Three Stocks to Buy on the Dip This Week

I’m Watching These Stocks Like a Hawk

The “IPO Explosion” – a burst of American entrepreneurial genius, unlocked by hundreds of billions in fresh capital inflows since 2020 – has handed millions of regular Americans opportunities to grab ground-floor opportunities in great companies, and the first stock on my watch list is no exception.

Toast Inc. (NYSE: TOST) operates a tech platform that streamlines all front and back of house work utilized by at least 40,000 restaurants in the United States and more abroad. Unlike competitors like Square Inc. (NYSE: SQ), Toast’s goal is to provide services that cover all of a restaurant’s needs, from payment processing and inventory management to in-person and online ordering systems.

With attractive, user-friendly systems like this, Toast has considerable potential for expansion – and, with it, considerable potential for a stock-price boom.

The IPO crowd inflated the stock value some, raising the price 56% in TOST’s initial day of trading. What I’m watching for is for this stock to come back down to around $40 – its original IPO price.

If TOST closes below $41 this week – shares were down 8% at midday yesterday – I’d love to buy the stock outright and hold on to it. As soon as the TOST options markets open, I’d buy a TOST call option with a $40 strike that won’t expire for 180 days.

As lucrative as that is, there are other, potentially even more lucrative ways to play the “IPO Explosion.”

I’ve also got my eyes on Facebook Inc. (NASDAQ: FB) right now. The famous, or should I say infamous, company has taken a big hit in the public sphere ever since The Wall Street Journal published its “Facebook Files” series.

The series is an entertaining read. Facebook comes across as something akin to the tobacco companies 30 years ago. The Journal claims that Facebook knows “in acute detail” about problems surrounding its platforms and how they harm users, but the company hasn’t fixed those problems because they’re so profitable.

I’m not here to disparage Facebook; I’m not here to defend it against the Journal‘s claims, but the impact this drama has on the perception of Facebook and, by extension, FB shares, is absolutely worth our attention.

Since Sept. 15 – the very day The Wall Street Journal‘s first piece in the series hit – Facebook’s stock has dropped 7.5%.

It’s starting to look downright irresistible, because, let’s be real: Facebook has no competition. Whether it makes reforms or not, once the current controversy dies down, Facebook will still be there, generating fistfuls of cash for investors

So this is a dip I’d love to buy. Facebook is trading at $340 on Tuesday at midday, down nearly 3.8%, and I love it here. What’s more, if FB shares close below $337, I’d buy a FB Jan. 21, 2022 $340/$345 call spread for $2.50 or less.

That’s not the only dip I’m eyeing up – with markets the way they are, there are a few to choose from.

This stock is one of a few under pressure from the big national labor shortage. FedEx Corp. (NYSE: FDX) dropped more than 9% in a single session because it failed to meet expected profits in its latest financial report. After an investigation, FedEx claimed hundreds of millions were lost due to lack of labor with an estimated 600,000 packages rerouted to compensate.

No doubt this is a big problem for FedEx, but it’s one I’m confident Facebook will overcome with time.

In the meantime, I fully expect a continued slide downward to $200 per share – a 37.5% discount – before the market comes back in to scoop up shares and drive prices higher.

At that price, and at that discount, I think FDX looks like a screaming “Buy.” Watch this one closely, because FDX shares are on pace to hit $200 in less than a week. If FDX trades down to $200 over the next 30 days, I like buying a FDX Jan. 21, 2022 $200/$210 call spread for $4 or less.