3 huge opportunities in the stock market to look at right now

Whether one is investing for growth or income, the stock market is throwing up some exciting opportunities right now, says Edward Sheldon.

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The stock market has been volatile recently. At present, the FTSE 100 is about 7% below its 2023 highs while the S&P 500 is around 5% below its year-to-date peak.

Now, I think this volatility has thrown up some attractive investment opportunities. With that in mind, here are three areas of the stock market that I think are worth a look right now.

Smashed by weight-loss drug fears

One area of the market that looks really interesting to me is stocks that have been smashed by fears over the long-term impact of GLP-1 weight-loss drugs such as Wegovy and Ozempic.

A wide range of stocks have been hit including medical device companies such as Smith & Nephew (a joint replacement specialist) and Edwards Lifesciences (a leading heart valve company), food and drink companies like Coca-Cola, PepsiCo, and McDonald’s, and alcoholic beverage companies like Diageo.

I reckon the fears associated with GLP-1 drugs are way overblown. Yes, these weight-loss drugs are going to be very popular in the years ahead. But are they going to wipe out sales of Coca-Cola or eliminate demand for knee replacements? I doubt it.

One stock I’ve been buying here is Smith & Nephew. After a big fall recently, it now looks really cheap.

Beaten-up tech stocks

A second area of the market that looks attractive to me at present is US-listed tech stocks.

Recently, the likes of Apple, Alphabet, and Mastercard have had a bit of a wobble. And I see this as a good buying opportunity.

These technology companies are some of the most dominant businesses in the world today. And over the next decade, they’re likely to get much bigger, creating wealth for investors.

I think the pick of the bunch is Google and YouTube owner Alphabet. At present, it trades on a forward-looking price-to-earnings (P/E) ratio of just 20. To my mind, that’s a really attractive valuation.

Of course, Alphabet stock isn’t without risk. Right now, the company is facing intense competition from Microsoft and other tech companies.

I like the risk/reward proposition on offer today, however. If it wasn’t already my second-largest holding, I would be buying more stock.

High-yield dividend stocks

Finally, I also think there are some amazing opportunities in the high-yield space at the moment. If one is looking for income, it’s possible to pick up some very attractive dividend yields as share prices have come down and yields have gone up.

One high-yield stock that I like the look of right now is banking giant HSBC. It’s forecast to reward investors with total dividends of 64 cents this year, which translates to a yield of nearly 9%.

Another high-yielder that looks interesting to me is Legal & General Group. It’s currently sporting a yield of around 9%.

Now, these stocks have their risks. HSBC is exposed to China’s weak economy while Legal & General owns assets that could be negatively affected by higher interest rates.

All things considered, however, I think they look attractive right now.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Edward Sheldon has positions in Alphabet, Microsoft, Apple, Coca-Cola, Diageo Plc, Edwards Lifesciences, Mastercard, and Smith & Nephew Plc. The Motley Fool UK has recommended Alphabet, Apple, Diageo Plc, HSBC Holdings, Mastercard, Microsoft, and Smith & Nephew Plc. HSBC Holdings is an advertising partner of The Ascent, a Motley Fool company. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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