Today they are not cheap, but that could change quickly.
Volatility is an inevitable feature of the stock market and is especially pronounced in growth stocks. Investors can count on this segment of the market to be among the first to recover when a broader rally begins. On the other hand, growth stocks tend to fall sharply in the early stages of a sell-off.
If possible, it's helpful to think of these declines as opportunities to acquire quality businesses at discounted valuations, rather than something to fear. A little preparation in the form of a watchlist can make all the difference in ensuring you're prepared to take action when the next cyclical downturn begins.
With that goal in mind, let's look at some excellent growth stocks worth considering in a stock market sell-off.
1.Microsoft
microsoft (MSFT 1.83%) Stocks are not cheap today. The rebound in the tech world has helped push the software giant's valuation to about 14 times annual sales. That translates to one of the highest premiums you could pay for a profitable technology leader. Apple The shares are available at 7 times earnings, for context, and Amazon It's even cheaper at only 3x the sales.
Microsoft's numerous growth paths help explain why investors love this stock. It has a lot of exposure to the rise of artificial intelligence (AI), both through its partnership with OpenAI and through the availability of the technology in its own software portfolio. There's no need to wait for AI to boost sales profits, either, thanks to Microsoft's rapidly expanding business services division. The growth here helped the company post a 16% sales increase in the most recent quarter.
2.Costco
Wholesale Costco (COST 1.25%) Stocks never seem like a bargain, unlike consumer staples products that the warehouse retailer wholesales for millions. The stock has been a big winner for shareholders last year, jumping more than 40% in 12 months, while the broader market is up 26%. That rally pushed its valuation above 1.3 times sales, or double the rate it would pay its own rival. Walmart. It might be best to wait for a stock market decline before diving into Costco stock at that price.
Sure, Costco is firing on all cylinders right now. Customer traffic is up, membership renewal rates are at a record high, and shoppers are flocking to your online business thanks to innovative product offerings like the recent gold bullion craze. However, the company could disappoint investors this year given the high expectations surrounding an increase in membership dues and greater profitability.
I would look to buy the stock if there is a pullback because the chain is a little below those lofty Wall Street targets.
3. Metaplatforms
Metaplatforms (GOAL 3.21%) is among the biggest winners of the "Magnificent seven", having gained more than 130% in the last full year. The rally makes sense given that the social media giant's business is on an incredible streak. Despite a difficult digital advertising market, revenue increased 16% last year and profits soared 66% to $39 "We had a good quarter as our community and business continue to grow," CEO Mark Zuckerberg said in a February press release.
Wall Street is salivating at the potential for further earnings growth once the digital advertising market begins to recover. Watch the average price by ad metric for signs of that rally beginning in the coming quarters. In the meantime, keep Meta on your watch list in case a downturn drives a more compelling valuation. The stock looks a little expensive right now with its current premium of 33 times earnings.
Randi Zuckerberg, former director of market development and spokesperson for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Demitri Kalogeropoulos He has positions in Amazon, Apple, Costco Wholesale and Meta Platforms. The Motley Fool ranks and recommends Amazon, Apple, Costco Wholesale, Meta Platforms, Microsoft, and Walmart. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
