Over the past two months, Wall Street and investors have been reminded that crashes and corrections are inevitable.
Although the swiftness of moves lower in the market can be unnerving at times, it's important to recognize that each and every previous crash or correction in the broader market was an opportunity to buy into great companies at a discount. For patient investors, there's simply no better time to put their money to work in the stock market.
Whether the current sell-off is nearing its trough or just beginning, these are three of the most surefire stocks you can buy hand over fist.
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General Motors
When volatility picks up in the market, it's not uncommon for investors to flock to value stocks. One such bargain-priced company that should thrive long after this correction is over is auto stock General Motors (GM -0.05%).
Since the end of the Great Recession, GM and traditional automakers have been outshined by growth stocks. Companies like General Motors have also been weighed down by the debt on their balance sheets. But a multigenerational growth opportunity now sits on GM's doorstep.
Virtually all major countries and economies worldwide are taking steps to combat climate change. One of the easiest ways to reduce carbon emissions is to promote clean-energy solutions for vehicles. The electrification of automobiles in the consumer and enterprise markets should lead to a multidecade vehicle-replacement cycle.
For its part, General Motors has pledged to spend $35 billion on electric-vehicle (EV), autonomous-vehicle, and battery research through 2025. The expectation, according to CEO Mary Barra, is the company will have two dedicated battery-production facilities up and running by 2023, with more than 1 million EVs being produced annually in North America by 2025. The goal is to introduce 30 new EVs globally by mid-decade.
Although it's early, it's worth noting that GM took more than 110,000 deposits of $100 to reserve the all-electric Silverado in just a couple of weeks. Trucks and SUVs generally boast higher margins than sedans, so it's smart on GM's part to focus its efforts on rolling out these cash cows first.
What's more, the company has a sizable presence in China, the world's No. 1 auto market. In each of the past two years, GM has delivered 2.9 million vehicles. With China's EV market still nascent, GM has a real opportunity to become a sizable player.
General Motors is valued at less than seven times Wall Street's forecast earnings for 2022, yet it has a long runway of above-average growth in its future. This makes it a really smart buy as the market dips.
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Exelixis
Another stock to buy hand over fist during this sell-off is cancer-drug developer Exelixis (EXEL -1.66%).
Generally speaking, healthcare stocks are one of the smartest places to put your money to work during corrections. No matter what happens with the stock market or U.S. economy, people will continue to develop ailment(s) that require prescription drugs, medical devices, and other healthcare services. This is why a biotech stock like Exelixis can do just fine in any environment.
Exelixis' claim to fame is its lead drug Cabometyx, which is approved to treat first- and second-line renal cell carcinoma (RCC), as well as hepatocellular carcinoma. These indications helped push the company above $1 billion in net product sales for the first time ever last year.
Understandably, not every cancer indication is going to respond to Cabometyx. However, with Exelixis undertaking in the neighborhood of six dozen clinical trials with its lead drug as both a monotherapy and combination treatment, even a handful of successes could expand its label and push annual revenue above the $2 billion mark.
What's particularly exciting about Cabometyx's success is that it's allowing Exelixis to reignite its internal growth engine and bring new clinical compounds to trial. The company is advancing early-stage studies of CDK7-inhibitor XL-102 and antibody-drug conjugate XB002. In December, it initiated its second phase 1b study involving next-generation tyrosine kinase inhibitor XL092.
Thanks to Cabometyx being a cash cow, Exelixis is rolling in the dough. The company ended 2021 with $1.9 billion in cash, cash equivalents, and restricted cash and investments. That works out to more than 30% of the company's market cap, as of this past weekend. This cash provides a healthy downside buffer for shares and might even make Exelixis an intriguing takeover target.
With sustained double-digit sales growth in its future, Exelixis looks far too inexpensive at less than 17 times Wall Street's forward-year profit projection.
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Mastercard
A third surefire stock investors can confidently buy hand over fist as the market corrects lower is payment processor Mastercard (MA -1.19%).
Unlike healthcare stocks, most financial stocks are very cyclical in nature. This means they perform quite well when the U.S. and global economy are expanding and struggle when recessions occur. What's important to realize is that while recessions are inevitable, they typically only last for a few months or a couple of quarters. By comparison, periods of economic expansion often last for years. Patient investors who buy Mastercard will get to take advantage of these long periods of economic expansion.
Mastercard finds itself in a relatively favorable position in the United States. Though it sits a long way behind rival Visa, it commands 22% of U.S. credit card market share by network-purchase volume (as of 2018). Since the U.S. is the leading market for consumption in the world, Mastercard is in an enviable position to take advantage of U.S. economic growth and even its four-decade-high inflation.
There's plenty of opportunity outside the U.S., as well. With a majority of the world's transactions still being conducted in cash, Mastercard has a long runway to expand its payment infrastructure organically or via acquisition into Southeastern Asia, the Middle East, and Africa.
As one final point, take note that Mastercard purely acts as a payment processor and not a lender. While some of its processing peers also lend and are therefore able to collect fees and interest income, this lending puts these companies at risk of rising loan/credit delinquencies when recessions arise.
Since Mastercard doesn't lend money, it doesn't have to set aside capital for losses during recessions. This is why it bounces back more quickly than most financial stocks following periods of economic contraction.
