PHUKET: Market corrections like the one that started last August are never times to completely abandon the stock market. Instead, they are great opportunities to buy quality stocks with strong fundamentals and technical charts, that should emerge higher once the correction is over.
For that reason, you should consider adding the following stocks to your market correction shopping list because (thus far) they have held up nicely and are likely to continue being leaders once this correction has run its course:
Salesforce.com, inc (NYSE: CRM). Large cap salesforce.com has a $48 billion market cap and is focused on customer relationship management (CRM) as a provider of enterprise cloud computing solutions that include apps and platform services along with professional services. Salesforce.com also happens to be a favorite on Wall Street right now because many analysts see substantial billings growth and have raised their fiscal 2016 estimates on both revenues and earnings.
Palo Alto Networks Inc (NYSE: PANW). Large cap Palo Alto Networks has a $15.4 billion market cap and calls itself the next-generation security company that helps keep both private and government organizations secure from cyber-attacks. Given that the rising panic over high profile attacks or hacks is fueling spending on cybersecurity, stocks like Palo Alto Networks are able to consistently beat earnings expectations quarter after quarter. Moreover, cybersecurity stocks like Palo Alto Networks might make nice acquisition targets for growth-starved vendors like Cisco Systems and IBM.
Priceline Group Inc (NASDAQ: PCLN). Large cap Priceline Group has a $63.5 billion market cap as a leading provider of online travel and travel-related reservation and search services through brands that include Booking.com, KAYAK, agoda.com, rentalcars.com and OpenTable. Priceline Group has also recently acquired rival Orbitz (adding brands like Orbitz.com, CheapTickets, ebookers, HotelClub and Orbitz Partner Network to its portfolio). In addition, low oil prices for the foreseeable future will mean more disposable income for consumers around the world to spend on leisure travel.
Google Inc (NASDAQ: GOOGL; GOOG). Large cap Google Inc has a $429 billion market cap with most revenue (as much as 90 per cent) still derived from its core internet search and advertising business. In August, Google announced it would restructure into a parent company called Alphabet. A slimmed down Google will contain the company’s core businesses (including Android, YouTube and Maps) while anything further afield will be placed under Alphabet.
While Google.com remains the search engine of choice for most Internet users (at least a two thirds market share), the advertising business has been flat-lining as marketers spend more on mobile where rates are much lower partly due to the smaller screen sizes. Nevertheless, there will be enough ‘moonshot’ projects (e.g. driverless cars, Google Glass, etc) along with more down to earth ventures (e.g. High-speed broadband internet and cable TV, smart home products, venture capital investments, etc) under Alphabet to ensure potential growth in the future.
However, let me add a word of caution in that I don’t believe the current market correction is completely over, as I can easily see a further 10 to 25 per cent downside from September market levels. I’ve also raised the cash allocations within the portfolios of my clients to both limit any further downside risk, as well as to have funds on hand to shop for quality stocks as they go on sale.
One final consideration: You may already own some of the previously mentioned individual stocks without realizing it because they are already in the ETFs or other funds you own. For that reason, you should always consult with an investment adviser who will make any asset allocation in individual stocks based upon your entire portfolio and any underlying investments in the funds you own.
Don Freeman,BSME is president of Freeman Capital Management, a Registered Investment Advisor with the US Securities Exchange Commission (SEC), based in Phuket. He has over 15 years’ experience working with expatriates, specializing in portfolio management, US tax preparation, financial planning and UK pension transfers. Call for a free portfolio review. Don can be reached at 089-970-5795 or email: [email protected]
— Don Freeman