Look no further than a market downturn when looking for the best buying opportunities. Investors looking at a historical chart of the S&P500 and by identifying the best buying opportunities, it is almost guaranteed that most of the best buying opportunities will arise during a market downturn or recession. So, historically speaking, now is a great opportunity to buy oversold stocks as the downturn continues to deepen.
Inflation data released recently was far from satisfactory, which likely means another oversized rate hike from the Federal Reserve. Of course, there is definitely some risk in buying stocks right now. That’s because stocks could still have plenty of downside. However, if you have a long-term perspective, this short-term turbulence should not prevent you from profiting from deeply undervalued stocks.
For example, I think most tech stocks present a great buying opportunity. Indeed, this slowdown has particularly affected this sector. Tech stocks are very risky during economic contractions, but they are equally rewarding when the economy is expanding. Therefore, I think most of the next seven best buying opportunities are currently in technology stocks.
This year has been a disaster for netflix (NASDAQ:NFLX), after its previous weak earnings report sent the stock plummeting. The stock is currently down almost 64% from its 2021 high, and it could drop further as the platform’s user base shrinks to more sustainable levels.
Netflix has gained millions of subscribers during the coronavirus pandemic and thanks to popular hits such as squid game. Therefore, I believe that the recent drop in subscriber counts is not abnormal and one would expect it, as the company’s subscriber counts return to more normal levels.
Notably, Netflix has managed to hold on to revenue despite declining subscribers. The company’s revenue growth has certainly slowed, but it continues to grow despite broader economic headwinds. The business is still profitable and is a highly recognized brand.
Unfortunately, the only slow metric is the company’s stock price. NFLX stock is now valued at the same price as it was at the start of 2018. At the time, the company had 50% lower subscriber and revenue levels. Therefore, I think Netflix shares currently present one of the best buying opportunities.
Meta platforms (META)
The transition from Facebook to Metaplatforms (NASDAQ:META) has cost the platform dearly, as the metaverse’s failure to live up to expectations has been seen in a number of key markets, including crypto. Virtual worlds attributed to the metaverse typically incorporate digital currencies for transactions and non-fungible tokens (or NFTs) for purchase. People are understandably no longer interested in such virtual worlds, especially as these asset classes lose value.
However, contrarian investors will still find META shares to be of great value. The selloff that began earlier this year due to Meta Platforms poor earnings report dragged it down 65% from its peak at levels last seen in late 2016. no doubt oversold territory, especially considering the company’s broad fundamentals and profitability.
Facebook remains the cash cow of Meta Platforms and continues to reap profits. Despite the recent decline in META shares, this company currently has a price/earnings ratio of just over 11x. I think it’s a godsend for a tech company that has one of the biggest social media platforms.
Of course, Facebook’s declining monthly active user count is still a cause for concern. However, as I said with Netflix, the platform could be cooling off from the significant boost it has received from the pandemic. Facebook is still in good shape relative to pre-pandemic user base and profitability metrics. The stock price is not.
PayPal funds (PYPL)
PayPal Credits (NASDAQ:PYPL) has also been hit hard this year by the massive sale of technology. However, I think PayPal will likely benefit from the booming gig economy in the long run, as it is one of the most widely used platforms for domestic and international payments.
Although PayPal’s net income turned negative in the second quarter of this year, the company is expected to rebound due to steady revenue growth. Still, I think there is a short-term risk to PYPL shares, as PayPal’s total active user count has remained flat at 429 million over the past two quarters. As with Facebook and Netflix, the company’s user numbers could continue to decline and cause the stock to sell again.
Still, I think the downside risk with this company is relatively low, given PayPal’s long-term potential. This tech stock is still on solid footing and is a bargain in my book.
Video zoom (ZM)
Enlarge video (NASDAQ:ZM) exploded during the pandemic and gained almost 800% in less than a year. However, as people returned to their offices and schools with the introduction of vaccines, the stock lost all of its gains in subsequent years. ZM stock is now worth almost 25% less than in the summer of 2019.
Nevertheless, even though the pandemic is no longer severe, universities and companies are still using the platform extensively. Remote work continues to grow in popularity. Thus, Zoom is uniquely positioned to take advantage of this secular growth trend, as the platform holds around 50% of the video conferencing market share.
Additionally, Zoom has maintained revenue and is posting a positive net income, at the time of writing. So, I think ZM stock is one of the best buying opportunities in the market right now, due to the growing popularity of remote work.
Fiverr International (FVRR)
Fiverr (NYSE:RVRF) is an online marketplace platform for freelancers. I think Fiverr is one of the best stocks to buy now as more and more companies are shifting their workforce to include more gig workers. The expanding gig economy will benefit the business in the long run. This is evidenced by the company’s double-digit annual growth rate over the past decade.
Additionally, FVRR stock is down more than 91% since its high in February 2021. I think these are advantageous levels given the long-term outlook for the gig economy. While there is substantial near-term risk due to the current economic climate, I believe the future for Fiverr is bright.
Thus, I list FVRR stocks as one of the best buying opportunities right now, as they offer investors a unique opportunity to benefit from a rapidly changing work culture.
Like all the other actions in this article, Wix.com (NASDAQ:WiX) has also been devastated this year due to the sale of technologies. WIX stock is down nearly 80% from its peak, which I believe provides investors with a great investment opportunity.
What makes Wix.com unique is that it makes building websites much easier than other open source counterparts. Wix.com allows its users to create their own websites with its cloud-based web development services. Of course, web development professionals are unlikely to use Wix. But with the rise of entrepreneurship, more and more people will need websites in the future.
Right now, things aren’t so rosy for Wix, with quarterly losses of $111 million. However, if management steers things in the right direction, WIX stock could grow profitably in the years to come. Certainly, the risk here is substantial, and I would recommend some of the other stocks on this list more.
Spotify (NYSE:PLACE) continues to dominate the audio streaming industry with over 433 million monthly active users on its platform. Unlike most other companies that provide media services, Spotify’s number of active users continues to grow steadily, even taking into account last year’s pandemic-related boom. Also, with podcasts growing in popularity, Spotify has a lot more room to grow in the years to come.
The company’s revenue growth rate has slowed. Currency conversion is an important factor in this, given that this company is based in Sweden. As a result, until the US dollar and euro exchange rates improve, this is a business that could struggle in the near term.
That said, Spotify’s results have been strong. The company’s quarterly losses are not significant and should improve as the platform adds more paying users and additional revenue streams. Therefore, I find Spotify deeply undervalued at $86 per share, relative to its future growth prospects.
At the date of publication, Omor Ibne Ehsan did not hold (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com publishing guidelines.