Market crashes can create all kinds of panic for investors. They can also present opportunities for long-term Foolish investors with a sound investment plan.
Earlier this year, the S&P/TSX Composite Index dropped an incredible 35% in just over one month. Since hitting rock bottom during the last week of March, the index is up more than 40%. The beauty of that five-month bull run is that investors didn’t need to time the market and buy when the market hit its bottom. We had five months to accumulate shares of top companies while the market rallied more than 40%.
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Preparing for the next market crash
After surging close to 50% in less than half a year, the market has since been trading flat for the past several months. And with COVID-19 cases ramping back up and an all-important election happening in the U.S. this week, the possibility of another market crashing happening before the end of the year is by no means out of the question. That is definitely no reason to start selling off stocks from your portfolio, though.
Market crashes are inevitable, and as long-term Foolish investors, we need to treat them as opportunities. An updated watch list is an extremely important tool to help keep you in check during the next market crash. It can help keep you from making rash decisions on what stocks to buy or sell. Rather, it will provide clarity on which companies you should be picking up shares of the next time prices begin to plummet.
With that being said, I’ve covered two Canadian stocks that I’ve recently added to my watch list. Both are tech stocks that are not far off from trading at all-time highs. The next time we’re faced with another steep market crash, these are two stocks that I’ll seriously consider adding to my portfolio.
Docebo
Up more than 200% on the year, Docebo (TSX: DCBO) has exploded as one of the top work-from-home stocks this year. The pandemic has forced many employees into a work-from-home environment for an indefinite amount of time, which has led to a surge in demand for Docebo’s training products.
The tech company provides its customers with cloud-based learning platforms. The software is powered by artificial intelligence so each user can have a personalized learning experience.
Headquartered in Toronto, Docebo has already built a global footprint. The tech company has customers in North America, Europe, and the Asia-Pacific region.
The company is up 200% on the year, and more than 275% since it joined the public market just over a year ago. But with growth levels like that, investors will need to pay a premium to own the growth stock.
Docebo trades today at a very expensive price-to-sales ratio of 30. It might be far from cheap, but it’s very likely that this company will not be considered a cheap stock anytime time soon, at least not with growth levels like that we’ve seen over the past 12 months.
Constellation Software
For investors looking for a little less of a volatile stock, Constellation Software (TSX: CSU) might be a better fit. The tech stock is only up 10% on the year, but it’s up close to 150% over the past five years and is more than a 30-bagger over the past decade.
The company likely won’t grow another 3,000% over the next ten years, but there is still plenty of gas left in the tank to continue to outperform the Canadian market.
The tech company is far from a household name amongst Canadian investors, especially considering its track record of growth over the past decade. It likely could be due to its specialized area of expertise. Similar to Docebo, Constellation Software develops software for its clients, often which are very niche companies.
While it might not have the same type of growth potential as Docebo over the next five to 10 years, Constellation Software is as solid of a long-term tech stock that you’ll find on the TSX.
