The stock market has been very volatile so far in 2021, with large swings in both directions. Investors have seen many of their hot growth stocks from 2020 take a beating and aren't sure if that's a portent for the year ahead.
But seasoned investors know that if there is a market crash, it's not time to panic, it's time to buy -- because that's when you can scoop up real bargains in stellar companies. To that end, we asked three Motley Fool contributors what they'll be buying if the market swoons.
The Apple of my eye
Barbara Eisner Bayer (Apple): One of the advantages of having a long-term investing vision is the ability to purchase great companies when they're out of favor with the market. But if they're not getting Wall Street love and then the market tanks, it's time to hop on all fours and pounce. That's just what I plan to do with iPhone creator Apple (AAPL 0.17%) if there's a market crash.
Cupertino's darling reported fiscal first-quarter sales at the end of January. Revenue hit an all-time high of $111.4 billion and earnings per share were $1.68. The company's other divisions -- wearables, iPhones, and services -- hit new revenue records, as well. And sales in China were up 57% from a decline in the previous quarter. Yet the stock is trading down about 8% for the year.
Wall Street may be down on Apple, but I'm not, because when I look into my virtual crystal ball, I see nothing but dollar signs in the company's future. And I'm not alone.
On March 10, longtime bull Daniel Ives from Wedbush said the recent sell-off is creating a "golden buying opportunity" and the new iPhone 13 could be a "game-changer." He has a price target of $175 on the stock, but sees an even more bullish possibility of $225. (It's trading at around $122 a share as of this writing.) This seems a real possibility considering Apple recently reported super-high demand for the larger iPhone 12 models.
Apple is aggressively pursuing new areas, as well. Analyst Ming-Chi Kuo thinks there'll be an augmented reality (AR)/virtual-reality headset in the very near future, with AR glasses following. And the company's creating a new $1.2 billion state-of-the-art research and development facility in Munich as its European Silicon Design Center "to focus on 5G and future wireless technologies."
Finally, let's not forget the rumored self-driving car and the fact that 5G smartphones are just starting out and topped the smartphone sales charts last quarter.
Apple has been in my portfolio since the early 2000s and has been one of my best performers, up almost 3,000%. I try to keep it no more than 10% of my overall allocation, so each time it rises above that, I sell a portion to bring it back down. And each time I've sold, it's eventually barreled back up to the point where I have to sell again.
But now it's hovering around that magic 10% number, so if the market crashes, I'm going to buy some more. I don't need that crystal ball to tell me that Apple is and will continue to be a winner.
Waiting for a reasonable price
Dan Caplinger (Airbnb): Market crashes are hard to go through, but they can also be some of your best buying opportunities. In particular, stocks that have always traded above your comfort level can sometimes become affordable for just a short period of time -- and then are often among the first to rebound.
Airbnb (ABNB -1.42%) is one such stock. I tried to get shares of the vacation rental website at their $68 per share IPO price, but my broker didn't choose to allocate any shares to me. By the time they opened near $150 per share, they were more expensive than I wanted to pay.
That said, Airbnb has huge opportunities for future growth. Even during the travel bans throughout 2020, the company held up better than many would have expected, with tight cost controls that kept it from losing any more money than necessary. Now that people are looking to scratch their travel itch in 2021, Airbnb will inevitably see sales soar.
If investors indiscriminately sell off Airbnb stock in the market crash, I'll be looking to buy. I don't expect any pullback would last too long, though.
Eyeing some portfolio "protection"
Sean Williams (CrowdStrike Holdings): If the recent correction in equities were to turn into a full-fledged crash, my plan is to use the panic-selling that often accompanies major downside to buy into hypergrowth cybersecurity stock CrowdStrike Holdings (CRWD 4.28%).
The beauty of cybersecurity stocks is that they've transformed into a basic-need service for businesses of all sizes. No matter how well or poorly the U.S. economy is performing, hackers and robots seeking to steal enterprise and customer data don't take a day off. As time passes, the onus of providing network and cloud protection is likely to fall onto third-party providers like CrowdStrike.
What makes CrowdStrike so special is the company's cloud-native Falcon platform. Having been built in the cloud, Falcon is able to respond to threats faster than on-premise solutions, and in many instances, at a lower cost. It's also a platform that leans on artificial intelligence to grow smarter over time. Each week, Falcon oversees more than 3 trillion events, so its ability to respond to threats is evolving and quickening over time.
The company's operating results demonstrate, unequivocally, that its clients like the product. CrowdStrike has more than doubled its customer count in each of the three previous years and is on track for approximately 85% customer growth in fiscal 2021 (it'll report its fiscal fourth-quarter results next week).
Moreover, only 9% of the company's clients had four or more cloud module subscriptions 3 1/2 years ago. By the end of October 2020, 61% of its customers had at least four cloud module subscriptions. This demonstrates the scalability of Falcon and is a big reason why the company has hit its long-term subscription gross margin range of 75% to 80% so early in its growth process.
As you might imagine, investors have been paying through the nose for this superior growth. At one point last month, CrowdStrike was valued at roughly 45 times forward-year sales. But following its recent pullback, CrowdStrike is now closer to 35 times forward-year sales.
If panic-selling ensues, CrowdStrike is the company I'm planning to buy.