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I’ve been putting together a list of shares I’d like to buy when the stock market has its next meltdown. We may not see a full-on ‘crash’ any time soon, but I want to be ready to buy if volatility returns to the market and throws up some opportunities.
Interested in seeing some of the stocks on my list? Here are three.
A tech stock I already own
When the stock market slumps, the best shares to buy are often the ones an investor already owns. If you know a company well and you’re optimistic about its long-term prospects, why not buy some more shares at a lower price?
This brings me to Nvidia (NASDAQ: NVDA). I’m already a holder of this stock. But I’d love to buy some more shares at a lower price. If the share price fell to, say, $150 I’d be a buyer again.
I’m pretty confident that this company has a lot of growth ahead of it. After all, the AI revolution is just getting started and Nvidia’s chips are going to be essential for technologies like robotics and self-driving cars.
Of course, there’s some competition emerging in the AI chip space now. So, this is a risk to monitor.
Personally, however, I reckon Nvidia will still be able to sell every chip it can manufacture in the years ahead. My view is that in the long run, its share price is going higher.
Nvidia’s main competition
Zooming in on Nvidia’s competition, one company that’s really gaining traction is Broadcom (NASDAQ: AVGO). It makes custom AI chips for large cloud companies (hyperscalers).
This company has been having a lot of success recently, landing chip deals with the likes of Alphabet and OpenAI. As a result, I’m keen to get the stock into my portfolio.
I’m annoyed with myself for not buying the stock years ago. It has been on my watchlist for ages but I’ve never bought it.
Right now, Broadcom stock looks a little expensive. Near $390, the price-to-earnings (P/E) ratio is around 40.
My target price is $300. That’s where I’d be a buyer.
There are risks around customer concentration. But I think this tech company will do well in the long term.
A low-profile AI stock
Finally, Vertiv (NYSE: VRT) is high up on my list. It’s the global leader in data centre cooling systems.
It’s had a lot of success in recent years on the back of the AI build-out. But realistically, the growth story is probably just getting started as over the next decade, a ton of data centres are likely to be built.
At today’s share price of $185, the P/E ratio here is 35 using next year’s earnings forecast. That’s not actually too bad given the company’s growth rate (revenue is expected to rise 28% this year).
But ideally I’d like to pay a lower multiple to reduce my risk. I’d like to buy in around $150 – that would put the P/E ratio under 30.
New data centre cooling technologies are a risk here. There’s no guarantee that in the long run, hyperscalers will continue to use Vertiv’s systems.
This company has some impressive technology, however. And with a razor-sharp leadership team, I believe it will continue to have success.
