As stock markets look to close off the first half of 2024, things could get a bit bumpier. With Nvidia (NASDAQ:NVDA) correcting nearly 10% from its all-time high, the GPU maker is no longer the world’s largest company at the time of writing. Despite the jitters in the hottest corners of tech, investors with a long-term time horizon shouldn’t get into a panic over a bit of volatility.
Of course, it can be easy to forget what it’s like to have a bad week in the stock market if you’re heavy on the red-hot semiconductor stocks. And though it’s nerve-racking to even think about buying on dips in this kind of market, I do view bad days as good for long-term investors, many of whom may have criticized this market for being a tad on the expensive side.
So, whether or not stocks take a plunge to cool off for the summer, the following stocks seem worth keeping on the radar. They look quite cheap today but may become that much cheaper if we’re on the cusp of a market-wide sell-off.
Salesforce (CRM)
Salesforce (NYSE:CRM) was slammed when it reported its latest quarterly earnings results, sparking one of the worst single-day sell-offs (of nearly 20%) in years. Indeed, CRM shareholders should be numb to such excessive post-earnings volatility by now. Fast-forward to today, and CRM stock’s starting to gain again, now up 14% from its late-May post-earnings lows.
If it’s not a quarterly disappointment, it’s the announcement of an expensive acquisition. Though the enterprise software firm has been a roller-coaster ride, many analysts still view the recent dip as buyable. At 44.1 times trailing price-to-earnings (P/E), CRM stock hasn’t looked this cheap in many months.
With Bank of America (NYSE:BAC) recently giving CRM stock the boot from its “U.S. 1 List,” there’s a great deal of cloudiness surrounding the fallen cloud juggernaut as it looks to double down on the Data Cloud and artificial intelligence (AI) with Einstein. Though such efforts may not result in a timely turnaround, I do like the long-term foundation Salesforce is continuing to improve.
Chipotle Mexican Grill (CMG)
Chipotle Mexican Grill (NYSE:CMG) has been the envy of the quick-serve restaurant scene in recent quarters. With CMG stock starting to see its impressive parabolic rally begin to taper off, many investors may be wondering if it’s time to book some profits in shares of CMG, something that billionaire investor Bill Ackman did earlier this year.
Lightening up a position after a 156% pop in two years is only smart, especially if the P/E multiple (currently at 68.4 times trailing) is higher than where it’s been historically. Though the growth thesis is as sound as ever, the premium multiple entails a lot of expectation baked into the stock right here.
Though shares have dipped over 6% from all-time highs, it may be wise to sit back and see how this one plays out as the firm runs into a 50-for-1 stock split while headlines surrounding portion sizes cause some to rethink their visit to the local Chipotle.
Five Below (FIVE)
Five Below (NASDAQ:FIVE) is a discount retailer feeling the pinch amid inflation-induced changes in consumer behavior. Undoubtedly, the items Five Below sells are quite affordable. However, a huge chunk of what the firm sells is deemed as discretionary goods, which don’t sell as well when times are tough and budgets are tight.
Amid inflation, low-cost toys, games, candies, and all sort aren’t exactly flying off shelves. Indeed, compared to other discount retailers, Five Below is leaning more on discretionary goods, leaving it sensitive to the state of the consumer. At writing, FIVE stock has lost 48% of its value since peaking in August 2021.
At 21.7 times trailing P/E, FIVE is a growth-focused retailer that I find could really start moving higher once inflation backs off further. As with most consumer discretionary plays, though, it can be tough to time an entry into the name, especially while it’s in free-fall.
On the date of publication, Joey Frenette held shares of Salesforce. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
