Given the recent spikes in volatility and declining market breadth, now is a great time to start thinking about which stocks you might be compelled to buy if the market enters a corrective phase. That way, investors can be prepared to take advantage of any significant declines in the share prices of quality companies. Putting together a shopping list of stocks that haven’t offered attractive entry points over the last few months can allow you to pounce on the next market dip and be more confident in your decisions even in the face of a large pullback.
When volatility reaches extreme levels, it can be difficult to add shares of companies that are facing heavy selling pressure. That’s why doing your homework and putting together several strong reasons why you want to own a company is so vital to your investing conviction. Keep reading below to learn about 3 ‘buy the dip’ stocks to watch if the market pulls back.
1. Goldman Sachs
First on our list is a global leader in investment banking, securities, and investment management services. Goldman Sachs (NYSE:GS) is without a doubt one of the strongest companies in the financial sector to own for the long-term. The company operates in four distinct segments including global markets, asset management, consumer & wealth management, and investment banking. In the near term, Goldman Sachs should benefit from a rebounding economy, a strong IPO market, and more companies pursuing M&A activity.
There were plenty of positive takeaways in the Q4 earnings report for the company that should help investors be confident in buying the stock on a dip. The company saw its Q4 revenue rise by 22% year-over-year and reported EPS of $12.08, which smashed analyst estimates. Goldman Sachs also reported that its investment banking backlog rose significantly and the company will be underwriting some of the hottest IPOs of the year in the coming months. Finally, the fact that the Federal Reserve announced it will allow banks to resume share repurchases is another strong reason to consider adding shares as the share price pulls back.
2. CrowdStrike
Crowdstrike (NASDAQ:CRWD) is a high-growth software-as-a-service name that hasn’t offered investors any decent pullbacks to buy over the last few months. However, that might be changing shortly as growth stocks potentially face some selling pressure. It’s a company that is one of the hottest names in cybersecurity and is worth a look for several reasons. The company’s Falcon platform offers endpoint protection for devices and networks via the cloud. It’s specifically designed to detect threats and stop breaches for large security markets including corporate workload security, IT operations management, and managed security services.
Recall that many U.S. companies and government agencies had to deal with one of the more serious cyber attacks in recent memory back in December, which highlights the importance of a company like CrowdStrike in today’s world. In Q3, the company added 1,186 net new subscription customers and saw revenue growth of 81% year-over-year. The stock price is essentially flat year-to-date and a dip down to the 50-day moving average might be an attractive entry for long-term investors.
3. Qualcomm
The last stock on our list is Qualcomm (NASDAQ:QCOM), a company that has a lot to offer for investors that are interested in adding semiconductors exposure to their portfolios. Qualcomm designs and manufactures technologies and products that are used in mobile devices and other wireless products like network equipment, broadband gateway equipment, consumer electronic devices, and more. If you are a big believer in the 5G revolution, Qualcomm is one of the best-positioned companies ahead of the large-scale rollout of this advanced network.
Some of the company’s customers include Apple (NASDAQ:AAPL), Samsung (KS:005930), and Huawei and it receives royalty licensing revenue from several different businesses thanks to its intellectual property portfolio. In Q4, the company reported $8.3 billion in revenues, which was a 73% year-over-year increase. Qualcomm also offers a 3-year dividend growth rate of +4.9%, which is a huge plus for investors that love dividend growth stocks. Qualcomm will announce its Q1 FY21 earnings report on February 3rd. The stock is currently pulling back and might be worth a look around the $150 level in the coming weeks.