Do you have $5,000? 3 bear market stocks to buy now and hold forever
The recent bear market has significantly reduced the appeal of most stocks. With many growth stocks down 75% or more from their highs, investors are increasingly turning to other investment vehicles.
But the slowdown may actually provide opportunities for one type of shareholder: the long-term investor. These potential buyers can now buy shares at a very favorable price, which should significantly increase returns once the market recovers. Three discounted tech stocks that would make great permanent additions to your portfolio are Microsoft (MSFT -1.94%), Axon Enterprise (AXONE 1.39%)and Focus on video communications (ZM -1.18%).
This software giant still has a lot to offer
Jake Lerch (Microsoft): Bear markets can do more than just deflate your portfolio balance – they can also reduce your confidence in the stock market itself. After all, the point of investing is to grow your wealth, not see it diminish.
It is therefore essential for long-term investors to remember that a bear market will be ultimately give way to a new bull market. And when that happens, savvy investors will profit from having bought – or held onto – shares of big companies. That’s why I’m optimistic Microsoft at present.
Much ink has been spilled as to why Microsoft is such a fantastic company. He owns one of the largest (and fastest growing) cloud companies. Additionally, its productivity and personal computing segments include some of the most well-known and trusted applications in the entire software industry. And yet, Microsoft shares are down 29% year-to-date.
In fact, from a valuation perspective, Microsoft shares are trading near a five-year low. With a current price-to-earnings (P/E) ratio of 24.9, Microsoft shares are approaching a five-year low of 22.6, hit in early 2019.
That said, it’s important to remember that a $5,000 investment made then would be worth $11,835 today. So, wAlthough bear markets can be scary, they can also be great opportunities. For investors looking for a sustainable stock, Microsoft is a name to consider.
A focus on public safety and innovation
Justin Pope (Axon Enterprise): Law enforcement is one of the most fragmented areas of the public sector; there are approximately 18,000 police departments in the United States. It is also tough work where ensuring the safety of citizens and officers is of the utmost importance.
Technology that can save lives is welcome, and that’s where Axon Enterprise has built its company. Axon specializes in non-lethal technologies, starting with Tasers, and is arguably best known today for its body cameras. It dominates the law enforcement industry in the United States, doing business with approximately 17,000 departments across America.
The company’s growth won’t blow you away, but it’s been very solid for quite some time now; revenues have increased by an average of 26% per year over the past decade. But you can see below how resilient the company is; public spending is very reliable and law enforcement budgets are generally immune to drastic budget cuts. Additionally, the business is profitable, generating both positive free cash flow and net income to net income:
One wonders where future growth will come from, given that it sells out to most law enforcement departments. This will likely come from product innovation and the sale of additional products. The company has been steadily adding new services, including cloud-based software that helps law enforcement organize and manage evidence and operations more efficiently.
Axon’s ability to get more from its customers is evident in its net dollar retention rate of 119%, and its cloud software sales grew an average of 43% from 2017 to 2021, becoming its growth product. the fastest.
Axon is a fundamentally sound company growing at double digit rates, exactly the kind of stock you want to buy during a bear market when fearful investors are selling. The stock has fallen 43% from its peak and is now trading at a price-to-sales (P/S) ratio of 8, around its average over the past decade. It’s not a discount valuation, but as Warren Buffett said, paying fair value for quality is better than getting junk food on the cheap.
The once-pandemic darling still has a bright future
will heal (Zoom video communications): Zoom’s fortunes seem to be going up and down with the pandemic. It hit record highs as locked-in workers turned to the platform for business. However, once they started returning to the office, investors sold the shares.
Investors who bought for $5,000 at the April 2019 IPO price of $36 per share would still have about $10,500 today. Indeed, that may offer little comfort to long-term investors, as the stock has fallen more than 85% from its 2020 peak.
Despite this decline, remote work has not disappeared. In fact, it is becoming a permanent fixture in many workplaces and growing. An Upwork study estimates that 22% of workers will work remotely by 2025, up 87% from pre-pandemic levels. Zoom claims around 75% of the market, according to Datanyze, likely due to its low cost and ease of use.
Indeed, the $2.2 billion revenue level for the first half of fiscal 2023 (which ended July 31) was only up 10%. That was well below fiscal 2022, when revenue was up 55%. However, the number of enterprise customers increased by 18% to more than 204,000, and they spent on average 20% more on the platform than a year ago. In addition, the number of customers who spend more than $100,000 annually has increased by 37%. So while small and medium-sized businesses use the platform less, Zoom has become popular with its higher-income customers.
Admittedly, overall revenue growth has slowed while increases in operating expenses have remained elevated. That led to profit for the first two quarters of fiscal 2023 of $159 million, down from $545 million in the same period last year. However, its profits allow the company to finance itself, because the rise in interest rates makes capital more expensive. This should add to the appeal of Zoom stock as it works to get growth back on track.
Additionally, its P/E ratio fell to 23, near a record low and well below four-digit P/E ratios during the pandemic. As companies increasingly shift to remote working and online meetings, investors may want to take another look at Zoom’s stock.