Stocks to Buy and Avoid as the Market Tumbles

The stock market hit correction territory in January, and there could easily be more bumps ahead. In this segment of Backstage Pass recorded on Jan. 24, Fool contributors Toby Bordelon, Brian Withers, Rachel Warren, and Danny Vena discuss their top stocks to jump on and a few to stay far away from right now. 

Toby Bordelon: One thing we do get in sell-offs guys is we maybe we get opportunities. We've got some opportunity. Opportunity to buy some good companies, also the opportunity to realize there are some companies out there that are just suck and we shouldn't buy on no matter what happens. We're seeing both of that, I think in this market right here.

The mark of a good investor is figuring out the difference between the good company that's an opportunity, and the bad company that you just don't want no matter how cheap the stock might be. Let's think about that. Let's help our viewers out a little bit.

Let's give me one company you'd buy today and one that you wouldn't touch with a Thurl Ravenscroft's, 39.5 foot pole. For those who don't know that name. He's the guy who provide the vocals for You're a Mean One, Mr. Grinch, in that classic holiday tale. Let's look at that Brian, up first, one to buy and one to not.

Brian Withers: Love the 39.5 foot pole reference. I'll start with that one. One I wouldn't touch Stitch Fix (NASDAQ:SFIX) surprisingly, I've been a bull for Stitch Fix in the past. I sold it I want to say six months or so ago. It might look like a deal under $2 billion. Similar to Peloton I think they have some real issues that they have to deal with.

They're facing external challenges that they really don't have much control over. Potentially supply chain issues, hybrid workforce with us working from home, we may not need as many clothes refreshes for being in a workplace. I love the idea of the company. But I want to see some, a couple of quarters in a row of real solid growth and progression of improving customer.

Toby Bordelon: Hey Brian?

Brian Withers: Yeah.

Toby Bordelon: Guess what's the best performing stock in my portfolio is today?

Brian Withers: Oh, no, Stitch Fix?

Toby Bordelon: Over 11% man. [laughs]

Brian Withers: Wow, that's awesome.

Toby Bordelon: On a time frame of longer than today, [laughs] I'm with you on that. What's your buy company?

Brian Withers: My buy company, I actually bought a company last Thursday and since we've gone through Friday's business trading day and Monday's trading day, I can actually talk about it.

I bought Okta. If you're interested in joining me, you can get it at 8% cheaper than I [laughs] bought it on Thursday. Okta, I think it's going to be around for a long time as people move to the cloud. Rachel, what about you?

Rachel Warren: Yeah. That's awesome. I think I'll also start off with a company I would not buy, even with someone else's money. That would be GameStop. I feel this was the stock that everyone talked about for a little while after the Reddit, meme crowd buzz, and then I just haven't heard about it in ages.

I did a quick Google search to see what's going on with GameStop [laughs]. It was down 8% today. We know that this was a company that was struggling before the pandemic.

Then the Reddit crowd artificially inflated the stock price by just going and buying up a ton of shares. That excitement seems to have really died down with each passing month since that time. Sadly, I just think that there are much better companies to invest in if you want to invest in the gaming space.

One company that comes to mind that I don't talk about a lot, but we've talked about a lot on the shows, Jose does a lot, is Roblox, one of those companies that equips gamers with the tools to build their own game. I think you look at a company like that and it's much more the way of the future. In terms of stock I would buy or two, one I already own, Shopify.

I keep getting notifications, like Shopify is down 10% today and yeah, it's down another 5% or 10%. It's getting even more in that territory. I'm like, "Perhaps it time to add to my position."

Then another stock I want to buy that I have not purchased yet is Airbnb and it's also trading on sale. I might wait a few more days. Well, now I have to, but [laughs] I think that's what I'm going to add to my list shortly.

Toby Bordelon: Danny, what do you think?

Danny Vena: Any stock that falls under the category of meme stock, I wouldn't buy with your money. I don't care if it's GameStop, AMC, and just so, folks, for full disclosure here, I sold AMC right before the meme stock craze hit. At one point I could've had I don't know, a 50-bagger or something if I had held it. But the decision to sell AMC stock was sound.

I wasn't able to sell. Hindsight being 2020, I might have held it for another month or two and got some more money out of it. But yeah, I wouldn't buy that stock with your money.

Oh my gosh, there are so many great stocks that are on sale right now. I'm going to give you a couple of them because these are ones that I have a really high conviction on.

I've already talked about MercadoLibre. I will also add to that The Trade Desk, which is the leader in digital advertising, works with all the major ad agencies and continues to notch up quarter after quarter after quarter after quarter over year growth.

Actually, it didn't do badly during the drawdown that we saw soon after the pandemic started. Then the other one that I would mention is Nvidia. Not only is Nvidia great because it has this solid base of gaming chips that it sells, and its gotten 80% of the discrete desktop GPU market.

But also these chips are used now for cloud computing, for data centers, for AI, for self-driving cars, you name it, virtual reality, augmented reality. That is a great stock to just buy, forget about and look at it in 10 years and you'll be glad you did.

Toby Bordelon: Thank you, Danny. I'll offer two real quick here. The one I wouldn't buy right now is Rivian. It's an interesting company. But the price is just not where it needs to be.

Give me another 50% down, and then maybe I will think about figuring out where I would actually buy it. But I don't even know that it will be at that price, quite honestly. $60 billion company, has only produced a couple hundred automobiles right now.

One that I think I would buy, Disney. I find Disney quite compelling, honestly. I've been talking this up to some friends of mine in a chat we've got on investing and two of them bought Disney today as luck would happen.

I think it's a good company you might want to look at. They got a lot going on for them. Maybe Microsoft too. That's a $2 trillion company, but it's not a bad one.