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Buy the Dip: 3 Stocks to Buy Today and Hold for the Next 3 Years

By Rick Munarriz - May 16, 2021 at 9:05AM

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Some of the market's most disruptive companies are trading for at least 35% below their highs. Let's go shopping.

Growth stocks started to bounce back on Friday, but the past three months have been rough for investors in some of Wall Street's most dynamic investments. If some of the stocks that you've been looking to buy have corrected sharply, now is a good time to buy the dip. 

DocuSign (DOCU 2.77%), Twilio (TWLO 1.54%), and Tesla (TSLA 4.67%) are all trading at least 30% below their recent all-time highs. These are strong and disruptive companies that aren't going away. Let's go over why these are three stocks you may want to consider buying into at today's compelling price points. 

A stock chart line bouncing off a trampoline.

Image source: Getty Images.

DocuSign

Can you remember your last wet signature? DocuSign has revolutionized the way we sign legal documents, and that's not going to change as we emerge out of the pandemic. Some disruptions are here to stay, and DocuSign is just starting to cash in on its pole position in digital signatures and a now fully fleshed-out ecosystem in the realm of digital document management. 

Even though the stock has retreated 35% from its peak last summer, this is a much better company right now. Revenue growth has accelerated in back-to-back fiscal years, and the 57% top-line surge it posted in its latest quarter was its strongest growth since its 2018 IPO. Adjusted earnings more than tripled in that quarter. In the three quarterly reports since the stock peaked in early September, DocuSign has landed at least 68% ahead of analyst profit targets. Imagine something that has gone on sale but is even better right now despite the lower price. If DocuSign comes to mind, you may as well sign on the virtual dotted line after you dig into some due diligence to make sure it's the right fit for your growth stock portfolio. 

Twilio

It's hard to view Twilio at 35% below February's all-time high as anything other than an opportunistic bargain. Twilio is the leader when it comes to in-app communication solutions, playing a pivotal role in some of the apps that you use the most to get things done. If you're using a third-party app to have a meal delivered, resetting your password on a streaming app without leaving the application, or checking on availability of a villa you want to rent for Memorial Day weekend, you're probably dealing seamlessly with Twilio.

There's a lot to like here. Twilio has come through with adjusted profits when analysts were bracing for losses in four consecutive quarters. It routinely puts out conservative guidance -- like the 44% to 47% it was targeting for the first quarter that it reported earlier this month. Revenue rose 62% for the period

Twilio now has 235,000 active customer accounts. The days of investor worries over the exit of major customers are over -- like four years ago, when Uber (NYSE: UBER) was accounting for 12% of its revenue and experimenting with other alternatives. Twilio's 10 largest customers now combine for 12% of the revenue mix. With strong engagement rates and a product that will only become increasingly popular as we rely more and more on our smartphone apps, Twilio's dip is a dinner bell for the tech-hungry.

Tesla Motors

It took me longer than others to warm up to Tesla Motors, but better late than never. I became a shareholder and Model Y owner in February, and it's now one of my highest-conviction investments. Tesla stock isn't cheap, and you will find more established automakers that delivered more than the 184,800 vehicles Tesla delivered in this year's first quarter. 

However, how many rival carmakers can make $10,000 off a simple full-self-driving upgrade or a $2,000 acceleration boost that's already built in to the vehicle? With its fleet of Supercharger stations, how many carmakers own every gas station you'll ever need? Elon Musk is a polarizing helmsman, but his brilliance is pretty much undeniable. Tesla is now consistently profitable, and it's blowing the ceiling off what's possible in terms of margins and lifetime earnings from a car sale. It is different from other automobile stocks, and right now it just happens to be available for 35% less than where it was in January.

DocuSign, Twilio, and Tesla have all shed more than a third of their peak value. They are all strong "buy the dip" candidates that are worth holding for the next few years.   

Rick Munarriz owns shares of DocuSign and Tesla. The Motley Fool owns shares of and recommends DocuSign, Tesla, and Twilio. The Motley Fool recommends Uber Technologies. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Tesla, Inc. Stock Quote
Tesla, Inc.
TSLA
$900.09 (4.67%) $40.20
Twilio Inc. Stock Quote
Twilio Inc.
TWLO
$86.90 (1.54%) $1.32
DocuSign Stock Quote
DocuSign
DOCU
$74.34 (2.77%) $2.00

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