If you know anything about investing, you’re probably well aware that the recent stock market sell-off — with the S&P 500 recently down around 14% so far this year, for example — is putting a lot of great stocks on sale.
Here are three stock investments to consider that have fallen a lot — and that are likely to recover and go on to hit new highs.
Etsy (NASDAQ: ETSY) has become a go-to destination for millions seeking handmade and vintage items, among other things. Its flagship online marketplace is what it’s best known for, featuring around 89 million active buyers in more than 200 countries. (Seven million of them arrived in the last quarter.) There’s more to Etsy than that, though — it has also assembled a “House of Brands” portfolio, having acquired the popular used clothing marketplace Depop, the musical instrument marketplace Reverb, and the Brazil-based Elo7 marketplace of handmade goods.
Etsy did rather well during the early part of the pandemic, with many more people shopping online — and often shopping for handmade masks. But its shares have been whacked recently, down more than 40% from their 52-week high. That’s largely due to the overall market sell-off, but it’s also partly due to concerns such as a seller strike, protesting a 30% increase in seller fees (from 5% to 6.5%). That’s a big increase, but it may not end up a big issue for the company. If it continues growing robustly, it will be bringing in new customers, which can result in more sales for sellers. And for shareholders, an increase in fees can boost revenue.
Amazon.com (NASDAQ: AMZN) is another online marketplace operator, and a much bigger one. It, too, has seen its shares fall sharply, recently down 39%. But that certainly doesn’t mean that the company is 39% less attractive as an investment or that its growth potential has shrunk by 39%. So why the drop? Well, along with the overall market slump, Amazon recently reported slowing growth — indeed, it posted a net loss for its first quarter. That’s not as worrisome as it might appear, though: For one thing, while sales boomed during the pandemic as shoppers moved online, many shoppers are returning to brick-and-mortar locations now. Also, in order to meet demand during the pandemic, Amazon invested heavily in bolstering its distribution network and capacity. Thus, it’s now primed to do a lot more business.
It’s now offering Buy with Prime — giving Prime members access to Prime deliveries from other marketplaces. It has many other growth irons in its fire, too. Its Amazon Web Services, for example, offers cloud-computing services and is growing briskly, up 37% year over year in the first quarter. It has also developed a “Just Walk Out” technology that enables shoppers to … just walk out of a store, with their purchases automatically recorded and charged to them.
I expect more growth from Amazon over the years and perhaps decades ahead, and the current price looks like a great opportunity for long-term investors. (Note that the stock will split 20-for-1 effective June 3. If it happened today, it would turn its recent share price of around $2,300 into a share price of around $230 — while multiplying shareholders’ numbers of shares by 20. So the value of the shares will not really change.)
3. The Invesco QQQ ETF
Finally, here’s a last investment to consider buying now that it has fallen sharply — in this case, by about 23% year to date: the Invesco QQQ ETF (NASDAQ: QQQ). It’s not a stock. Rather, it’s an exchange-traded fund (ETF) — essentially a fund that trades like a stock. Buying shares of it will give you exposure to 100 stocks, specifically the 100 largest nonfinancial companies listed on the Nasdaq stock market, as measured by market capitalization.
The Invesco QQQ can serve you very well if some of the following apply to you:
You are excited that many major tech companies have fallen sharply, and you want to take advantage of bargains.
You don’t have enough money to buy much of every stock of interest.
You don’t know which of the big tech-heavy companies will do best over time.
You like the idea of having your money diversified across a bunch of big, rather successful companies.
Here are some of its holdings:
If that kind of lineup features the sort of stocks you’d want in your portfolio, the Invesco QQQ ETF might be a good fit for you. It sports a relatively low annual fee, too, of 0.2%, and it has averaged annual gains of 17% to 18% over the past three, five, and 10 years. That’s not guaranteed to continue, but it does reflect the recent drops in prices.
So give the three investments above some consideration and take a closer look at any that interest you. Know that there are many, many other terrific investments out there these days, too.
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. 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. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Selena Maranjian has positions in Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Costco Wholesale, Etsy, Intuitive Surgical, Meta Platforms, Inc., Microsoft, and Starbucks. The Motley Fool has positions in and recommends Airbnb, Inc., Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Costco Wholesale, Etsy, Intuitive Surgical, Meta Platforms, Inc., Microsoft, Nvidia, Starbucks, and Tesla. The Motley Fool recommends the following options: long March 2023 $120 calls on Apple, short July 2022 $85 calls on Starbucks, and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.