3 top stocks to buy in a market downturn | Smart Change: Personal Finances
When the stock market goes down, the shares of many great companies go on sale. The market is already in sharp decline in 2022 — the S&P500, for example, recently fell 17% year-to-date. There are plenty of stocks at attractive prices right now – but if there’s another pullback in the market, it may be hard to resist plenty of bargains.
Here are three solid companies whose stocks you might want to take a closer look at and consider for your long-term portfolio, should their price drop further.
Salesforce.com (NYSE: CRM), the global leader in customer relationship management (CRM), explains that it “allows businesses of all sizes and across industries to digitally transform and create a 360° view of their customers.” Customer management is quite important for a myriad of businesses, as it can involve keeping track of them and their preferences, optimizing communications with them, and delivering personalized experiences. Such things can increase customer satisfaction and loyalty.
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Salesforce is one of the first software as a service (SAAS) companies, with many cloud-based services. It claims more than 150,000 companies as customers, from small to very large. In its most recent fiscal year, the company delivered 25% year-over-year revenue growth to $26.5 billion, and 25% growth in operating cash flow, even though earnings per share were in the red. The company faces headwinds, such as Microsoftcompeting CRM offerings and what some see as over-diversification on the part of the company.
Still, he remains the top dog in his field and continues to grow by double digits. It generates a large portion of its revenue through subscriptions, which is a business model that many investors love, as this revenue is quite recurring. Additionally, it benefits from the competitive advantage of switching costs, as it can be difficult for customers to switch to another provider once they use a suite of Saleforce services.
Salesforce stock recently fell 46% from its 52-week high. If it falls further, its appeal as an investment opportunity will only grow.
pinterest (NYSE: PINS) has seen its shares fall in recent months. At the time of this writing, shares of growth stocks are down about 74% from their 52-week high.
The company calls itself “the visual discovery engine” – “where you find and do what you love”. Specifically, it is a social media platform where users share products, styles, and designs (as well as recipes, inspirational quotes, and fitness tips, among others) that they like. It works – because there are over 400 million monthly active users (more than half of which are outside the US), and together they’ve logged over 240 billion “pins”.
In the company’s first quarter, revenue grew 18% year-over-year to $574.9 million, in what CEO and co-founder Ben Silbermann called a “macroeconomic environment and difficult geopolitics”. He also noted that “Pinterest made good progress in the first quarter in executing our long-term strategy. We continued to evolve our native content and creator ecosystem, began beta testing your store, our Surface custom shopping experience, and released our new open Pinterest API so any developer can build apps for Pinners, Creators, Merchants, and Advertisers.” Much of Pinterest’s value lies in its potential to monetize its large user base – and the company is clearly working on this – for example, by developing ways to help users quickly find and buy items that interest them.
A big advantage for Pinterest is that it knows a ground on its members, because it can track what they watch, record and follow. Thus, it is able to provide sellers with well-qualified potential buyers. Pinterest’s user base has dwindled a bit recently, which has investors worried. Research the company before investing in it – if you think the contraction is temporary, consider buying if the stock falls further. Otherwise, move on to another company.
Finally, there is waltz disney (NYSE: DIS), which requires little introduction for most people. But while you probably know a lot about the company, you might not appreciate how many irons it has in various fires. There are the Disney theme parks, of course, but also Walt Disney Studios, Walt Disney Animation Studios, Pixar Animation Studios, Marvel Studios, 20th Century Studios, Searchlight Pictures, Lucasfilm, ABC TV, FX, National Geographic, ESPN, the Disney+ streaming service, and part of Hulu.
The stock has been hammered, down 43% recently from its 52-week high, but its outlook is certainly no worse 43% than it was a few months ago. Indeed, in the company’s second quarter, revenue grew 23% year over year, with its “Parks, Experiences and
The “Products” division saw its turnover more than double. CEO Bob Chapek said, “Our strong second quarter results, including fantastic performance in our national parks and continued growth in our streaming services, with 7.9 million Disney+ subscribers added during the quarter . [totaling a whopping 137.7 million] and the total number of subscriptions in all our [direct-to-consumer] bids exceeding 205 million – once again proved that we are in a league of our own.”
Some may punish Disney in light of netflixDisney’s slowing growth and stock market crash, but Disney has a lot to do, including a slew of potential blockbuster movies coming out this year and new technologies and operational tools at its parks that can generate more revenue.
Disney is built to last, with many valuable franchises and a diverse set of revenue streams. The stock already looks attractive, with a price-to-sales ratio and forward-looking price-to-earnings (P/E) ratio well below five-year averages. If equities fall further, they will only be more attractive.
There are many strong and promising stocks that have fallen to attractive levels. Take a closer look at the ones that interest you, as bear markets are good times to buy stocks.
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Selena Maranjian holds positions at Microsoft, Netflix, Salesforce.com and Walt Disney. The Motley Fool holds positions and endorses Microsoft, Netflix, Pinterest, Salesforce.com and Walt Disney. The Motley Fool recommends the following options: January 2024 long calls at $145 on Walt Disney and January 2024 short calls at $155 on Walt Disney. The Motley Fool has a disclosure policy.