Amid the scorching heat of summer, the stock market has experienced a cooling effect, with the S&P 500 index retracing 4% of its gains in August alone after a stellar 20% climb from January to July.
This dip, often seen as a stormy patch, has emerged as a tempting opportunity for savvy investors eyeing promising long-term prospects.
Here are three stocks that have caught the attention of market watchers and experts, presenting potential avenues for profit in the midst of market volatility.
Microsoft (MSFT): A Blue-Chip Bargain
The tech giant Microsoft, known for its diverse business segments and iconic software products, has seen its stock price slide by 11% from its recent 52-week peak. For those with a discerning eye, this drop signals an attractive chance to acquire shares at a discounted rate. Microsoft’s triumph isn’t solely rooted in its products but is also underpinned by its formidable management.
Under the leadership of Satya Nadella, who marks his 10th year as CEO next February, Microsoft’s stock value has surged an astounding 779%. This translates to a transformative growth from $10,000 invested in 2013 to nearly $88,000 today. This remarkable progress starkly contrasts with the preceding 10 years, when Microsoft, under former CEO Steve Ballmer, saw meager growth of 35%.
Nadella’s vision doesn’t waver, as evident from his ambitious goal of steering Microsoft to a remarkable $500 billion in sales by 2030. Such aspirations, bolstered by Nadella’s track record, further solidify the case for long-term investors to consider seizing the moment and capitalizing on Microsoft’s discounted stock price.
Nu Holdings (NU): Banking on Financial Inclusion
While market turbulence has rocked many stocks, Nu Holdings, the parent company of Nubank, has stood firm, showcasing its resilience amid the volatile environment. Nubank, a digital financial services platform, has been successful in a market where millions of Latin Americans remain unbanked. Its offering of credit cards has resonated, with over 5.7 million Brazilians obtaining their first credit card through Nubank in a year.
This milestone isn’t merely a testament to Nubank’s reach, but also signifies the potential for tapping into previously untapped markets. Nubank’s rapid customer growth, both in Brazil and beyond, has positioned it as a beacon of financial inclusion. With 85 million customers and counting, the company’s expansion into Mexico and Colombia has demonstrated its capacity to replicate its success in new territories.
Datadog (DDOG): Seeing Beyond Short-Term Stumbles
Despite facing a recent stock decline triggered by Q2 earnings that fell short of high expectations, Datadog is emblematic of a valuable lesson for investors: a brief stumble can pave the way for long-term gains. Datadog’s cloud observability service, which monitors technological performance and solves issues, has propelled its revenue to triple over two years.
Boasting over 26,000 customers and an impressive net revenue retention rate above 120%, Datadog remains resilient and future-focused. Its substantial expansion potential is underscored by its double-digit revenue growth prospects, and analysts foresee earnings per share growing at an average annual rate of 25% over the next 3-5 years.
Investors undeterred by a forward P/E ratio of 69 recognize Datadog’s trajectory as a high-growth company with untapped potential. This dynamic offers a chance for strategic investors to make prudent purchases, particularly in the face of a broader market volatility.
In a market climate characterized by fluctuation, strategic investors are looking beyond short-term disturbances to identify valuable long-term opportunities. Microsoft, Nu Holdings, and Datadog have emerged as promising candidates, each with its unique strengths and growth trajectories that align with the aspirations of forward-thinking investors. As the dog days of summer continue, these three stocks beckon as potential treasures amidst the stock market’s ebb and flow.
