During last year's market crash, many investors were shell-shocked by the rapid and sudden decline of the stock market. And with the markets now at all-time highs, there are concerns that another crash may not be too far away. At the very least, many stocks are vulnerable to corrections given their inflated valuations.

Three stocks that are on my watch list and that could be excellent buys if they fall in value are Fulgent Genetics (NASDAQ:FLGT)Roku (NASDAQ:ROKU), and Take-Two Interactive (NASDAQ:TTWO). All three have been doing great this past year and are solid investments -- just not at their current prices.

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1. Fulgent Genetics

Genetic testing company Fulgent Genetics has been enjoying an incredible year as demand for its COVID-19 tests has been through the roof. Profits in 2020 were $214 million, a sharp improvement from the losses that it incurred in previous years. And when the company last released its earnings on May 6, sales of $359 million for the first three months of the year were up 4,500% year over year, nearly reaching the $422 million the business generated for all of 2020.

Although the company projects revenue of $830 million for the full year, the bulk of that is going to come from COVID-19 tests. It is trying to become less dependent on COVID-19, but currently, just $100 million in revenue is projected to come from the other main area of its business -- next-generation sequencing.

Admittedly, Fulgent doesn't look like an expensive stock, trading at just 6 times its trailing earnings (the S&P 500 is at a multiple of more than 30). But if there is a big drop-off in COVID-19 testing revenue, Fulgent's bottom line could look very different. Multiple testing companies have scaled back their guidance for the year because of less demand for COVID-19 tests. Abbott Laboratories was one of the more recent, but the difference there is its business is much more diverse than Fulgent's, and thus less dependent on that segment of its operations. 

However, COVID-19 still presents a problem for the world, especially with multiple variants emerging. The slowdown in testing demand may prove to be temporary, which could make Fulgent a great buy. But that is far from a guarantee, and its inflated numbers make me hesitant to invest in the healthcare stock because it's difficult to ascertain just how well it will do; its earnings have been anything but consistent over the past few years. And that's why I wouldn't consider taking a chance on the stock unless it were to fall drastically and trade at less than $60 -- where it was at the tail end of last year. 

2. Roku

Entertainment company Roku has come off its 52-week highs, but the stock remains ultra-expensive. With a P/E ratio of more than 500, investors know the company isn't terribly profitable. Over the trailing 12 months, its net income of $113 million has been less than 6% of the more than $2 billion it recorded in sales during that time.

That said, the business has been performing exceptionally well, with sales in 2020 climbing to $1.8 billion, up 58% from the previous year. Its revenue comes from its platform, which includes ad-related sales, and its streaming products, which fall under the "player" division. Last year, platform sales rose 71%, while player-related revenue was up by 32%.

But like Fulgent, Roku has been benefiting from trends that may not persist as people resume their day-to-day lives and spend less time watching television. That's why I'm skeptical that its impressive growth will continue for much longer. While it can enter new markets, that can often come at a cost of lower margins.

With shares of Roku up more than 180% over the past 12 months (far greater than the S&P 500's gains of 39%), this stock would need to fall significantly before I would consider buying it. There is clearly too much bullishness already priced into it.

3. Take-Two Interactive

Another business that could have some softer numbers as normal day-to-day life resumes is gaming company Take-Two Interactive, known for popular titles such as Grand Theft Auto and Red Dead Redemption. Revenue for the most recent fiscal year, which ended March 31, totaled $3.4 billion, up just 9% from the previous year. Its net income of $589 million grew at a rate of 46%, but that hasn't been enough to make the stock a cheap buy; today, shares of Take-Two trade at 34 times their earnings. That multiple might be acceptable if the company's growth rate was higher, but that just isn't the case.

I do like the business and its strong profits -- which have been at least 12% of revenue in each of the past three years. However, the company projects that its revenue for this fiscal year will come within a range of $3.14 billion and $3.24 billion -- which would be a drop from the past year. And net income would be no higher than $257 million. 

Despite some soft guidance from management (with no specific reason given), the business is still in great shape and it is arguably a better buy than some of its rivals. But I still wouldn't buy shares of the company just yet -- at least not until there's a steep drop in price.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.