By Jacob Sonenshine
Sometimes, an opportunity to buy something is hiding in plain sight. That is a distinct possibility today, considering the tons of stocks that have crashed recently.
Enormous drops in stocks have historically provided some of the best buying opportunities. When a concern emerges, prices fall to levels that fully reflect the worry, whether the risk that caused the selloff materializes or not. That sets the shares up to benefit from any improvement in sentiment.
Evercore strategist Julian Emanuel listed a bunch of examples. The 1987 crash that sent the S&P 500 tumbling in one day turned out to have been a great time to load up on shares. The index hit bottom that year and gained about 60% by the end of the decade.
Stocks in the S&P 500 financial sector, which were almost wiped out during the 2008-2009 financial crisis, make the same point. They more than doubled from early 2009 to the end of the year. And in the early 2000s, while S&P 500 software stocks plummeted as the dotcom bubble burst, they gained about 45% from late 2002 to late 2003.
Both sets of stocks far outperformed the broader index.
Today, software is yet again a viable candidate for dip-buyers. The iShares Expanded Tech-Software Sector exchange-traded fund is down 29% from its record high in late September. The overarching concern is that companies such as Anthropic, OpenAI, and Alphabet will eventually offer artificial-intelligence products that eliminate the need for the business software hundreds of providers now sell.
Elsewhere, companies that provide private money, via both loans and equity investments, have seen their stocks tank. Even shares of the investment bank Jefferies, which owns a stake in a hedge fund that had exposure to private credit, are down 14% from a multimonth high hit in September.
Elsewhere, companies that provide private loans and equity financing, via private investment funds, have seen their stocks tank. Even shares of the investment bank Jefferies, which owns a stake in a hedge fund that had exposure to private credit, are down 14% from a multimonth high hit in September
Health insurance is another beaten-down sector. UnitedHealth Group stock is down 21% from its 2026 high, hit at the end of January. The Centers for Medicare and Medicaid Services proposed a much smaller increase in reimbursements for Medicare Advantage services than the market had expected. That would hit United's earnings.
To help investors take advantage, Emanuel compiled a list of battered stocks that could be worth scooping up. He identified shares that have fallen at least 10% this year and 30% or more the past 12 months, with significant short interest, a metric that compares the number of shares borrowed for bets that the price will fall to the amount available for trading.
To make the list, short interest had to be in the 65th percentile of the historic range for each company, or higher, meaning that the stocks could take off in response to the slightest bit of positive news. Short-sellers would have to buy to cover their positions, potentially leading to gains that could force other traders to do the same.
Salesforce, Adobe, ServiceNow, SailPoint, and Workday qualify on all those points. So do UnitedHealth and the private-credit investment firm Blue Owl Capital.
Barron's has argued that Salesforce could stabilize and rally soon. It appears extremely cheap and its short interest is in its 100th percentile.
We've also argued for UnitedHealth, which has short interest in its 87th percentile.
A cohort of other healthcare stocks have been crushed as well, including providers of data-centric tools that pharmaceutical companies use to create new drugs. Investors worry that like providers of software, those businesses will be pushed to the sidelines by AI.
KeyBanc analyst Scott Schoenhaus sees an opportunity there, saying in a research note that biologic data is "complex, higher-dimensional, and harder to standardize." He listed AbCellera Biologics, Absci, Recursion Pharmaceuticals, and Schrodinger as prime examples of stocks that may have fallen too far.
Each of those stocks is down by double digits from its peak. But those companies "have amassed large and proprietary datasets over many years, creating significant moat," he wrote.
This might be a rare moment for stock-pickers to have a field day.
Write to Jacob Sonenshine at jacob.sonenshine@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
February 09, 2026 14:22 ET (19:22 GMT)
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