Rejoice, my friend…
The market correction we have been waiting for for months is finally here.
With the S&P 500 index shooting up by a staggering 18.8% from October to February, my job was getting harder by the day.
Finding quality stocks trading at fair prices in an environment like that was becoming impossible.
Fortunately for you and me, though, the markets did retrace, and stocks are now ripe for the picking.
Buy-The-Dip Stock #1: Microsoft (NASDAQ: MSFT)
I have been recommending my True Retirement Wealth readers to buy Microsoft since June 2019 when it was trading for $119.84.
But don’t worry, I don’t think the opportunity to invest has passed.
Sure, it was difficult to purchase the stock when it was making new all-time highs every day. But with the recent pullback, Microsoft is trading -8.18% lower than where it was just two weeks ago.
Moreover, you’re buying a stock with excellent fundamentals.
Since Satya Nadella took the helm as CEO, the company has experienced a significant turnaround.
Nadella has transformed many of Microsoft’s traditional products, such as Office 365, for example, into subscriptions and steered the company into one of the most profitable businesses of our era—the cloud.
Cloud computing is evolving into a massive industry that is projected to grow at an average annual rate of 32% per year to surpass $623 billion in the next three years.
And Microsoft, with its Azure cloud service solutions, is perfectly positioned to benefit.
In 2019 alone, this business segment increased revenues by 59% and helped the tech giant close the gap on the current cloud market share leader—Amazon.
Moreover, last quarter, the company scored the lucrative JEDI (Joint Enterprise Defense Infrastructure) contract with the Defense Department. Initial estimates show the deal could be worth $10 billion.
With such excellent growth potential, I believe Microsoft at $172.79 is worth the purchase.
Buy-The-Dip Stock #2: Alphabet (NASDAQ: GOOGL)
Another tech giant, and a rising cloud competitor, is Alphabet, also known as Google.
I’ve been recommending it as a buy since May 2019, when you could get it for $1,168.47, after which it gained 31%.
Thanks to the coronavirus dip, the stock dipped by -9.40% and is once again trading at reasonable levels.
I’ve already mentioned Google is becoming a serious competitor in the cloud segment. However, the company also has a robust core business—online advertising—where it’s still the most dominant player with a staggering 73% market share.
Furthermore, this dominance is set to increase with the release of the new Google Chrome 80. The latest browser edition will prevent other digital advertisers from accessing cookies (user information) from specific websites, making them less competitive.
Then there’s the hoard of cash the company sits on, which alone could be enough to lift its shares. With the new CEO in place, there’s a high chance Alphabet will increase its share repurchase program, and maybe even pay out some of it in dividends.
I see this stock making new record-highs by the end of the year.
Buy-The-Dip Stock #3: Facebook (NASDAQ: FB)
Finally, I recommend buying Facebook.
This one trades -10.18% below its all-time highs, which is the most out of my three recommendations.
Despite the company becoming a household name among the investing community, it’s still growing revenues at a remarkable pace of 46% annually over the last three years.
Even more impressive is the fact that it is doing so while keeping its net profit margin above 25%. Fast-growing companies typically can’t do that.
However, what I like most about Facebook’s business is its ability to reach a targeted audience. When comparing its tools with the other online advertising giant—Google—the degree of detailed information Facebook has on its users is unmatched.
Moreover, the company hasn’t monetized its messaging applications Messenger and WhatsApp yet. They have 1.3 billion and 1.6 billion monthly active users respectively and represent a massive ad-revenue potential.
All this means that Facebook’s rapid growth is still far from over and that the recent record-level highs will soon be surpassed.