Stock market crashes tend to be painful, but they also create opportunities to invest in big companies with huge discounts. Catching the right stocks when these opportunities present themselves can be a path to life-changing returns.
With that in mind, a panel of Motley Fool contributors identified three stocks worth tapping into in the next crash. Read on to see why these companies are at the top of their “shopping lists” for the next time the stock market goes up for sale.
Keith Noonan: CrowdStrike (NASDAQ: CRWD) provides cloud-based cybersecurity services that help prevent devices, including laptops, mobile hardware, and servers, from being exploited by hackers and other malicious actors. The company, a leader in its industry, has solid growth prospects even as overall economic conditions are expected to weaken.
The cybersecurity specialist has already seen rapid growth, managing to grow revenue by 70% year-over-year in the last quarter and 82% in the last fiscal year. The impressive sales momentum has helped push CrowdStrike’s share price up over 130% over the past 12 months, and the company looks poised to take advantage of strong demand over the next decade and beyond. of the.
As business and communications are increasingly done through digital channels, the risks and damage from cyber attacks are skyrocketing. Cybersecurity services will only become more and more important, as bad actors have more and more incentive to exploit vulnerabilities and gain access to network systems, and CrowdStrike’s AI-based software provides the best solutions. The company’s Falcon platform learns from each new threat it encounters, creating a service that delivers added value for customers.
Valued at around $ 59 billion and trading at around 43 times this year’s expected sales, CrowdStrike has a valuation heavily dependent on growth. This suggests that the stock could be poised for a substantial pullback when the next stock market crash occurs. But demand for the company’s service expertise is expected to remain fairly healthy and help the stock rebound and reach new heights.
Jamal Carnette: Big Tech’s relationship with Washington lawmakers can be called “it’s complicated.” Just a few years ago, politicians trumpeted the “new economy”; now companies like Facebook (NASDAQ: FB) are firmly in DC’s sights. Last month, the House of Representatives voted on six bills to regulate the tech industry.
Understandably, Facebook investors are worried about increased regulatory and legal risk, but a proper perspective is warranted. In general, less than 5% of all bills become laws, and most tend to have less impact than the initial drafts. In addition, Facebook will have the ability to fight legislation through the court system. Recently, that is exactly what he did and won a victory against the Federal Trade Commission.
Facebook is poised for growth. Last year, revenues rose 22% as the pandemic hit digital advertisers in the travel and entertainment industries. The global digital marketing industry grew by 7%. This year, the industry expects growth rates to be three times that of last year, which will disproportionately benefit Facebook and Alphabet, and both will continue to gain share by expanding at rates higher than the overall market.
Despite its recent performance, Facebook stock is still trading at a reasonable valuation. Currently, the shares are trading at 29.6 times earnings compared to 27.3 times the larger S&P 500. The price-to-earnings-to-growth (PEG) ratio – which takes into account expected earnings growth over the numbers above – is 1.2, a number in value market territory. In the event of a crash, investors should take the opportunity to buy Facebook shares on the cheap.
The commercial counter
Jason hall: It’s been an amazing race for The commercial counter (NASDAQ: TTD) investors, with the ad-tech stock generating nearly 2,500% of total returns since its IPO less than five years ago.
Yet even with this incredible run, I expect The Trade Desk to continue to outperform the market for years to come as more ad dollars move away from linear TV and others. platforms to move to programmatic advertising platforms. And that’s a huge tailwind for the company, which is partnering with some of the world’s largest advertising agencies, positioning it for even greater growth to come.
On the other hand, the Trade Desk has been and probably will remain a very volatile stocks. We saw this unfold to the extreme during the 2020 coronavirus crash, when stocks fell more than 50% in less than two months:
As the chart above shows, it is not uncommon for The Trade Desk stock to fall more than 30% from its recent high; stocks are actually still down around 20% from the recent high at the time of writing.
Add it all up and The Trade Desk is a big growth stock because of its outlook. But it’s also worth adding value to your portfolio over time when Mr. Market gives you buying opportunities. Chances are the next stock market crash will turn out to be one of those opportunities.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.