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Headlines
- Smart Strategies for Market Fluctuations: Market downturns can be ideal for acquiring shares of strong companies at reduced prices.
- Alphabet’s Robust Growth: Alphabet's dominance in digital advertising and impressive revenue growth make it an appealing choice if market conditions become favorable.
- Visa’s Resilience and Opportunity: Despite current challenges, Visa's consistent revenue and profits, combined with its widespread network, position it well for long-term gains.
When the stock market experiences a downturn, it often presents a valuable chance to acquire shares of top-performing companies at more accessible prices. Here are two dynamic growth stocks that could be particularly appealing if market conditions shift.
Alphabet
Alphabet (NASDAQ:GOOGL), the parent company of Google, stands out as a powerful player in the digital advertising arena. With its leading position in internet search, Alphabet generates substantial revenue, primarily from advertising. Over the past year, Alphabet reported revenue of $328 billion, equating to nearly $1 billion per day, with a significant portion coming from its advertising segment.
Alphabet's impressive growth over the past decade is notable, with quarterly revenue increasing by an average of 19% over that period. This robust growth has contributed to a strong compound annual growth rate (CAGR) of 20% since 2014. Currently, Alphabet’s stock is trading at a lower valuation compared to its historical average, with a price-to-earnings (P/E) ratio of 25 versus its 10-year average of 30. Despite ongoing regulatory challenges, such as an antitrust lawsuit, the lower valuation could present a favorable buying scenario if market conditions become more volatile.
Visa
Visa (NYSE:V) is another compelling stock to consider, even amid current market uncertainties. Over the past decade, Visa has achieved an impressive 10-year compound annual growth rate (CAGR) of 18%, outperforming the S&P 500 index's 13% over the same period. Visa's success is driven by its simple yet effective business model, which facilitates hundreds of billions of transactions annually. Each transaction incurs a fee for using Visa’s network, contributing to substantial revenue.
In the last year, Visa generated $35 billion in revenue, with a significant portion converted to profit due to its asset-light model. The company reported nearly $19 billion in net income during this period. Despite recent market concerns and an antitrust lawsuit, Visa’s consistent performance and extensive network position it as a promising choice. The current below-average P/E ratio of 28, compared to its 10-year average of 34, may offer an advantageous entry point if market conditions become more favorable.
Both Alphabet and Visa have demonstrated remarkable growth and resilience. Their strong business models and financial performances suggest they could be attractive additions if the market experiences a downturn.
