Adnan Rafique M.D.
Warren Buffett once said, buy the stocks when everyone is fearful and sell when everyone is buying. We have heard this phrase so many times, yet very few have the guts to follow the advice of the best stock market investor of all time.
During these highly dangerous times when the world is at the brink of another war and feds are trying their best to control the out-of-control inflation by potentially increasing the interest rates rapidly, picking a few stocks with great future potential seems easy but daring.
People with growth-heavy stocks have suffered the most in the last few months due to the technology sector decline. Some very reliable and rapidly growing stocks have crashed to the ground so quickly that investors didn’t have time to exit before they realized that their beloved stocks have lost half their value. Examples of those once very reliable and favorite stocks are Paypal, Square, Twilio, Cloudflare, Crowdstrike, etc. These can be very attractive at this valuation but there may be more room for the market to move downward due to looming war.
I bought some good energy stocks last month to hedge against this volatility.
I still believe there is a lot of potential for long-term investors in this market. The key is to buy essential and valuable stocks at cheaper prices and hold them for at least 3-5 years. No one can predict the short-term market trend but I’m certain that the market always goes higher in the long run. So stay in the market and keep buying quality names at cheaper valuations during these scary times.
There are many big and valuable companies on sale but every individual should look into their own risk tolerance and time horizon before they buy stocks. Below are the names that look attractive to me for a long-term hold.
TESLA (TSLA): There is so much innovation and demand for their EVs that this company will do great in the long term. As it drops further due to geopolitical issues in Russia and rising interest rates, I will keep adding to my portfolio. I always believe TESLA is not a car company, it's an energy company that has some great business ideas and leadership to execute these ideas.
Alphabet, Inc (GOOG): Another quality and essential name for consumers around the world. It's a technology powerhouse that is engaged in innovation and helping the world solve multiple problems. One of the most valuable companies on the planet and it's at a reasonable valuation. You can easily keep this stock for 5 years and enjoy the upswing after this transient downtrend.
Lululemon Athletica, Inc (LULU): One of the quality athletic apparel companies which have declined significantly from its peak due to soft sales and forecast but most analysts are very bullish going forward. LULU had a Very decent last quarter and sales continue to rise once again due to the rise in outdoor activities. With any dips in the future, this can be a great name to buy for the next 2-3 years.
Yeti Holdings (YETI): Yeti Holdings design, market and distribute products for outdoor living. With easing covid restriction and summer approaching, this company can be a beneficiary due to its high-quality products. It has a decent balance sheet and great management behind this successful business model.
High-Quality Energy Companies: In the short term, some energy companies can get a boost due to fear in the market. I like the names like Diamondback Energy (FANG), Pioneer natural resources (PXD), and EOG.
Generac Holdings Inc (GNRC): Designs, manufactures, and sells power generation equipment, energy storage systems, and other power products for the residential, and light commercial and industrial markets worldwide. It has a solid business model worldwide. It has declined almost 50% from its peak.
Cloudflare, Inc (NET): CloudFlare, Inc. operates a cloud platform that delivers a range of network services to businesses worldwide. The company provides an integrated cloud-based security solution to secure a range of combinations of platforms, including public cloud, private cloud, on-premise, software-as-a-service applications, and Internet of Things (IoT) devices. Its security products comprise cloud firewall, bot management, distributed denial of service, IoT, SSL/TLS, secure origin connection, and rate-limiting products.
High-Risk High Reward: Buying stocks these days is a high risk for the short term but some names can be worth including in your portfolio. In the stock market, they say “investors should have a bigger stomach than a bigger brain” to tolerate the volatility and risks. Always keep less than 10% of your portfolio in high-risk names for aggressive growth.
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