Another market crash just began. No one knows how long the pain will last, but stock prices are sharply lower this week. If you’ve been looking to buy, this could be your chance.
Not all stocks are a bargain right now. Some valuations were so steep that even a brief selloff hasn’t made them attractive. Other stocks, however, are steals.
The biggest trick is to know where to look. The COVID-19 crisis rages on, with the future impossible predict. As Ben Inker said, “Uncertainty has seldom been higher.”
If you want to take advantage of the market crash, the following three picks are your best options.
Stick with digital
The retail industry is in a lot of pain. The coronavirus forced the shuttering of millions of storefronts. Foot traffic fell off a cliff. Even after stores reopened, limited consumer confidence kept a lid on the recovery.
It turns out that economies built on consumption don’t stop consuming during a pandemic. They just shift their spending dollars from physical locations to online shops. As the biggest e-commerce platform on the planet — at least when excluding Amazon — Shopify is primed for continued success.
Shopify stock is consistently expensive. We’re talking above 70 times trailing sales! But in this case, you get what you pay for. Due to the most recent market crash, you can buy into this premium business at a 15% discount. That’s not much, but this stock rarely goes on sale.
Buck the crowd
Want to score a great deal? Go against the crowd. This takes some guts, but massive upside can be had.
Consider Blackberry (TSX:BB)(NYSE:BB) stock. It’s likely been a while since you’ve thought of this company, so long that you may not realize that it’s no longer a phone company. Today, it’s completely focused on cybersecurity software.
Cybersecurity software stocks haven’t been hit by the market crash. The entire industry is still approaching all-time highs. Every stock, that is, except BlackBerry. Shares still trade at three times sales, even though the competition trades at 10 to 30 times sales.
Market crashes can make cheap stocks even cheaper. That’s the case with BlackBerry, but if you’re willing to remain patient until the market realizes the potential, it could be a chance to triple or even quadruple your original investment.
Forget the market crash
Constellation Software (TSX:CSU) is a great pick no matter what happens to the overall market. Since 2006, shares have risen 75 times in value, with almost zero down years. What’s the secret?
Constellation flies under the radar, because it focuses on niche software aimed at the enterprise market. These aren’t blockbuster products, but they are cash flow machines.
Year after year, Constellation acquires additional software products to strengthen its portfolio. When a market crash occurs, it can actually benefit the business as acquisition prices fall.
If you want to forget about the stock market entirely, Constellation is a perfect fit.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. David Gardner owns shares of Amazon. Tom Gardner owns shares of Shopify. The Motley Fool owns shares of and recommends Amazon, Constellation Software, Shopify, and Shopify. The Motley Fool recommends BlackBerry and BlackBerry and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. Fool contributor Ryan Vanzo has no position in any stocks mentioned.