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Stock Market Sell-Off: The Best Stocks to Buy Right Now

The stock market sell-off of 2022 showed signs of abating last week as major indices ended the week higher, but they are still down big time this year.

^SPX data by YCharts.

The good part is that if things get worse, savvy investors with an eye for long-term gains will find opportunities to buy some great companies at cheap valuations. Let's look at some of those potential long-term winners that investors can consider buying amid the stock market sell-off.

These tech giants are set to gain from secular growth trends

The massive decline in tech stocks this year means that investors can get their hands on some big names at attractive valuations. Amazon (NASDAQ: AMZN), for example, is currently trading at 56 times earnings as compared to its five-year average earnings multiple of 122. Last year, Amazon was trading at 65 times earnings, so the 30% slide in the stock price has made it relatively affordable.

Investors may not want to miss this opportunity to buy Amazon as the company is on track to take advantage of multiple catalysts. For instance, the tech giant controls a third of the global cloud infrastructure service market that was worth $178 billion at the end of 2021. Second-placed Microsoft was well behind with a 21% share, indicating that Amazon is strongly positioned to take advantage of the huge opportunity in this space.

With the cloud computing market expected to clock annual growth of nearly 18% through 2028, Amazon could witness solid incremental revenue growth from this segment. Throw in Amazon's prospects in the global e-commerce market, and it becomes easy to see why the company's earnings are expected to grow at an annual rate of 40% for the next five years. All this makes Amazon a top tech stock to buy right now.

Qualcomm (NASDAQ: QCOM) is another tech giant that's available on the cheap right now. Trading at just 13 times earnings, the chip giant is way cheaper than its five-year average earnings multiple of 27. Analysts are expecting Qualcomm's earnings to grow at an annual pace of over 14% for the next five years. But it won't be surprising to see it clock faster growth, thanks to the secular growth opportunity in smartphones, as well as the automotive and the Internet of Things (IoT) markets where it is gaining traction.

In the second quarter of fiscal 2022, Qualcomm's revenue had shot up 41% year over year to $11.1 billion. Smartphones accounted for a huge chunk of the top line at $6.3 billion, with the segment's revenue jumping 56% year over year. With Qualcomm controlling 30% of the global smartphone application processor market in the first quarter thanks to stronger adoption of its chips by the likes of Samsung, the company is in a solid position to benefit from the adoption of 5G smartphones.

Third-party estimates forecast that the 5G smartphone market could grow at nearly 130% a year through 2027, and Qualcomm's healthy share indicates that it could win big from this massive growth. Meanwhile, Qualcomm has design wins worth $16 billion in the automotive space, which should start translating into revenue once customers who have selected its chips start making vehicles and components using its chips. This points toward a massive growth opportunity as the automotive business had generated just $339 million in revenue last quarter, which was an increase of 41% over the year-ago period.

The electric vehicle opportunity makes this stock an enticing bet

Sales of electric vehicles (EVs) are taking off, and Tesla (NASDAQ: TSLA) is already taking advantage of this massive opportunity. This is evident from Tesla's performance in the first quarter of 2022. The company recorded an impressive 81% year-over-year growth in revenue to $18.8 billion, thanks to a nice spike in vehicle deliveries and production.

Tesla had produced just over 305,000 vehicles during the quarter, a 69% increase over the prior-year period. The company's deliveries shot up 68% year over year to 310,000 vehicles. What's more, Tesla's adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) were up nine percentage points over the prior-year period to 26.8% last quarter, driven by solid growth in deliveries, higher average selling prices, and lower production costs per vehicle.

Tesla is now looking to ramp up its manufacturing capacity. Its factory in Austin, Texas, is already online, while the Texas Gigafactory is expected to start producing Model Y's later this year. The company's factory in Germany has also gone online. In all, Tesla aims to grow its annual vehicle deliveries by an average of 50% over the long run. With the global EV market expected to clock annual growth of 29% through the end of the decade, it won't be surprising to see Tesla hit its ambitious growth target in the long run.

Not surprisingly, analysts are expecting nearly 43% annual earnings growth from Tesla for the next five years. With Tesla stock losing 30% of its value in 2022 and trading at 13.4 times sales as compared to last year's sales multiple of 25.6, now looks like a good time to buy this potential growth stock on the cheap following its crash.

Find out why Amazon is one of the 10 best stocks to buy now

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Microsoft, Qualcomm, and Tesla. The Motley Fool has a disclosure policy.


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