If you have $5,000, buying these top 5 stocks right now would be a stroke of genius

As the market dips into bearish territory (down 20% or more from its peak), there is a lot of fear around. This uncertainty stems from rising federal interest rates, inflation and a potential recession, which are causing investors to pull out of the market en masse.

However, this is a mistake. Bear markets are not uncommon; they occur once every three and a half years. Additionally, stocks tend to have some of their best performing days during periods of recovery. For this reason, savvy investors should look for good stocks to grab during a market panic.

I have a list of five good buys that should see a strong rally when the bear market ends. Investing $5,000 in these top stocks, all of which trade at relatively low valuations, could be a stroke of genius you’ll be sure to thank yourself for later.

1.Alphabet

Alphabet (GOOG 5.20%) is the parent company of Google and YouTube, among others. It primarily generates revenue through advertisements on its platforms; however, advertising spending tends to decline during recessions. Following this reflection, the share was sold at a historically low valuation.

GOOG PE ratio given by Y charts.

While Alphabet may see short-term headwinds, the long-term dominance of this business is undeniable. It’s a free cash flow printing machine, generating $15 billion in the first quarter alone. With nearly $134 billion in cash on its balance sheet, Alphabet is built to weather any downturn the economy throws at it.

Another hidden advantage here is Alphabet’s $70 billion stock buyback plan. This program will reduce the number of shares outstanding, which will make each share more valuable when the stock drops from its lowest price.

2.Nvidia

Nvidia (NVDA 5.55%) manufactures graphics processing units (GPUs) that can be used for various tasks. Its main recent driver has been its data center division, which outpaced its gaming segment for the first time this quarter. In the first quarter (ended May 1) of fiscal 2023, Nvidia’s data center division grew 83% year-over-year (YOY) to $3.75 billion, while games grew 31% to $3.62 billion.

With more and more enterprise and consumer technology moving to the cloud, Nvidia’s data center will only continue to grow. During its recent conference call, analysts asked if management was concerned about its data center growth in terms of economic headwinds, to which CEO and Founder Jensen Huang responded, “Demand for our data center is strong and will stay strong.”

GPUs have become integrated into almost any graphics or computing scenario, and Nvidia benefits significantly from this. With shares trading at 44 times earnings, it’s a solid value for a company that has consistently increased revenue quarter after quarter and was trading at a P/E ratio of over 100 at the end. from last year.

3.Airbnb

People were stuck at home for two years and couldn’t (or didn’t want to) travel. Now people are traveling again and companies like Airbnb (ABNB 8.14%) hold to benefit from it. In its first quarter results, revenue was up 70% year-over-year and is now up 80% from pre-pandemic 2019 numbers. This quarter was a record high for Airbnb, and the future looks bright. equally promising announcement.

Airbnb recently revamped its platform and now offers many more options than the standard “pick a place and date” search function that travel websites have used for years. Now customers can book multiple stays in one trip, search for unique travel experiences and use travel insurance.

Airbnb estimates it will experience a similar growth rate in the second quarter as it did in the first quarter and anticipates stronger than average demand for the third and fourth quarters. Of course, that sentiment could change if consumers decide to save money instead of travel, but Airbnb’s long-term shift away from standard hotel stays is pretty obvious.

4. MercadoLibre

In Latin America, e-commerce is growing rapidly thanks to MercadoLibre (MELI 5.84%). With the company’s wide range of offerings, residents of Latin America can take advantage of two-day shipping to many locations, digital payments, access to credit cards and a huge marketplace. of e-commerce.

Business also grows like a weed. First-quarter commerce revenue rose 44% year-on-year to $1.3 billion, and fintech revenue rose 113% to $971 million.

However, as the US economy slows, international markets are also expected to be affected. Q2 results will reveal the strength of the Latin American consumer, but until then investors should check how highly this stock is valued.

Table of MELI PS ratios

MELI PS report given by Y charts.

MercadoLibre trades for less four times sales. The last time it was this low? How about never. MercadoLibre didn’t even trade that cheaply during the height of the Great Recession. This stock is incredibly valuable right now, and investors should grab every stock they can get.

5. CrowdStrike

Last but not least is the cybersecurity provider CrowdStrike (CRWD 5.77%). The previous four companies are affected by consumer strength, but not by CrowdStrike. This company provides endpoint protection for devices that access a company’s network, such as laptops or phones. It uses a cloud-first approach that makes it data-rich and easy to integrate.

Cybersecurity is an expense that businesses can’t get enough of, and many businesses are slow to embrace it. This necessity works in favor of CrowdStrike regardless of economic conditions.

In the first quarter of fiscal 2023 (ending April 30), CrowdStrike achieved annual recurring revenue (ARR) growth of 61% to $1.9 billion and converted 32% of its revenue into streams. available cash. He also reiterated a strong forecast for the rest of the year, with revenue expected to rise 52% from last year’s total.

The cybersecurity industry has massive tailwinds blowing in its favor, and CrowdStrike is in a prime position to capture market share regardless of economic conditions.

The common theme with these five companies is that stocks are down significantly right now, but if you look at them with a three to five year holding mindset, the returns can be immense.

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