Stock market crash: 3 companies to buy and hold for the long term
Depending on your perspective and positioning, a stock market crash can be an absolute nightmare or a blessing in disguise. Recent volatility has driven down the prices of some promising stocks, and further turmoil may cause the prices of large stocks to fall. Big valuation setbacks almost certainly add to the total amount of stress in the world, but they can also be great opportunities.
With that in mind, we assembled a team of Motley Fool contributors and asked each member to profile a stock that they believe is set to go the distance and deliver great returns. Read on to see why they think investors will be rewarded for building positions in these three companies.
Keith Noonan (Baozun): Growth-dependent technology stocks have been hit hard by recent market volatility, and Baozunof (NASDAQ: BZUN) valuation has slipped away from its recent highs. China-based ecommerce stock already looks like a good buy after the recent sell-off, and it is possible that risk-tolerant investors could achieve even better long-term returns if a deeper market crash drives the price lower. of the company’s action.
Baozun is sometimes compared to Shopify because both companies provide e-commerce website building and management services, but their business model is distinct enough to make the comparison somewhat misleading. So even if you hear Baozun described as “China’s Shopify,” it’s best to rate the business on its own merits.
Baozun’s core business is to provide a suite of online retail management tools and support services to major Western brands looking to tap into China’s massive and rapidly growing online retail market. . Although management has indicated that they are looking to move away from warehousing and fulfillment services and focus on software services that offer better margins, product storage and shipping is still a part of it. substantial business activities. Like Shopify, Baozun also provides services suitable for small businesses, but this service is still at a relatively early stage of growth.
The Chinese e-commerce services company is its own beast and should be treated as such, but it is attractively valued and could offer big payouts for patient investors. Baozun stock is trading down about 44% from its 52-week high of $ 57 per share and about 52% from the lifetime high it reached in July 2018. With the company valued at $ 2.6 billion and trading at around 23 times this year’s expected earnings, Baozun still has huge room for growth.
The Trade Desk
Jamal Carnette (The Trade Office): It’s been a tough year for high growth tech stocks like the ad specialist The Trade Desk (NASDAQ: TTD). Shares slumped after the company reported first quarter earnings. So, naturally, you would expect the company to miss analysts’ earnings or profit estimates or give lukewarm advice – and you’d be wrong.
The Trade Desk beat analyst estimates for the top row by posting 37% revenue growth, an acceleration in growth from the 33% clip in the previous year’s quarter, and blew up adjusted estimates. EPS of $ 0.77 by declaring $ 1.41. Better yet, the company reported $ 260.5 million in revenue in the middle of next quarter, higher than consensus expectations and 87% higher than last year’s pandemic figure.
The Trade Desk is pulling all the cylinders, but stocks are down almost 44% from annual highs set in February. Like many growth stocks, the stock had taken the lead with an explosion of 210% as earnings only increased by 26% (still impressive during the pandemic). However, the recent sale has created an opportunity for long-term investors.
The long-term thesis of the Trade Desk remains intact. Advertising will continue to move away from traditional print and cable to digital outlets such as mobile and connected video, while the ad buying process will continue to migrate from person-to-person transactions. person to programmatic transactions. As the world’s largest independent buy-side digital programmatic platform, The Trade Desk is well positioned to capitalize on these long-term trends.
Like all stocks, The Trade Desk comes with risk. Part of the astonishing run of the past year was its leadership around Unified ID 2.0, a seamless opt-in email tracking solution to replace third-party cookies. Publishers, marketers and others in the advertising ecosystem have rallied around UID 2.0 as a Apple and Alphabet third-party cookies prohibited. Recent communications seem to indicate that these platforms are also against the email-based identifier of Unified ID to capture data.
These fears seem exaggerated and do not apply to high-growth advertising verticals like connected TV that drove The Trade Desk’s growth in the last quarter. In addition, The Trade Desk is actively seeking new ways to expand its capabilities, such as its innovative agreement with Walmart to provide insight into the retail giant’s buyers, which will make it easier for advertisers to locate potential buyers.
Joe tenebruso (Amazon): It might not seem like the case back then, but you can make a fortune in a stock market crash. It is during these times of volatility that the stock prices of the world’s best companies are listed for sale. Buying a high quality business with a competitive advantage at a reduced price is a great recipe for building wealth. Fortunately, we have such an opportunity today with Amazon (NASDAQ: AMZN).
Amazon has become even more dominant during the coronavirus pandemic. More people are shopping online than ever before, and no one does e-commerce better than Amazon. The online sales giant saw its first-quarter net sales jump 40% to $ 64.4 billion in North America and 60% to $ 30.6 billion in international markets. That’s a staggering level of growth for a $ 1.6 trillion company.
Incredibly, Amazon has another powerful growth driver in its high margin cloud computing business. Amazon Web Services (AWS) saw sales growth of 32% in the first quarter as companies moved operations to the cloud during the COVID-19 crisis. Impressively, AWS made $ 4.2 billion in operating income from its $ 13.5 billion in revenue.
Yet despite these good results, Amazon’s stock price fell about 10% from its year highs, along with the prices of many other growth stocks during the recent market swoon. . This is where your opportunity lies.
Amazon’s business is as strong as it ever was, and its shares are now trading cheaply. If you buy today, you could reap the rewards.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! 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.