Investors Eye Bargains in Stocks After Recent Market Corrections
Occasionally, Wall Street reminds investors that stock prices can fluctuate in both positive and negative directions. Between February 19 and March 13, the renowned Dow Jones Industrial Average, the benchmark S&P 500 (SNPINDEX: ^GSPC), and the growth-focused Nasdaq Composite (NASDAQINDEX: ^IXIC) experienced significant declines of 8.6%, 10.1%, and 13.7%, respectively. The declines for the S&P 500 and Nasdaq Composite pushed both indexes into official correction territory.
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Nevertheless, these corrections were relatively brief. The S&P 500 quickly rebounded, escaping correction within just one session, while the Nasdaq Composite followed suit on March 24.
Opportunities for Long-Term Investors
Market corrections historically present excellent opportunities for long-term investors with available cash to find bargains. Despite the uncertainty surrounding the Nasdaq’s downturn, five growth stocks appear particularly appealing for investment.
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Image source: Getty Images.
The Trade Desk
First among these promising stocks is The Trade Desk (NASDAQ: TTD), an adtech leader with shares more than 57% below their peak. Economic growth concerns may pressure its immediate operating prospects. However, The Trade Desk stands ready to capitalize on the growing digital advertising expenditure.
Key to its growth is the adoption of its Unified ID 2.0 technology, a tracking tool that surpasses traditional cookies, enabling targeted advertising. The company excels in demand-side connected TV advertising, a market expected to sustain double-digit growth.
Furthermore, ad companies thrive through economic cycles’ nonlinearity. Historically, periods of economic expansion since World War II have lasted about five years, prompting businesses to enhance marketing budgets and, consequently, boosting The Trade Desk’s future sales and profits.
Notably, The Trade Desk’s forward price-to-earnings (P/E) ratio stands at 27, significantly below its average P/E of nearly 89 over the past five years.
PayPal Holdings
Another attractive growth stock is PayPal Holdings (NASDAQ: PYPL). In spite of fierce competition in the digital payments sector, PayPal has crucial catalysts to drive differentiation and growth.
PayPal’s performance metrics are more positive than critics claim. Total payment volume saw a constant-currency increase of 10%, reaching $1.68 trillion in 2024, even with slight active account growth. Most notably, transactional activity per account surged from 40.9 at the end of 2020 to 60.6 by the end of 2024, indicating higher engagement and profit potential.
The appointment of Alex Chriss as CEO is pivotal as well. In his role, Chriss has leveraged his experience from Intuit to introduce innovations aimed at attracting new users. His focus on managing operating costs and repurchasing shares aims to enhance both margins and earnings per share.
The forward P/E ratio for PayPal is 12.6, representing a 37% discount from its average over the last five years.
Image source: Amazon.
Amazon
In light of the Nasdaq correction, it’s also a favorable time to invest in Amazon (NASDAQ: AMZN). Although the company’s online retail sector may face challenges during economic downturns, Amazon’s growth prospects largely hinge on its diverse operational segments.
One critical segment is Amazon Web Services (AWS), the top cloud infrastructure provider globally. As enterprise cloud spending is in the early stages of growth, the integration of artificial intelligence solutions promises to enhance AWS’s momentum. Although AWS accounts for around one-sixth of Amazon’s total sales, it generates over half of the company’s operating income.
In addition, Amazon’s advertising and subscription services are poised for growth. Rights to stream Thursday Night Football and select NBA games strengthen its pricing power in both advertising and Prime subscriptions, with both segments consistently achieving double-digit sales growth, excluding currency impacts.
While Amazon may not appear undervalued on the surface, it is sufficiently inexpensive compared to projected future cash flows. Currently, investors can acquire shares at approximately 12.2 times anticipated cash flow for 2026, a striking 42% discount from the average multiple over the previous five years.
BioMarin Pharmaceutical
Finally, long-term investors might consider BioMarin Pharmaceutical (NASDAQ: BMRN), which presents a compelling opportunity following the near-14% decline in the Nasdaq. Despite the time-limited exclusivity of many brand-name drugs, BioMarin has notable catalysts that are attracting investor interest.
BioMarin and Alphabet: Insights into Their Promising Futures
BioMarin focuses on developing therapies for rare diseases and orphan indications. This strategy targets diseases with limited or no available treatments, ensuring minimal competition and leading to strong pricing power. For instance, the company’s leading drug, Voxzogo, which treats achondroplasia in patients aged four months and older, generated $735 million in sales last year—a 56% increase from the previous year.
In addition to expanding Voxzogo’s label, BioMarin boasts a promising pipeline. The pipeline includes BMN 351, an experimental treatment for Duchenne Muscular Dystrophy, and BMN 333, which is being studied for various skeletal conditions. The management team is optimistic about reaching $4 billion in annual sales by 2027, a significant increase of 40% from the $2.85 billion reported for 2024.
Currently, BioMarin’s forward price-to-earnings (P/E) ratio stands at 13.5, marking a 64% discount from its average forward-year earnings multiple over the past five years.
Alphabet: Capitalizing on Market Dominance and Innovation
Alphabet, the parent company of Google, presents itself as an attractive investment following the recent Nasdaq correction. Although it faces short-term advertising uncertainties similar to those impacting The Trade Desk, Alphabet has multiple avenues to drive growth.
Google remains the foundation of Alphabet’s business. According to GlobalStats, Google has commanded an impressive 89% to 93% share of global internet search for the past decade. This dominant position in search has given Google strong advertising pricing power and contributed significantly to Alphabet’s robust operating cash flow. In the fourth quarter, approximately 75% of Alphabet’s net sales were derived from advertising, a figure that mirrors favorable economic conditions.
Looking ahead, Alphabet’s cash flow is expected to receive a boost from Google Cloud services. By integrating generative AI solutions into its offerings, Alphabet is positioning itself as the world’s third-largest cloud service provider by global spending, focusing not just on growth but also on enhancing profit margins, which are generally higher than those seen in advertising.
Long-term investors can currently purchase shares of Alphabet at 16.4 times projected earnings for 2026, representing a 27% discount compared to its five-year average.
Seize Your Opportunity with “Double Down” Alerts
If you’ve ever regretted missing out on top-performing stocks, this is your chance to rectify that. Our expert analysts have occasionally issued “Double Down” stock recommendations for companies poised for significant growth. If you believe you may have missed earlier investment opportunities, now is the ideal time to act before the window closes. Consider these remarkable numbers:
- Nvidia: A $1,000 investment when we recommended it in 2009 would now be worth $312,980!*
- Apple: A similar investment in 2008 would have grown to $42,421!*
- Netflix: Investing $1,000 during our recommendation in 2004 would now yield $537,825!*
At present, we are issuing “Double Down” recommendations for three remarkable companies, and opportunities like this may not appear again soon.
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*Stock Advisor returns as of March 24, 2025.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is also a board member. Sean Williams is invested in Alphabet, Amazon, and PayPal. The Motley Fool holds positions in and recommends Alphabet, Amazon, Intuit, PayPal, and The Trade Desk, and recommends BioMarin Pharmaceutical. The Motley Fool’s disclosure policy includes positions in long January 2027 $42.50 calls on PayPal and short March 2025 $85 calls on PayPal.
The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Nasdaq, Inc.
