“When they’re crying, you should be buying. When they’re yelling, you should be selling.” This old stock market adage can serve investors well, particularly during sharp market downturns like we’ve seen the past few days. It can be difficult to determine why exactly the market and particularly technology stocks got beaten up so much this week, but if you’ve been waiting to add shares of the companies that have been leading the market higher over the last few months, now might be a good time to do so.
Consider the fact that many of these companies have a massive potential to grow over the next few years. When a dip occurs like we’ve seen this week, the bears start coming out to take a victory lap. The real winners will be long-term investors that are able to recognize great buying opportunities in leading names. Below, we are going to discuss 3 strong stocks that investors should consider buying on the dip.
The first company that is worth a look is Square, a business that has been on fire this year and is changing the ways that payment processing is handled. The company reported a strong Q2 earnings beat in August with 64% year-over-year revenue growth that sent shares to all-time highs. Square produces digital payment products that allow small businesses to handle remote payment processing with small square dongles. With many small and medium-sized businesses closed for business during the first half of the year, Square could see a nice boost in revenue once the pandemic is under control.
There’s also the company’s Cash App, which generated $1.2 billion in revenue in Q2, up 361% from last year. The Cash App is popular because it allows consumers to send money safely using smartphones, buy things with a prepaid debit card, and invest in bitcoin and fractional shares of stocks. There’s definitely a lot to like about Square’s business going forward, which is why adding shares on the current dip might be the right idea.
While technology stocks were the most vulnerable during the recent correction, companies like Walmart also took a hit. This multinational retail corporation was hitting all-time highs before the market lost some of its steam and is a fantastic addition to any portfolio. With 4,753 stores across the country, the company has grown its revenue annually over the last 5 years and offers investors a 1.52% dividend yield. If volatility in the market is back, companies like Walmart offer relative safety since their businesses are essentially recession-proof. You really can’t go wrong buying a dividend aristocrat stock like Walmart when it pulls back.
There are several other reasons why buying Walmart on the dip makes sense. First, you have the much anticipated $98-a-year Walmart+ subscription service that the company recently announced. This could be huge for the company, especially since roughly 90% of Americans live within 10 miles of a Walmart. There’s also the upcoming holiday season, which always provides a strong boost in sales for the retail giant. Finally, the fact that Walmart seems to be making investments in tech means that the company has big ambitions. Its stake in JD.com (NASDAQ:JD) and the recent reports stating Walmart and Microsoft (NASDAQ:MSFT) are teaming up to make an offer for TikTok could end up taking this stock a lot higher over the long-term.
Is it a car company or a tech company? This is a good question for investors to ponder as shares of one of the hottest stocks in the market have slumped significantly this week. The burgeoning Electric Vehicle manufacturer is worth looking at on dips as it has been one of the best-performing companies in the U.S. stock market this year. The stock is down over 15% in September after a truly epic run over the last few months. While there might be some more selling pressure in the coming trading sessions, investors that have been waiting for an opportunity to buy might find a strong entry point soon.
There quite a few reasons why buying Tesla after the stock price levels out makes sense. First, you have battery day coming up in late September that could provide a bullish catalyst for the stock. There’s also the idea that Tesla could be included in the S&P 500 as soon as by the end of the month. Tesla’s announcement of a $5 billion stock sale will help the company out financially and allow it to continue growing into one of the largest electric vehicle manufacturers in the world. Finally, there’s a good chance that the recent stock split could allow the stock price to rise significantly over the long term, which has occurred historically with companies like Apple and Amazon.
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