The brutal broad-market pullback this month has impacted most stocks, presenting buying opportunities for speculators who believe the long-term rally will resume. Among some of the best stocks to buy after big dips, historically, include cloud concerns Citrix Systems, Inc. (NASDAQ:CTXS) and Salesforce.com, Inc. (NYSE:CRM). Below, we take a look at CTXS and CRM stocks, which could be on sale right now, if past is prologue.
Following major S&P 500 pullbacks since 1986, Citrix Systems stock has been among the best to own, per data from Schaeffer's Senior Quantitative Analyst Rocky White. One month after such pullbacks, CTXS shares were higher 80% of the time, and averaged a healthy gain of 10.65%.
Before the recent dip, the stock was in a channel of higher highs and lows, touching an 18-year high of $95 on Jan. 29. However, the equity is now clinging to support atop its 60-day moving average, and was last seen trading at $88.95, down 0.2% on the day. Another 10.65% rally from current levels would place CTXS shares around $98.42 -- north of their March 2000 record high of $97.39.
A short squeeze could fuel the fire, too. Short interest on Citrix stock represents nearly a week's worth of pent-up buying demand, at the equity's average pace of trading. Likewise, a round of upgrades could also lure buyers to the table, as just four of 15 analysts consider CTXS worthy of a "buy" or better rating.
Salesforce.com stock has also emerged as one to buy on big dips, historically. Following the last five major S&P pullbacks, the security rallied 9.56%, on average, in the subsequent month, and was higher 60% of the time.
As with CTXS, CRM stock was flirting with new highs before the pullback, touching an all-time best of $114.52 on Jan. 31. The security's recent drop was contained by its ascending 80-day moving average, and the shares were last seen 1.3% higher on the day, at $110.99. Another 9.56% surge from current levels would place Salesforce shares around $121.60 -- back into uncharted territory.
An unwinding of recent pessimism in the options pits could translate into a tailwind for CRM. While calls bought to open have outnumbered puts on an absolute basis during the past two weeks, the equity's 10-day put/call volume ratio of 0.78 on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits in the 87th percentile of its annual range. This points to a healthier-than-usual appetite for bearish options bets over bullish lately.