A bear market is a 20% decline in a major stock index, think of the S&P/TSX for example. When these events occur, many investors become hesitant to buy shares in fears of seeing those positions lose money immediately. However, it’s actually during those times that investors should get excited. During bear markets, excellent companies trade at very attractive prices. This could set investors up for once-in-a-generation buying opportunities.
Over the long run, the shares that investors buy during bear markets could drive portfolio growth. However, it’s essential that investors buy solid companies during bear markets, as subpar companies could falter or see a lot of difficulties during those periods.
In this article, I’ll discuss three stocks investors should consider buying during the next bear market.
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Invest in this e-commerce stock
Shopify (TSX: SHOP) is the first stock that I would recommend that investors consider buying during a bear market. This company is widely known for its e-commerce platform that is used by first-time entrepreneurs and large cap enterprises alike. During bear markets, Shopify is likely to see a significant decline in its stock. This is because the company is reliant on consumer spending, which tends to decrease during tougher economic periods.
However, despite any potential slowdowns in its business, I think Shopify is still an excellent stock to hold for the long term. This is because of its leadership positioning within the massive global e-commerce industry. Shopify has managed to attract businesses like Netflix and Pepsi to its platform, which speaks to the value of its services. Shopify also offers merchants the opportunity to take advantage of a tremendous enterprise partnership network, which includes Meta Platforms and YouTube, among many other companies.
A top growth stock for your portfolio
Topicus.com (TSXV: TOI) is the next stock that investors should consider buying during a bear market. This company acquires vertical market software companies. What separates it from its peers is that Topicus focuses solely on the European tech industry.
This is beneficial for two reasons. First, it allows the company to specialize in a space, which could eventually lead to a competitive advantage over its peers. Second, European tech businesses tend to face less pressure from venture capitalists, which could help Topicus acquire businesses at a discount.
Topicus is famously known for its ties to Constellation Software. Although this company now operates on its own, as opposed to a subsidiary of Constellation Software, the two companies maintain a close relationship. Six members of Topicus’s board of directors are executives from Constellation Software. That relationship could help Topicus avoid many of the critical mistakes that plague newer holding companies.
This stock could grow immensely in the future
Finally, investors should consider buying shares of Docebo (TSX: DCBO). This company offers a cloud-based and AI-powered eLearning platform to enterprises. With many businesses now operating remotely, services like the one Docebo offers have become essential.
Docebo has managed to attract many of the world’s largest companies to its platform. This includes Amazon, which has chosen Docebo to power its AWS Training and Certification offerings worldwide. Docebo stock currently trades at a massive discount (-50% this year). Considering the strength of its business, and the continued growth it has shown, I believe this is a tremendous opportunity for investors today.
