S&P 500 Correction: Top Stocks to Consider Now

Last week, investors witnessed a significant market development: the S&P 500 entered correction territory, defined as a decline of at least 10%. However, this correction may be short-lived. Currently, the S&P 500 is down less than 8% from its all-time high, suggesting a potential rebound.

Despite the overall market’s recent resilience, numerous high-quality S&P 500 stocks have seen a decline of 20% or more. Among these are Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL), Vistra (NYSE: VST), Dollar General (NYSE: DG), and Airbnb (NASDAQ: ABNB).

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Here are reasons to consider buying these four stocks while they are down.

1. Alphabet

Alphabet, part of the “Magnificent Seven”—the world’s most valuable companies—stands out for its valuation. Currently, it trades for less than 19 times its projected earnings, making it the cheapest of the group and below the S&P 500 average, which exceeds 26 times, according to YCharts.

S&P 500 P/E Ratio Forward Estimate data by YCharts

Some may question if Alphabet is below average because of its valuation. However, the company provides access to various high-growth businesses, including its vast advertising segment, which grew 11% year over year to $72 billion in 2024. Additionally, its cloud computing division saw impressive growth of 30% to $12 billion.

Alphabet is well-prepared for future growth in sectors such as artificial intelligence (AI), quantum computing, and robotics. As trends evolve over the next decade, Alphabet is likely to remain a fundamental player in these areas.

For investors, missing the opportunity to invest in a quality company like Alphabet at a reduced price could lead to regret. With its stock down 20% from highs, Alphabet warrants serious consideration at this time.

2. Vistra

While the AI trend might not resonate with every investor, the increasing demand for electricity certainly does. This is why a closer look at Vistra Stock is worth considering, especially as it is down 32% from its peak earlier this year.

The U.S. Energy Information Administration reported that from 2012 to 2022, electricity consumption grew at a meager 0.5% annually. In contrast, Grid Strategies forecasts that U.S. electricity demand will surge at 3% annually through 2029, fueled by trends like AI and electric vehicles.

With the current electricity grid under pressure, companies like Vistra are well-positioned for significant growth. Analysts expect a heightened reliance on nuclear energy by companies like Vistra, which is the second-largest competitive nuclear power producer in the country.

This year, Vistra anticipates adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $5.5 billion to $6.1 billion. Given its enterprise value of $62 billion, this represents a valuation of just 10 to 11 times EBITDA, appealing for a company poised for long-term growth.

3. Dollar General

This may not be the most exciting stock, but Dollar General remains an investment to consider. Currently, it has plummeted 68% from its highs in late 2022.

Despite the decline, the company maintains solid fundamentals, as evidenced by a 5% increase in net sales, reaching a record $40.6 billion in 2024. Moreover, customer traffic was down only 1% from the previous year, showing consumer loyalty remains intact.

While profit margins have suffered, the stock now trades at a low valuation of just 16 times current earnings. Management is working to stabilize financial performance, suggesting potential for earnings growth in 2025 and beyond.

In the current economic climate, consumers often seek out Dollar General for savings, enhancing the company’s resilience and growth prospects moving forward.

4. Airbnb

Finally, we turn to Airbnb Stock, which is down 21% from its 2025 highs. It has not reached an all-time high since early 2021, which is surprising considering its growth trajectory and opportunities ahead.

Although some investors criticize Airbnb, alleging it is losing market share to hotels due to its service fees, such claims lack substantiation according to market data. In reality, Airbnb’s growth potential continues to highlight its resilience in the travel and hospitality sector.