The best time to buy stocks is when they’re cheap. But investors need to be careful with this – without a reason for things to change, shares can stay out of favour for a long time.
Right now, though, I think there are stocks that have struggled recently where clear signs of tangible improvement are starting to emerge. And this is where I’m looking for opportunities.
The One Big Beautiful Bill Act
One of the major forces that I expect to influence the stock market in 2026 is the One Big Beautiful Bill Act (OBBBA) in the US. And there are a few major moves on the way.
Consumer spending makes up around 70% of the US economy. And the OBBBA is set to make lower tax rates permanent, while introducing higher standard deductions for households.
In agriculture, the bill strengthens revenue protections that subsidise farmers when crop prices fall below certain levels. It also offers more support with crop insurance premiums.
The OBBBA is also significant for other industries, including semiconductors, car production, and healthcare. But in terms of stocks, I’m focusing on consumer spending and agriculture.
Diageo
US households having more money could be a very good thing for Diageo (LSE:DGE). The FTSE 100 firm has struggled with US sales recently, but its competitive position is still strong.
The big question for investors is why revenues have been struggling. Is it because household budgets have been under pressure, or is there a more durable shift in preferences going on?
My view is that at least part of the issue has been a temporary downturn. But the way to get a clearer sense of this is by keeping an eye on volumes at US wholesalers during the year.
If this starts to improve, a recovery could be on the way. And while Diageo is trading at some of its lowest levels in the last 10 years, I think it’s well worth considering.
CNH Industrial
Farming is a notoriously cyclical industry. And that means tractor company CNH Industrial (NYSE:CNH) is well used to seeing its revenues fluctuate from one year to another.
Weak crop prices have meant lower investment in new equipment recently. But the OBBA is set to give farmers – especially ones with larger operations – more revenue certainty in future.
That might well incentivise investment in new machinery and I expect CNH to benefit if it does. That’s why I’ve been buying the stock recently at a 30% discount to its 52-week highs.
The risk of fluctuating crop prices won’t go away entirely. But the time to look at this type of stock is when it’s in a downturn – and I think there are signs a recovery could be on the way.
Buying and holding
From a long-term perspective, the best time to buy shares is when they’re undervalued. And with companies like Diageo and CNH, their share prices move in relatively obvious cycles.
The question is when a potential recovery might take place – and there’s a cost to being early. But in both cases, I think there are positive signs on the horizon in the next few months.
That’s why I think both are worth considering for investors looking for opportunities. If I’m right, though, they aren’t going to be around forever.
