It's been an up and down year, although more down than up. The S&P 500 currently sits 22% below 2021's close. Roughly half of its stocks are down by even more.
As veteran investors can attest, however, this isn't a time to wallow in fear. Pullbacks are a time to step into beaten-down quality stocks with true long-term staying power. Here's a look at three such discounted investment options that could end up being brilliant purchases.
1. Alphabet
It's so commonly suggested as a stock pick that it's almost become a cliché. There's a reason Alphabet (GOOG -1.96%) (GOOGL -1.97%) is one of the world's most popular holdings, though. In more ways than one, it's the centerpiece of our digital lives.
Global Stats says Alphabet's search engine Google fields more than 90% of the planet's web searches, while its Android operating system is powering over 70% of the world's mobile devices. And while not a conventional streaming service, its YouTube is attracting viewers who would otherwise spend TV-watching time with rival platforms like Netflix and Disney's (DIS -1.01%) Hulu.
Google's cloud-based office productivity software is also just about as popular as Microsoft's Office. Then there's Google's cloud computing arm, now driving more than $6 billion worth of quarterly revenue.
If you're online, odds are good you're using at least one Alphabet product or service. You're possibly using two or more Alphabet platforms.
The company fell just a bit short of its second-quarter revenue expectations of $69.9 billion, reporting $69.7 billion instead. Earnings of $1.21 per share also missed estimates of $1.28. While technically a disappointment, investors have been pricing in lackluster results since November of last year. The stock is down more than 30% since then, reaching new 52-week lows just last week.
What the market is missing, though, is that this is Alphabet, dominant in several corners of the worldwide web, consistently succeeding in all of them to maintain its own branded digital ecosystem. Also note that while Alphabet missed last quarter's projections, revenue was still up year over year for the 38th time in the past 40 quarters. And one of those two exceptions was the second quarter of 2020, when COVID-19 was upending the world.
2. Thermo Fisher Scientific
It's not nearly as well known as Alphabet. In fact, you might have never even heard of Thermo Fisher Scientific (TMO -0.98%). But this $200 billion outfit is a juggernaut in its own right, backed by a mostly uninterrupted streak of sales growth.
Thermo Fisher Scientific manufactures a variety of medical and scientific testing equipment. Cellular imaging, electron microscopes, laboratory supplies, and semiconductor testing are just a sampling of the goods in its portfolio. While some of these markets ebb and flow, many of them drive consistent demand regardless of the economic environment. Notably, the company continued to grow its top and bottom lines in 2020 and 2021, during the pandemic.
Investors haven't been impressed by this resiliency of late. Although Thermo Fisher's revenue is on pace to grow another 10% this year before finally cooling off to a tepid 2.6% next year, shares are down 21% year to date; the stock started 2022 on a bearish foot
As with Alphabet, however, the market is currently ignoring the company's long-term staying power because it's too focused on prospective near-term turbulence. Big mistake.
3. ASML Holding
Lastly, add ASML Holding (ASML 1.14%) to your list of stocks to buy for capital appreciation.
It's another off-the-radar outfit. Again, though, don't be misled by this Dutch company's seeming obscurity. The $156 billion outfit did $18 billion worth of business last year, and should roughly repeat that in 2022 before reaccelerating top-line growth by 19% next year. While volatile from one quarter to the next, that's in line with the company's long-term growth norms.
ASML Holding makes equipment needed by semiconductor companies to manufacture their chips. It sells lithography systems that turn a wafer into a functioning computer component. It's one of the biggest and best in the business, which is largely a reflection of its intellectual property portfolio.
That portfolio is so potent that ASML is confidently claiming China's Dongfang Jingyuan Electron is illegally using at least one of the company's patented manufacturing procedures. It's the latest chapter in a string of similar legal maneuvering that never really seems to end.
In the meantime, the company has been caught up in the technology trade war between China and the United States. Just last week, ASML instructed its U.S. employees to stop working on products that might be shipped to China, as any such shipment would violate President Joe Biden's export bans.
They're both contributing factors to the stock's year-to-date pullback of 46%.
Like the other two stocks here, however, the steep sell-off suffered by ASML shares is too dismissive of its long-term potential. The company has been in similar situations before, and recovered every time because the world needs better and better technology.
So despite being more than halved since September's peak, the stock is still up 130% for the past five years, and 676% above where it was trading 10 years ago. That's the bigger-picture ASML Holding you want to plug into.
