Warren Buffett is one of the most followed fund managers in the world. Retail and institutional investors alike often follow the advice given by the Oracle of Omaha. Throughout history, Warren Buffett has made it clear that Berkshire Hathaway would be net buyers regardless of the economic situation. This has less to do with a desire to spend money but, rather, demonstrates his hesitance to sell positions.
However, in his company’s latest 13F filing, investors can note that Buffett has been a net seller for the past two quarters. In fact, the Oracle has recently closed out his position in Costco, which seems like it would be a great pick to hold through economic uncertainty. Could this recent selling activity be indicative of Buffett’s negative outlook on the market? In this article, I present two stocks that would be great buys in the event of a market crash.
This growth stock rewarded shareholders last year
When it comes to a market crash, investors should target growth stocks. Often, these are the companies that see the most gains out of a market downturn. I would therefore suggest that investors consider adding Shopify (TSX:SHOP)(NYSE:SHOP) to their portfolios during the next market crash. In fact, this is exactly what I did in April and the topic of my very first article on the Fool.
Investors who bought Shopify during the March lows would have seen more than 260% in gains by the end of 2020. Today, Shopify trades about 14% from its end-of-year highs, but investors would still be up over 200% from Shopify’s March lows.
Shopify also benefits from strong secular trends which will help propel its stock to even further heights over the next few years. Consumers have relied on online shopping more than ever this past year, and economists believe that the adoption of ecommerce has been accelerated by many years. With these points in consideration, it becomes very difficult to ignore the attractive investment proposition that Shopify presents.
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The world is becoming more digital
One way to describe the strong global trends that we see today is that the world is quickly becoming more digital. In nearly every aspect of life, we see companies turning to digital offerings. From enterprise solutions such as payroll, accounting, and due diligence, to everyday activities such as exercise, the trend appears present. Because of this, I believe investors should hold companies that help accelerate global digitization in their portfolio.
One of the top companies in that regard is Docebo (TSX:DCBO)(NASDAQ:DCBO). The company offers a cloud-based and AI-powered eLearning platform for enterprises. Using this software, training managers are able to assign, monitor, and modify training exercises more efficiently.
Docebo has done an excellent job at attracting top tier customers such as Walmart, Uber, and Appian. It has also secured partnerships with Salesforce and Amazon, which speaks to the company’s high-quality offerings.
Investors interested in starting a position may be discouraged by the fact they could have bought shares for as low as $10.30 in March. At a current price near $80, many may think that they have missed the boat. However, at a market cap of just $2.57 billion, Docebo still has a lot of room to grow.
Warren Buffett has been one of the most vocal fund managers when it comes to being a net buyer in the stock market. However, his transaction history shows that Berkshire Hathaway has been net sellers over the past quarters. This could indicate his bearish outlook on the markets moving forward. If a market crash does occur, investors should target growth stocks. Companies like Shopify and Docebo will certainly boost your returns in that case.
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. Fool contributor Jed Lloren owns shares of Appian, Docebo Inc., and Shopify. David Gardner owns shares of Amazon. Tom Gardner owns shares of Appian, Salesforce.com, and Shopify. The Motley Fool owns shares of and recommends Amazon, Appian, Berkshire Hathaway (B shares), Costco Wholesale, Salesforce.com, Shopify, and Shopify. The Motley Fool recommends Uber Technologies and recommends the following options: long January 2022 $1920 calls on Amazon, short January 2021 $200 puts on Berkshire Hathaway (B shares), short January 2022 $1940 calls on Amazon, and long January 2021 $200 calls on Berkshire Hathaway (B shares).