The broader markets took a vicious hit to the chin to end off what was a pretty good January for stocks. Undoubtedly, the U.S. Federal Reserve may have been disappointed when it took to the podium with rate cuts that may be a tad further out than many investors may have expected. Indeed, hopes for a March rate cut have been diminished. But don’t let that discourage you from snagging a market bargain after the turbulent session of trade.
Indeed, there are fine bargains around this market, even if the S&P 500 is close to a fresh, new all-time high. Though February could see more days like Wednesday’s turbulent session, investors must remember that any such dips are only healthy for any bull that expects to sustain itself over the years. Indeed, artificial intelligence (AI) remains a top investment theme, even as valuations across top tech plays begin to come in a bit in response to fears that rate cuts may be pushed out into the second half of the year.
Could it be that investors got far too ahead of themselves with regard to rate cuts? That seems to be the case. Looking ahead, however, investors would be wise to be net buyers of any sudden dips, as they could prove smart longer-term buying opportunities for value investors seeking to get more per dollar.
Constellation Software
In terms of growth plays to buy and hold for years at a time, it’s hard to look past shares of Constellation Software (TSX:CSU) after its 2.2% pullback on Wednesday. Undoubtedly, the stock has been going parabolic of late, and while the recent dip may be the start of something more vicious, I’d argue that any dips in the high-quality software firm are more than buyable.
The stock has been on an incredible run, and it can back itself up with solid growth prospects — something that not every high-tech growth firm is capable of doing. Going into the new year, I expect Constellation Software to keep doing what it does best: buying small software companies and helping them live up to their full potential.
Add a sprinkle of AI into the mix, and I believe CSU stock isn’t nearly as pricey as it seems, even as the stock looks to surrender just a bit of the parabolic gains it posted in the final quarter of 2023.
Shopify
Shopify (TSX:SHOP) is another high-tech Canadian play that fell more than 2% on Wednesday’s scary session. I think the dip could open up a nice entry point for investors who may have missed the recent run in the top dog of e-commerce.
Undoubtedly, the future of digital retail could look very different as new technologies like the metaverse start becoming mainstream. Shopify is one company that will not be left behind as it looks to give its merchants (or customers) any edge they can get in this high-tech age.
Undoubtedly, Shopify stock still looks expensive, but it’s a great pick-up on any further pullbacks. Personally, I’d watch for SHOP stock to hit $100 before really getting interested!
