You may not be in the mood for a stock market shopping spree right now. Major stock indexes each lost more than 4% in one trading session this week. Investors worried that August’s rising inflation could spur the Federal Reserve to become more aggressive with interest rate hikes. The fear is such a move could hurt growth.
All of this may sound grim. But here’s some good news. We’ve been through these troubled times before. And every time, the economy and market have recovered. And gone on to thrive. So, the stocks we buy now may be suffering today — but they could deliver big over time. That’s exactly why a market downturn is a great time to buy. Let’s check out five top stocks to consider if you’ve got $5,000.
1. Amazon
Investors have shied away from Amazon (AMZN -2.18%) because it’s clearly hurt by rising inflation. It means the company has to pay more to transport its goods and cover other costs. It also is bad news because it hits the wallets of Amazon’s customers. As a result, Amazon has been reporting decreases in operating cash flow and operating income.
But if we take a long-term view, the picture looks a lot brighter. Amazon is a leader in two markets forecast to grow in the double digits through the coming years: e-commerce and cloud computing. These markets already have translated into a multibillion-dollar revenue and profit track record for Amazon.
AMZN Revenue (Annual) data by YCharts
And today, Amazon’s cloud computing business — Amazon Web Services — continues to report double-digit increases in sales and operating income, in spite of the difficult economic context. Once e-commerce picks up again, these two business could send Amazon’s earnings soaring — and this should translate into share price gains.
2. Moderna
Back in 2020, Moderna (MRNA 1.38%) was a stock market star. The shares gained more than 400% as investors bet on the company’s ability to dominate the coronavirus vaccine market. That was a winning bet. Since, the company has generated billions of dollars from its coronavirus vaccine.
But its share price performance hasn’t followed. The stock has lost 45% so far this year. Why? Investors worry about Moderna’s revenue and profit prospects in a post-pandemic world. But there are two reasons to push those worries aside.
First, Moderna recently said the future coronavirus vaccine market may reach as much $13 billion. And that’s in the U.S. alone. So vaccine revenue is far from over.
Second, Moderna is working on 46 programs. And three of its non-coronavirus candidates are in phase 3 trials right now. At the same time, the company has $18 billion in cash to fund pipeline development. That means Moderna probably won’t be a one-product company for very long.
3. CRISPR Therapeutics
CRISPR Therapeutics (CRSP -5.97%) has only slipped about 6% so far this year. But at this price it’s still down more than 60% from a peak back in 2021. At the same time, CRISPR is closer than ever to bringing its first product to market. The company specializes in gene editing, which is the changing of a gene involved in a disease process.
CRISPR is working with partner Vertex Pharmaceuticals on a candidate to treat blood disorders. What makes the project so attention-getting is this would be a one-time curative treatment. There are limited treatment options for these disorders — beta thalassemia and sickle cell disease. So patients probably would be eager to try this gene-editing approach.
For the above two reasons, this could truly be a game changer for patients — and for the company.
Data so far have been positive. And the companies aim to file for regulatory approval in Europe and the U.K. this year. They are also involved in discussions with U.S. regulators.
CRISPR remains risky because the company doesn’t yet have products on the market. And a lot depends on regulators giving the nod to its blood disorder candidate. But considering the potential of the candidate, CRISPR makes a compelling choice for aggressive investors.
4. Etsy
Etsy‘s (ETSY -3.85%) popularity exploded during the early days of the coronavirus pandemic. The online market for handcrafted goods sold plenty of face masks. But shoppers got to know the other products offered by Etsy sellers as well.
And the good news is most of those shoppers stuck around. Etsy had 46 million active buyers right before the pandemic hit. Today, the company’s active buyers total 88 million. And Etsy’s gross merchandise sales per active buyer actually was a bit higher in the second quarter of this year compared with the year-earlier period.
Another big plus for Etsy is that it isn’t hurt by the supply chain and transport issues that have plagued other retailers in recent times. That’s because Etsy sellers are small businesses that don’t order enormous supplies or send big shipments.
Etsy shares are trading for 29 times forward earnings estimates. That’s compared with more than 48 early this year. Considering the popularity of Etsy among shoppers and the growth in spending on the platform, this looks like a bargain.
5. Intuitive Surgical
Intuitive Surgical (ISRG -1.59%) is the leader in the robotic surgery market — and by far. The company holds nearly 80% of the market, according to BIS Research. Surgeons rely on more than 7,100 of the company’s flagship Da Vinci robots installed throughout the world. They use the Da Vinci for minimally invasive surgeries such as hernia repair.
I’m not too worried about competition for two reasons. First, most surgeons train on the Da Vinci system. So, it seems unlikely they would opt for a rival system. Also, pricing for the Da Vinci starts at about $1.5 million. If hospitals are satisfied with the Da Vinci’s performance, they probably will stick with it after such an investment.
Another important point is the way Intuitive generates revenue. This isn’t just through the sales of systems. Intuitive actually makes most of its revenue through the sales of instruments and accessories used during Da Vinci procedures. This represents a regular revenue stream for Intuitive.
All of these companies have one key thing in common: promising long-term prospects. And that’s why buying them now is a great way to prepare for brighter days.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Adria Cimino has positions in Amazon and Vertex Pharmaceuticals. The Motley Fool has positions in and recommends Amazon, CRISPR Therapeutics, Etsy, Intuitive Surgical, and Vertex Pharmaceuticals. The Motley Fool recommends Moderna Inc. The Motley Fool has a disclosure policy.
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