Volatility is an inevitable feature of the stock market, especially in growth stocks. Investors can expect this market segment to be the first to recover when a broader bull market begins. Growth stocks, on the other hand, tend to drop significantly in the early stages of a decline.
If possible, consider these declines not to be feared, but as an opportunity to buy quality companies at lower valuations. A little preparation in the form of a watch list can make a big difference in ensuring you're ready to act when the next economic downturn begins.
With this goal in mind, let's take a look at some great growth stocks worth considering during a stock market downturn.
1.Microsoft
microsoft (NASDAQ: MSFT) Stocks aren't cheap these days. Rising stocks in the tech industry have boosted the software giant's valuation to about 14 times annual sales. This makes him one of the highest premiums a profitable technology leader can pay. apple For context, the stock is available at 7x earnings. Amazon It's even cheaper with just 3x the sale.
Microsoft's many growth levers help explain why investors like this stock. The company has significant exposure to the artificial intelligence (AI) boom both through its OpenAI partnership and the availability of the technology across its software portfolio. Microsoft's Enterprise Services division is rapidly expanding, so there's no need to wait for AI to significantly increase revenue. The growth here has seen the company's sales soar 16% in its most recent quarter.
2.Costco
costco wholesale (NASDAQ:COST) In contrast to consumer staples sold in bulk by the millions by warehouse retailers, stocks never seem like stolen goods. The company's stock has delivered big returns for shareholders over the past year, soaring more than 40% in 12 months while the broader market is up 26%. This increase puts the company's valuation at more than 1.3 times sales, or twice the interest it pays competitors. walmart. You may want to wait for the stock price to fall before jumping into Costco stock at that price.
Indeed, Costco is firing on all cylinders right now. Thanks to innovative product offerings like the recent gold bar craze, customer traffic is up, membership renewal rates are at an all-time high, and shoppers are flocking to the company's online business. doing. However, the company could disappoint investors this year, given higher expectations for increased membership fees and improved profitability.
If there's a pullback because the chain falls just short of Wall Street's lofty targets, I'll buy the stock.
3. Metaplatform
meta platform (NASDAQ:Meta) has been one of the biggest winners of the 'Magnificent Seven', with returns of over 130% over the past year. The rise is no surprise given how incredibly strong the social media giant's business is. Despite a tough digital advertising market, revenue rose 16% last year and profits rose 66% to $39 billion. “We had a good quarter as our community and business continue to grow,” CEO Mark Zuckerberg said in a February press release.
Wall Street is salivating at the prospect of further profit growth once the digital advertising market begins to recover. Keep an eye on the average price per ad metric for signs of that recovery over the next few quarters. In the meantime, keep Meta on your watch list in case the economic downturn leads to more convincing valuations. The stock seems a little expensive considering its current premium of 33 times earnings.
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Randi Zuckerberg is a former head of market development and spokesperson at Facebook, sister of Meta Platforms CEO Mark Zuckerberg, and a member of the Motley Fool's board of directors. John Mackey, former CEO of Amazon subsidiary Whole Foods Market, is a member of the Motley Fool's board of directors. Demitri Kalogeropoulos has worked at Amazon, Apple, Costco Wholesale, and Meta Platforms. The Motley Fool has positions in and recommends Amazon, Apple, Costco Wholesale, Meta Platforms, Microsoft, and Walmart. The Motley Fool recommends the following options: A long January 2026 $395 call on Microsoft and a short January 2026 $405 call on Microsoft. The Motley Fool has a disclosure policy.
“3 Unstoppable Growth Stocks to Buy When There's a Stock Market Selloff” was originally published by The Motley Fool.
