If a Stock Market Crash Is Coming, Smart Investors Might Want to Buy This Growth Stock on the Dip
Stock market downturns can be unnerving, but they often create excellent buying opportunities for prepared investors.
Overview
The S&P 500 (SNPINDEX: ^GSPC) index is hovering near a record high, but there are reasons for investors to be cautious given its lofty valuation. That's especially true considering that oil prices have soared and broader inflation remains elevated, both factors that are increasing the odds that the Federal Reserve will hike interest rates in the coming months. The S&P's Shiller Cyclically Adjusted Price-to-Earnings (CAPE) ratio is now about 41. That makes this the second-most-expensive stock market in history -- and the only time stocks were more highly valued relative to earnings was near the peak of the dot-com bubble in late 1999 and early 2000.
If the S&P 500 suffers a broad sell-off in the coming months, investors might have an opportunity to buy many high-quality individual stocks at a meaningful discount to today's prices. Netflix (NASDAQ: NFLX) will almost certainly be one of them, and while it would be more tempting after a correction, I think it's attractively valued even at its current price. Here's why investors should keep the streaming giant on their watch lists.
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Originally published at www.fool.com.