The stock market declined only sharply: The Dow Jones Industrial Average fell more than 1,300 points over a two-day period.
However, market movements like these are no cause for panic. Instead, think about stock market revisions just as you would think of selling them at your favorite store – as a great time to buy quality goods at lower prices. With that in mind, here are two stocks recently hit that are at the top of my shopping list.
A Growing Financial Ecosystem
Fintech Enterprises Square (NYSE: SQ) struck hard yesterday its recent highs close to 30%, and that is after a little recovery
Fortunately, the move is not due to anything that affects the long-term growth potential of the company. In fact, there were three major negative catalysts driving down Square's share price:
- Square announced it was treading up on consumer credit with square rates. To make it clear: adds long-term growth potential, but also adds an extra element of credit risk, which is probably the reason the market reacted negatively.
- Square CEO Jack Dorsey recently sold more than 1
- Squares CFO Sarah Friar has decided to leave the company to pursue other opportunities. Now Friar was an absolute rock star in her role, and it's certainly worth having great managers. I'm really not surprised that this has caused a downward movement. I'm curious to see who the next CFO will be, but I have no reason to doubt the ability of Dorsey and his team to find the right person for the job.
Here's the bottom line: Square has surprisingly long-term growth potential with various aspects of its business. Did this change? Not at all
A huge growth opportunity for consumer banks
I've been watching Goldman Sachs (NYSE: GS) for quite some time now, and this recent downtrend could finally bring me to it to press the trigger and add it to my portfolio. At the moment, Goldman has fallen more than 13% from its recent high.
First of all, Goldman's recent record is impressive, even though it has one of the lowest price-to-book valuations in the financial sector as a whole. The investment banking business continues to grow, asset management assets have risen steadily and profitability has risen sharply.
The reason why I am most interested in Goldman Sachs as a long-term investment is its largely untapped opportunity in the retail banking business. Unless you're unfamiliar, Goldman has entered the retail banking business with its Marcus by Goldman Sachs platform, which has made billions of personal loans and high-yielding online savings accounts. While initial results were strong, both sides are still quite small, according to "big bank" standards.
This could only be the tip of the iceberg. We have recently learned that Goldman, as Apple's co-branding partner, is entering the credit card business. And in a presentation a few months ago, Goldman's then-president and COO David Solomon mentioned several other potential growth areas such as mortgages, auto loans, insurance products, current accounts, and payment solutions.
Here I think Goldman becomes an important force in consumer banking. The bank has the resources of a large bank to grow as aggressively or cautiously as it wants, and has one of the most recognizable brand names in the financial world. And because it does not operate commercial bank branches, it has a big cost advantage over banks of similar size.
In short, Goldman Sachs has all the advantages of a large bank, but without obstructing a legacy industry network
Short-term weakness among long-term winners
Square and Goldman Sachs are worth 30% and 13% less than they still are a few weeks ago? Of course not. Both of these companies have as much growth potential as they did before the recent market downturn, and in some respects they themselves looked cheap before . If these two stocks are not on your radar yet, maybe they should be now.
Matthew Frankel, CFP owns shares in Square and has the following options: shortly in December 2018 calls $ 90 Square. The Motley Fool owns shares of and recommends Square. The Motley Fool has the following options: shortly January 2019 calls $ 80 on Square. The Motley Fool has a disclosure policy.