Earlier this year, the S&P 500 confirmed something investors had been eagerly awaiting: the onset of a bull market. The index didn’t stop there, though, and continued to reach new record highs. And today, that benchmark is heading towards a 20% gain for the year.
In the current environment, you may not be thinking about the next market sell-off — but this is actually a good time to consider what you should do when that next point of market weakness rolls around. We know it will happen because even when the markets are strongest, indexes don’t rise in a straight line. There are always moments when stocks will pull back, pause, and ideally roar higher once again.
What’s the best move an investor can make? Plan ahead by considering which quality growth stocks would make great long-term buys on the dip. These players should have a solid earnings track record, a clear competitive advantage to keep them in leadership positions, and bright prospects. Let’s check out two unstoppable players that should be on your buy list if (when) there’s a market sell-off.
1. Meta Platforms
Meta Platforms (NASDAQ: META) has built a leading position in social media, via Facebook, Messenger, Instagram, and WhatsApp. These apps have become part of our daily lives — in fact, more than 3.2 billion people worldwide use at least one of them every day.
And Meta’s moat, or competitive advantage, is simple. Users of these platforms know that if they leave for another app, they’ll lose many of their contacts. This, and the solid reputation of Meta’s apps, keep users loyal — both of which are the key to the company’s revenue growth. Advertisers, which make up the lion’s share of Meta’s revenue, know consumers will spend a lot of time on those apps.
This has resulted in billions of dollars in revenue and net profit for Meta. In the most recent quarter, the company reported a 22% increase in revenue to $39 billion. And net income came in at more than $13 billion. The company has been so successful that earlier this year it launched its first-ever dividend, saying it is in the financial position to reward shareholders and fund growth.
Now, what’s the next step for Meta? Potentially becoming a winner in the hot growth area of artificial intelligence (AI). The company is investing heavily and aims to create AIs for every Meta user — to help you with everything from leisure to professional activities.
Meta shares have soared 68% so far this year, but the stock remains inexpensive at 27x forward earnings estimates. And a purchase on the dip could offer you an even better bargain.
2. Palantir Technologies
Palantir Technologies (NYSE: PLTR) has been around for 20 years — but it’s only taken center stage with investors recently. Historically, this software company was known for its contracts with governments, but over the past couple of years, has shifted. Palantir’s government contract revenue is still growing, but commercial growth has far surpassed it.
This potential for increased commercial contracts, as well as Palantir’s use of AI, are driving growth at the company which has helped the stock surge 130% so far this year.
So, what does Palantir do? It helps its customers aggregate their data and make better use of it — this often results in game-changing decisions or an entirely new way of approaching a challenge. Aggregating data across an organization is a complex task, one that’s difficult for a company to do on its own — and that’s kept Palantir’s business growing.
Last year, the company launched a new product, its Artificial Intelligence Platform (AIP), which truly supercharged growth. To introduce potential customers to this platform, Palantir invites them to “Bootcamps” which are sessions that help them go from zero to use cases in a matter of hours.
All of this is reflected in Palantir’s financial results. In the most recent quarter, for example, U.S. commercial revenue surged 55% to $159 million, while U.S. commercial customer count soared 83% to nearly 300 customers. It’s important to remember that Palantir counted only 14 U.S. commercial customers just four years ago. Meanwhile, as mentioned, government revenue continues to climb too — by 23% in the quarter.
Palantir shares have gotten more expensive this year, reaching 112x forward earnings estimates, so any pullback could create an interesting opportunity for investors to get in on this unstoppable growth stock.
Don’t miss this second chance at a potentially lucrative opportunity
Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.
On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:
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Amazon: if you invested $1,000 when we doubled down in 2010, you’d have $20,363!*
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Apple: if you invested $1,000 when we doubled down in 2008, you’d have $41,938!*
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Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $378,539!*
Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.
See 3 “Double Down” stocks »
*Stock Advisor returns as of October 7, 2024
Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Meta Platforms and Palantir Technologies. The Motley Fool has a disclosure policy.
2 Unstoppable Growth Stocks to Buy if There’s a Stock Market Sell-Off was originally published by The Motley Fool
