For many, yesterday's big drop in the stock market was a scary, ominous sign of what might be to come. But long-term investors who have prudently kept money on the sidelines for the next golden opportunity should be overjoyed at the prospect of a market correction -- because it may give you the attractive entry points you've been looking for.
Investing in a straight-up market
Last month, I noted just how hard it is to invest when the market is soaring. The pressure to do something -- anything -- seems to increase every day that you watch share prices go up.
Yet the best thing you can do in those situations is nothing. Nothing, that is, except to plan for the future -- and, more specifically, the inevitable time in the future when the market finally comes down again. If you have a plan in place, then you'll be better prepared when the time comes to take smart, profitable action.
Making a list, checking it twice
One great way to keep your emotions in check as an investor is to make what may seem like unreasonable demands on stocks you're assessing as candidates. By setting your standards higher, you leave yourself open to never getting the deals you want. But when you occasionally do find a stock that meets your criteria -- and it'll happen from time to time, no matter how ridiculous those criteria may be -- it'll give you the best prospects for profits that you could ever ask for.
Today, let's look at five big-growth candidates whose share prices have soared just a little too high lately. If the market's fall yesterday turns into a full-blown correction, then these stocks might suddenly look a lot more attractive.
priceline.com (Nasdaq: PCLN )
Priceline has distinguished itself with its customer-bidding process and its unparalleled ability to negotiate from a position of strength with travel providers. But eventually Priceline will have to slow down. That's why despite strong results, paying 30 times earnings seems expensive. I'd rather "name my own price" on the shares at about a 20% discount, corresponding to its 24% long-term future expected growth rate -- and hope that William Shatner can deliver.
Intuitive Surgical (Nasdaq: ISRG )
Robotic surgery is the wave of the future, and Intuitive Surgical is surfing on its leading edge. But growth for such an expensive item has an inherent speed limit, and paying 30 times forward earnings estimates doesn't match up well with realistic growth projections. Bring that price back down to where shares traded last summer, however -- about 30% lower -- and the company starts looking more attractive again.
Wynn Resorts (Nasdaq: WYNN )
Unlike Priceline and Intuitive Surgical, Wynn Resorts has already seen a nice move down for its share price. If the company is indeed on the cusp of a deal to develop a new prop