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7 High-Conviction Stocks to Consider Amid the Stock Market Sell-Off

By Brian Withers and Matthew Frankel, CFP® - Mar 12, 2021 at 6:35AM

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This basket should have something for just about every investor.

Growth stocks have been on a bit of a roller coaster ride lately. Sometimes this gives opportunistic investors a chance to buy great companies at a discount. On a Fool Live episode recorded on March 3, Fool contributors Brian Withers and Matt Frankel discuss seven of their highest-conviction stock ideas for investors today.

Matt Frankel: We gave the advice a little while ago about adding to our highest-conviction stocks. I know Brian mentioned his portfolio concentration, things like that. I got to think that the most concentrated ones are his higher-conviction stocks. [laughs]. The specific question from JP says, "Your three or four highest conviction stocks after this pullback." For that purpose, I'm going to limit this to tech stocks. I'd say my highest conviction stock overall that we've talked about today is probably Disney. But that's not really a tech stock that's pulled back a lot.

I'd say, out of the tech stock pullback, and then I'll shut up and let Brian answer it, out of the tech stock pullback, probably Square and Apple are going to be out of those we talked about. I still think Square has just tapped into the ecosystem concept of its financial services business. It doesn't offer interest-bearing deposit accounts right now, it doesn't offer checking accounts, it doesn't offer personal loans, it doesn't offer auto loans, it doesn't offer mortgages or insurance products, all these other things that can bring into its ecosystem. I think, as it incrementally adds these products, there's going to be an amazing network effect. It's going to work like Apple's ecosystem of products, which I mentioned earlier why I love Apple so much.

If you want to talk about one outside of the stocks we mentioned today, one of my highest conviction names is a company called Digital Realty Trust, which has pulled back a lot lately. It's essentially a real estate stock that trades as a tech stock. It's a company that owns a bunch of data centers, which is what all of these tech stocks, where all their software-as-a-service products and other Cloud-based applications and things like that, this is the physical homes for these. That's pulled back quite a bit. If you're looking for a tech play without a ton of downside risks because it's backed by real estate, that's a company [for you], the ticker symbol for that one is D-L-R. That's one of my favorite stocks after this pullback. Brian, what are you watching? Or you just not looking at your brokerage at all?

Brian Withers: No. There's a bunch of things that look like good deals right now. Among the ones we talked about, I would say Twilio is my favorite. I said it's got plenty of growth levers and they're extremely innovative and have added to their addressable market over the last several years. That's the kind of company that you want to get in on who has the optionality and has the ability to grow into adjacent markets.

I would be remiss if I did not talk about MercadoLibre at 25% off sale today. That one is just a fantastic long-term play on a market that is still in the single-digits in e-commerce in Latin America. Not only e-commerce, MercadoLibre has a fantastic payments platform and they're going to become a fintech innovator to allow consumers, the unbanked and under-banked consumers in the region, to have access to financial products that they need.

Lastly, just because the coronavirus is ending, just because we're getting a vaccine and we're going to see people in person again, doesn't mean that you're going to need a pen and a paper to sign documents anymore. People who have adopted DocuSign's e-signature platform are not going away. They're going to continue to expand their use cases, they're going to continue to grow customers. They're close to finishing their data center to allow them to get FedRAMP-level high approval, which will allow them to get into DOD [Department of Defense] and [the] veterans administration. DocuSign is just a solid buy to me. We can't tell you that. We can't give you personal advice on the show, but I love the price it's at. It's going to come out with earnings here on March 11 and I think it's going to beat. I'm just excited about DocuSign, MercadoLibre, and Twilio over the next five to 10 years.

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Stocks Mentioned

Apple Inc. Stock Quote
Apple Inc.
AAPL
$145.54 (-1.07%) $-1.57
The Walt Disney Company Stock Quote
The Walt Disney Company
DIS
$105.18 (-2.00%) $-2.15
Mercadolibre, Inc. Stock Quote
Mercadolibre, Inc.
MELI
$787.81 (-0.90%) $-7.15
Digital Realty Trust, Inc. Stock Quote
Digital Realty Trust, Inc.
DLR
$128.41 (-2.12%) $-2.78
Block, Inc. Stock Quote
Block, Inc.
SQ
$79.70 (-5.29%) $-4.45
Twilio Inc. Stock Quote
Twilio Inc.
TWLO
$99.68 (-10.03%) $-11.11
DocuSign Stock Quote
DocuSign
DOCU
$74.49 (-5.91%) $-4.68

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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