The stock market has endured a rough month. Several companies on my watchlist have seen 25% of their market caps wiped off. Needless to say, my Stocks and Shares ISA hasn’t performed particularly well. Anyway, these corrections often create opportunities. So, here are three world-class investments to consider buying while they’re on sale.
Alphabet
Alphabet (NASDAQ:GOOGL) is Google’s parent company and the stock is down about 6% this month, making it an interesting proposition for investors. Its current forward price-to-earnings (P/E) ratio is around 17.4 times, well below its five-year average of 25.1, suggesting the stock is attractively valued compared to its own history. The forward P/E-to-growth (PEG) ratio stands at about 1.1, indicating a considerable discount versus the information technology sector average.
Now, a downturn in the US economy could hurt demand for advertising — a core business of Google. However, it’s a diversified business and its investments in AI and cloud computing are poised to drive future growth. With a wide economic moat and robust balance sheet, Alphabet’s current valuation may offer an appealing entry point for long-term investors seeking exposure to leading technology and innovation. I’ve actually opened a little position here.
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Scottish Mortgage Investment Trust
Scottish Mortgage Investment Trust (LSE:SMT), down 11% over the past month, is attracting attention as a high-risk, high-reward option. The trust’s tech-heavy, growth-focused portfolio has struggled amid recent market volatility and high interest rates, but its long-term track record remains impressive, with a 10-year share price total return of nearly 237%.
The current discount to net asset value, around 10.9%, is wider than average and could represent a buying opportunity for investors with a long time horizon. However, investors should be mindful of volatility, and the trust’s use of gearing. This is borrowing to invest, and while it magnifies gains, it also magnifies losses. Nonetheless, the trust’s history and discount may appeal to growth-oriented buyers. It also has an amazing track record of picking the next big winner before most people have even heard of them. I’ve added a bit of this too.
Jet2
Okay, not everyone would called Jet2 (LSE:JET2) a world-class investment, but I’m a big fan of the stock. It’s the main stock I’ve loaded up on since Trump’s trade policy caused chaos on global markets. The company is trading with a valuation just above its net cash position. In fact, the current EV-to-EBITDA ratio is less than one, while its peers trade around three times.
Nonetheless, the current plan to overhaul the fleet looks prudent with the company planning to spend less than 12% of sales on replacements. This should also cement its position as the UK’s number-one tour operator and number-three airline.
However, the impact of increasing costs will hit this lower margin airline more than others. Jet2 faces a £25m hike in annual employment costs as a result of changes announced in October’s Budget. Despite, this, I’m remaining bullish.
