5 high-conviction stocks to buy in the next market correction

It’s a good idea to make a watch list of the stocks you plan to accumulate. Markets have been experiencing increased volatility in the past few months as the Federal Reserve raised interest rates to tackle hyperinflation. With the NASDAQ Composite Index and Standard & Poor’s 500 Already in a bear market this year, stock prices may have room to fall further. You should see a market correction as a golden opportunity to either accumulate more shares of companies you already own or to start a new position in a company that has become much cheaper.

Of course, you’ll need to make sure you have several traits in place before you pull the trigger. The business needs to show steady growth, be a dominant player in its industry, and enjoy the tailwinds that will allow it to continue to do well. With these characteristics in place, a buy-and-hold strategy can ensure that you enjoy a steady installation to meet your retirement goals.

Here are five stocks you can consider buying during the next market correction.

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Starbucks

Starbucks (SBUX 0.91%) It is a global coffee chain with more than 34,000 stores worldwide. The company reported an encouraging batch of earnings for the third quarter of fiscal 2022, with net revenue rising 9% year over year to a record $8.2 billion. Similar store sales are up 3% globally, with the US reporting a 9% increase, and active Starbucks Rewards members up 13% annually in the US to 27.4 million members.

Starbucks, at its recent biennial investor day, revealed an ambitious three-year financial roadmap for comparable annual store sales growth of 7% to 9%, revenue growth of 10% to 12%, and earnings per share (EPS) growth. 15% to 20%. Founder and interim CEO Howard Schultz introduced the new CEO of Laxman Narasimhan, who will take up his new role on April 1st next year. With this plan, the company appears to be working towards steady earnings growth for investors.

Lululemon

Lululemon (Lulu 1.15%) is a market leader in athletic apparel and footwear for yoga, running and training and provides innovative materials and exciting designs for its products. The results for the second quarter of fiscal year 2022 were impressive. Revenue increased 29% year over year to $1.9 billion, with comparable store sales up 23% year over year. Net income increased 39.1% year-over-year to $289.5 million, boosted in part by a $10.2 million one-time gain from the disposal of an office building.

Lululemon reports that supply chain problems are receding, allowing the company to manufacture the products it needs to meet strong demand. The sportswear company expects net revenue to grow at a three-year compound annual growth rate of about 26% and in 2022 to report sales of between $7.87 billion and $7.94 billion.

octa

octa (OKTA -0.17%) is a software-as-a-service company that provides identity management services to more than 16,400 customers to help their systems set up secure and convenient access. Okta’s shares may have fallen about 72% over the year so far, but the company is still turning the spotlight with its latest Q2-2023 earnings. Revenue grew 43% year over year, with subscription revenue growing 44% year over year. Subscription backlog improved 25% year over year to 2.8 billion, while billing increased 36% year over year.

Okta believes there is a significant opportunity for it to continue growing as the total addressable market for its business is approximately $80 billion. The company has identified several growth drivers and will implement them to drive its top and bottom line earnings. It will improve its platform and network and also use its successful “land and expand” strategy in large organizations. International expansion is also on the cards as US revenue accounted for more than three-quarters of total revenue for the quarter.

DocuSign

If you are looking for a fast, secure and convenient way to digitally sign your business agreements, DocuSign (DOCU -0.18%) He has a cloud service that provides this service. The company has more than 1 billion users in 180 countries and reported a strong report card for the second quarter of 2023. Underwriting and total revenue continued to rise, up 23% and 22% year-over-year, respectively. Billings also saw a 9% year-over-year increase.

DocuSign believes that agreement cloud has a significant market opportunity with a total addressable market of approximately $50 billion. The company is confident in driving new use cases such as document authentication and analytics. By expanding into these new uses, DocuSign can increase adoption across the organization.

Chipotle Mexican Grill

Chipotle Mexican Grill (CMG 0.69%) It offers an extensive list of nutrients using responsibly sourced ingredients that contain no artificial colours, flavors or preservatives. The Mexican food chain, which includes 3,000 restaurants in the United States and parts of Europe, reported continued growth in its second-quarter 2022 earnings report. Total revenue rose 17% year-over-year to $2.2 billion, with comparable store sales increasing 10.1% on the year. annual basis. Digital sales accounted for nearly 40% of revenue, demonstrating the success Chipotle has had by focusing on online orders during the pandemic.

The company is on track to open new stores and expects to open between 235 and 250 new restaurants in 2022. The board of directors also approved an additional $300 million to use for share buybacks.

Royston Yang has positions at Starbucks. Motley Fool has positions at Chipotle Mexican Grill, DocuSign, Lululemon Athletica, Okta and Starbucks. Motley Fool recommends the following options: long January 2024 calls of $60 on DocuSign and short October 2022 calls of $85 on Starbucks. Motley Fool has a disclosure policy.

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