOLV stock’s performance closely as well.

3M Company has appreciated 7% year-to-date (YTD) and currently trades near 1-year highs. Yet, MMM shares still seem attractively priced at 13.2 times forward earnings and 1.65 times sales. Analysts have a 12-month price target of $100 for MMM, suggesting a potential upside of 3% from current levels.

Walgreens Boots Alliance (WBA)

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Another stock to buy for market volatility is the pharmacy-led health and retail business Walgreens Boots Alliance (NASDAQ:WBA). The company operates a vast network of retail pharmacies under the Walgreens and Boots brands across the U.S., Europe and Latin America. In addition, WBA offers a wide range of health and beauty products and convenient healthcare services.

Walgreens Boots Alliance released strong fiscal 2024 second-quarter results in late March. Total sales for the quarter rose 6.3% YOY to $37.1 billion, reflecting growth across all segments. Adjusted net earnings climbed 3.5% YOY to $1.0 billion, while adjusted EPS increased 3.4% to $1.20.

Meanwhile, management announced the launch of gene and cell services as part of the newly integrated Walgreens Specialty Pharmacy business. The healthcare group is looking to increase its presence in serving patient needs better in emerging therapies. Investors expect the company to provide more healthcare services in stores while beefing up the more lucrative aspects of the pharmacy business.

Walgreens Boots Alliance has paid a dividend in over 350 consecutive quarters, and the stock currently has a lucrative dividend yield of 5.6%. Yet WBA stock has tumbled more than 30% YTD. The stock trades at a very cheap 5.6 times forward earnings and 0.11 times sales. Wall Street remains bullish, with a median 12-month price target of $22, implying a 24% upside.

AT&T (T)

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Finally, AT&T (NYSE:T) is another top pick among stocks to buy for market volatility. Last month, the telecommunications giant delivered mixed earnings results. Revenues totaled $30.0 billion, a YOY decline of 0.4%, due to lower Mobility equipment revenues. However, adjusted operating income, excluding certain items, remained flat at $6.0 billion compared to the year-ago quarter. Adjusted EPS declined 8.3% YOY to $0.55, reflecting increased depreciation costs.

Investors noted that AT&T’s subscriber growth blew past analyst expectations, adding 349,000 new postpaid phones and 252,000 fiber internet subscribers. Yet, both were lower than the subscriber growth numbers posted a year ago.

In addition to its core businesses, AT&T continues to innovate and invest in emerging technologies such as the Internet of Things (IoT), cybersecurity and cloud services. Looking ahead, AT&T is also strategically positioning itself to capitalize on the growth of 5G and fiber networks. These strategic initiatives diversify the company’s revenue sources and position it as an important global player in the digital transformation of industries and businesses. Management also highlights its commitment to financial discipline while it works on reducing debt and streamlining operations.

So far in 2024, T stock has traded flat. The shares currently trade at a forward price-to-earnings (P/E) ratio of 7.6x and a trailing price-to-sales (P/S) ratio of 1x, suggesting a relatively cheap valuation. In addition, shares currently have a dividend yield of over 6.5%. Finally, Wall Street remains optimistic, while the 12-month median price forecast for T stock is $20. Such an up move could mean an almost 20% return for buy-and-hold investors.

On the date of publication, Tezcan Gecgil did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Tezcan Gecgil, PhD, began contributing to InvestorPlace in 2018. She brings over 20 years of experience in the U.S. and U.K. and has also completed all 3 levels of the Chartered Market Technician (CMT) examination. Publicly, she has contributed to investing.com and the U.K. website of The Motley Fool.

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