Nasdaq in correction: These 2 safe stocks finally look interesting
In times of market turbulence - such as now - it pays to focus on two key strategies: owning "safe" stocks, i.e. those that can withstand pressure, and taking advantage of downturns to buy bargains.
Although the Nasdaq has risen sharply over the past two years and even trended positively earlier this year, recent events have brought complications. U.S. President Donald Trump announced tariffs on imports from Canada, China and Mexico - the U.S.'s largest trading partners - sparking investor concerns about the impact of these measures on corporate profits and the economy. Fears of a possible coming recession intensified, sending the Nasdaq into a correction, falling more than 10% from its last high on December 16.
In uncertain times, it is therefore important to have stable stocks in your portfolio and to buy them at a reasonable price. Let's take a look at two safe stocks that look interesting during this correction.
Amazon
Amazon $AMZN belongs in the "safe" stock category for two main reasons. First, the company has built a strong presence in e-commerce with more than 200 million Prime loyalty program members. These customers shop at Amazon regularly due to its low prices, which is especially important during times of economic uncertainty.
The second factor that makes Amazon a safe investment is its ability to adapt to economic fluctuations. In recent years, the company has undertaken a major restructuring to improve efficiency, cut costs and reorganized its distribution model, which has led to an improved cost structure. Thanks to these measures, Amazon is well prepared to cope with any upcoming economic recession.
In addition, Amazon has a strong cloud business. Its Amazon Web Services (AWS) division has shown resilience even during periods of high inflation, when its revenues continued to grow.
Intuitive Surgical
Intuitive Surgical $ISRG is a world leader in robotic surgery, which is increasingly being used for minimally invasive procedures such as hernia repair. Medical technology companies are among the safe investments because demand for medical procedures persists regardless of the economic climate.
Intuitive Surgical's strong market position is also a key advantage. Surgeons are trained on its main product - the da Vinci system - and once they get used to it, they tend to stay with it instead of switching to competitors. In addition, the high purchase price of the robotic systems (more than $1 million apiece) leads hospitals to use the technology for a long time, which provides the company with steady revenue.
Despite its dominant position, Intuitive Surgical continues to invest in innovation. It recently launched the next generation da Vinci system with more than 150 enhancements.
In terms of stock valuation, they have historically traded at high earnings multiples, which is consistent with their strong competitive position. But now the stock has fallen from about 80 times expected earnings to 59 times, a more attractive value compared to the past. Therefore, Intuitive Surgical seems like a reasonable choice during the current Nasdaq correction.
Disclaimer: You will find a lot of inspiration on Bulios, but stock selection and portfolio construction is up to you, so always do a thorough analysis of your own.
Source: TheMotleyFool
