They say that time in the stock market is more important than timing the market. And as a long-term investor I totally agree. However, there’s no denying the fact that buying a stock at the right time – when there’s value on offer – can increase returns significantly.
With that in mind, here are two stocks to buy today. I’ve been buying both recently as there has been value on the table. However, there may not be value on offer for much longer.
A slam dunk on the opposition
First up is Alphabet (NASDAQ: GOOG), the owner of Google and YouTube.
Alphabet has underperformed its Big Tech peers for much of the year. That’s because investors have been worried that ChatGPT is going to obliterate Google’s Search business.
However, at Google’s I/O day event earlier this month, the company hit rivals with a slam dunk.
For starters, it told investors its own artificial intelligence (AI)-powered chat-bot, Bard, is now available to everyone (and has been upgraded with advanced maths, reasoning skills, visual recognition, coding capabilities, and more).
Secondly, it said Google Search is getting a major update called ‘AI snapshots’, and that Gmail is adding a big AI-related upgrade called ‘Help me write’.
Investors loved this update and the share price has been moving higher since.
Right now, I think Alphabet stock still offers value as the P/E ratio is in the low 20s. However, if it keeps moving up at its currently pace, it won’t offer value for much longer.
Of course, tech shares are notoriously volatile. So the stock could easily pull back from here.
For long-term investors such as myself however, I think it’s a good time to be buying.
Rebounding after Covid challenges
Next we have Smith & Nephew (LSE: SN.), the British healthcare company specialising in joint replacement and knee reconstruction technology.
Smith & Nephew has had a challenging few years. Not only has it had to deal with a sharp drop in elective surgeries (due to Covid) but it has also had supply chain and inflation issues.
The outlook is now improving dramatically though. Procedure volumes are strengthening (China’s reopening should provide a massive boost over the next 12 months) and inflation/supply chain issues are beginning to moderate.
And the market is waking up to all of this. This year, the stock has climbed from around 1,110p to 1,282p – a gain of around 15.5% (versus 4% for the FTSE 100 index).
I think there’s still value on offer at today’s share price. Currently, the forward-looking P/E ratio here is around 18. But the value could disappear quickly.
Recently, analysts at Bernstein slapped a 1,580p price target on the stock – nearly 25% higher than today’s share price. This kind of bullish broker activity is likely to grab investors’ attention.
It’s worth pointing out that while Smith & Nephew shares appear to have upside potential from here, they may not move higher in a straight line. After the recent gains, there is always the risk of a pullback.
Taking a long-term view however, I believe this stock can provide attractive returns in the years ahead.
