Top 3 Stocks to Watch After This Week's Market Dip

Amid this rush of investors withdrawing or holding back, many continued searching for stocks that could endure and thrive in the long run.

On Monday, August 5th, the stock market experienced a sharp and significant decline, marking a notable point in the ongoing downward trend.

Reflecting this decline, the Dow Jones Industrial Average, a widely followed index of 30 large, publicly owned companies on the NYSE and Nasdaq, dropped almost 1,034 points, or 2.6%, to 38,703.27.

The Nasdaq Composites lost 3.43% and closed at 16,200.08, while the S&P 500 slid 3% to end at 5,186.33. More concerningly, the blue-chip Dow and S&P 500 recorded their biggest daily losses since September 2022.

The volatility affected markets everywhere. In the Far East, Japan's stock market witnessed its worst drop since Wall Street's Black Monday in 1987. Other asset classes also took a hit, as Bitcoin slid down to US$54,000 on Monday from US$62,000 on Friday.

STOXX 600 indices in Europe, which, along with DAX, comprise a global and comprehensive family of over 17,000 strictly rules-based and transparent indices, were off by 2.2%.

The CBOE volatility index went as high as 65, its greatest level since the early days of the world being hit with COVID-19. The US Treasury bonds witnessed a tumble as investors became keen to lodge into a global haven.

There were many reasons for this volatility. In the US, investors feared a recession and felt the pressure of the Federal Reserve lowering interest rates to encourage a global slowdown, while central banks aimed to keep rates as high as possible.

The market, including those in Asia, also reacted to the unfavorable July jobs report released on August 2nd, which showed that nonfarm payrolls grew by just 114,000 in July—below the downwardly revised 179,000 in June and the Dow Jones estimate of 185,000. The unemployment rate, edging higher to 4.3%, reached its highest point since October 2021.

A combination of all of these factors resulted in investors selling off mega-cap tech stocks, AI stocks, and more.

Amid this rush of investors withdrawing or holding back, many continued searching for stocks that could endure and thrive in the long run. In this context, we explore how market volatility can also present new opportunities and highlight three top stocks to watch after this week's market dip.

**#1. Netflix**

On Monday, Netflix also witnessed a dip. As of Monday's close, shares of the streaming firm had dropped 9.2% from the close of $690.65 set on July 5th. The stock also experienced multiple drops in its valuation. To be precise, it slipped to 29 times the next-12-months earnings from 34 times on July 5th and below a five-year average of 41 times. Yet, the stock was in the good books of the analysts.

For instance, analyst Jason Helfstein of Oppenheimer maintained a buy rating on the stock with a target price of US$725. Netflix's success rate was 50%, which is the number of the analyst's successful ratings divided by his/her total number of ratings over the past year. While articulating his faith in the stock's potential, Helfstein had the following to say:

“The company has the best long-term visibility within our coverage and deserves to trade at a premium valuation, in our view.”

In explaining the factors that give birth to this optimism about the stock, Helfstein said:

“NFLX's revenue drivers are very clear through 2026: second-half 2024 driven by continued subscriber tailwinds; fiscal 2025 benefits from price increases & fiscal 2026 from advertising monetization at scale.”

Netflix's revenue pattern has been consistent. Between 2019 and 2023, revenue grew from US$20.15 billion to US$33.72 billion, a growth of 6.7% from the previous year.

While speaking about the robustness of Netflix's revenue and earning strategy, analysts showed optimism and trust. The latest report from Netflix came on July 18th, with an EPS of $4.88, $0.14 better than the analyst estimate of $4.74. The company also outperformed in the area of revenue by earning US$9.56 billion in the quarter against a consensus estimate of US$9.53 billion.

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