Do the smartest investors run for the hills when the market pulls back? Absolutely not. Instead, they capitalize on the opportunity to add to their positions in great stocks at more attractive prices.
Of course, not every stock that drops during an overall market sell-off is a good pick. Some, though, continue to have tremendous growth prospects even if their declines seem to indicate otherwise. Adding $1,000 or more to these three stocks would be a brilliant move right now.
Fiverr (NYSE:FVRR) stock is currently more than 30% off its high from earlier this year. It's not just the sell-off of tech stocks that caused Fiverr's plunge, though. The company's freelancing platform could face new competition.
It looks like Microsoft (NASDAQ:MSFT) is about to jump into the freelancing space by offering a new "LinkedIn Marketplaces" service. LinkedIn could emerge as a major rival to Fiverr over time. So why does it make sense to buy more shares of Fiverr right now? I think the worries are overblown.
For one thing, there's no guarantee that Microsoft's LinkedIn offering will be a hit with freelancers. Even if it is, though, my view is that the market is big enough to support multiple winners.
Fiverr estimates that its U.S. addressable market totals $115 billion. There's also a huge opportunity in international markets. With Fiverr's market cap now below $8 billion, I think the stock has plenty of room to run even with Microsoft throwing its hat into the ring.
Shares of Teladoc Health (NYSE:TDOC) are close to 38% below their level in early February. Stay-at-home stocks have been hit pretty hard as COVID-19 vaccinations have steadily increased. Some Wall Street analysts were also disappointed with Teladoc's 2021 guidance for paid U.S. membership.
I'm not concerned about either of these factors. Teladoc's prospects should remain strong even when the pandemic is over. Sure, 2% year-over-year U.S. paid membership growth is really low compared to the company's massive growth in 2020. However, Teladoc expects revenue will soar around 80% this year and at least 40% adjusted for the Livongo acquisition.
Teladoc Health CEO Jason Gorevic said in the company's Q4 conference call that Teladoc has a 50% greater growth opportunity now than it did a year ago. He noted, though, that the company is "earlier in the selling process" after its explosive performance in 2020 and is being more conservative with its membership growth projection.
The long-term prospects for Teladoc appear to be exceptionally good, particularly with Livongo's digital health platform for managing chronic conditions under its umbrella. Virtual care will almost certainly be a much bigger market 10 years from now than it is today. I expect Teladoc Health will continue to be the market leader.
The Trade Desk
The Trade Desk (NASDAQ:TTD) is another stock that's more than 20% off its high from just a few weeks ago. As was the case with Fiverr and Teladoc, there's another reason in addition to the overall market downturn causing headwinds for The Trade Desk.
Several ad-targeting stocks crashed last week after Alphabet's (NASDAQ:GOOG) (NASDAQ:GOOGL) Google announced it's taking steps to limit the capability to track users across different websites. This could hurt companies like The Trade Desk that help advertisers target specific types of customers.
My view, though, is that The Trade Desk could actually be more attractive to advertisers as a result of Google's changes. The Trade Desk CEO Jeff Green wrote in a blog post that Google's latest move "is great news for the open internet." It could set the stage for the Unified ID 2.0 alternative that The Trade Desk is championing to flourish.
I think the Trade Desk remains well-positioned to dominate the buy-side digital advertising market. That market still has an enormous growth runway. Buying additional shares of The Trade Desk now should pay off handsomely over the long run.