5 High-Conviction Stocks to Buy in This Market Correction

It's tough to even think about it while the market is in a freefall. But this is the time to be buying, provided you're actually buying stocks for the long haul and not just looking to score a quick gain. Five years from now, it won't matter much if you didn't step in at the exact bottom.

Here are five highly sold-off stocks you can buy into in the middle of a meltdown that's been renewed every time it attempted to start a recovery.

Cardinal Health

Investing in healthcare stocks can be daunting. Pharmaceutical companies are forever just one competitor's drug development away from disaster, while insurers and hospitals are at constant risk of increasingly heavy-handed regulation.

There's one sliver of this sector, however, that's so simple and straightforward that it sidesteps these sorts of risks. That's supplying hospitals and clinics with the consumables they always need more of.

Enter Cardinal Health (NYSE: CAH). The company provides goods like rubber gloves, syringes, bandages, and even some pharmaceuticals. But Cardinal Health also offers higher-level supplies like radiopharmaceuticals (for medical imaging), diagnostic kits, and the equipment needed to do this sort of work. If you find it in a hospital, there's a good chance Cardinal sells it.

Being able to serve as a one-stop-shop for an industry that needs to worry more about patients and less about managing a bunch of different suppliers is this company's "value add." It's also why Cardinal Health has been able to grow its top line every quarter for the past eight years, except for the second quarter of 2020, when the COVID-19 pandemic's arrival in the United States temporarily wrecked supply chains.

Salesforce

Salesforce (NYSE: CRM) is arguably the original cloud computing company. It offered web-based access to customer data beginning in 1999, before "cloud" became a commonly used way of describing remote connectivity to a network.

The product's certainly evolved since then. In 1999, users could only use a web browser to find and update the most basic information about a customer or sales prospect. Now, the platform integrates with third-party collaboration services, provides holistic data to data-analytics teams, and supports e-commerce operations. In early June, Salesforce even unveiled a way for its merchant clients to connect with TikTok's users. This sort of innovation is why this company is still expected to beef up its top line to the tune of 20% this year, and nearly another 18% next year.

There's still plenty of room to keep growing after that, though. Precedence Research estimates the customer relationship management software market will grow by an average of more than 13% per year through 2030. As the industry's powerhouse, Salesforce is positioned to win at least its fair share of that market expansion.

Palo Alto Networks

It's been obscured by coverage of more pressing matters like rampant inflation, midterm elections, and Russia's invasion of Ukraine, but digital data breaches continue to swell. After a record-breaking number of successful "hacks" in 2021, the Identity Theft Resource Center reports that during the first quarter of 2022, data breaches were up 14% from Q1 2021's tally. Eva Velasquez, the organization's president and CEO, concluded: "The fact the number of breach events in Q1 represents a double-digit increase over the same time last year is another indicator that data compromises will continue to rise in 2022."

Connect the dots. The world's still not doing enough to protect its increasingly connected networks.

Palo Alto Networks (NASDAQ: PANW) to the rescue! While it's one of several publicly traded cybersecurity stocks, it's one of the best -- if not the best. That's because its offerings are so complete. Cloud and edge computing, secure remote employee connectivity, and even threat assessment and response are all in its wheelhouse, making it a one-stop-shop solution for enterprises that need better digital protection.

That's what analysts' forecasts suggest, anyway. They're calling for top-line growth of 29% this year and 22% next year, and per-share earnings growth of 21% and 24% (respectively) for the same two years.

Lam Research

They're down 40% just since the end of last year, so there's no denying that Lam Research (NASDAQ: LRCX) shares have been swept up in a sell-off that's problematic for the technology sector, and downright brutal for names in the semiconductor business. Investors, however, might be misunderstanding Lam Research's place in the industry.

It would be naive to believe Lam isn't being affected by the current semiconductor shortage. While it merely makes the supplies and equipment that allow more familiar chip companies like Intel and Taiwan Semiconductor to manufacture products for end-users, most chipmakers are curtailing output due to a lack of components needed to make a complete final product.

But the industry still needs Lam -- and perhaps even needs it more than usual right now. The world's not just scrambling for more computer chips and semiconductors. Chipmakers are also scrambling for more capacity to make them in the future, including building their own new manufacturing facilities.There's no telling when this demand might cool down, if it ever does.

The dynamic plays right into the hand Lam Research is holding. The company's atomic layering, plasma cleaning, and ion etching tools are just some of the hardware that chip foundries have to have in order to manufacture computer chips. That's never going to change.

Amazon

Finally, add Amazon (NASDAQ: AMZN) to your list of high-conviction stocks to step into while the market is in the middle of a correction. This stock has helped drive this correction, in fact, falling 35% year to date.

Amazon is the ruler of e-commerce, now accounting for more than half of the United States' online retailing revenue by itself, according to e-commerce market research outfit Pymnts. No competitor even comes close.

But e-commerce dominance isn't the reason you can feel good about stepping into the stock on this big dip -- the company's e-commerce operation wasn't even profitable last quarter thanks to sky-high operating costs. Rather, it might be wiser to start thinking of Amazon as a cloud computing and advertising company that also happens to sell stuff online.

For all of 2021 (before inflation exploded into a full-blown cost headache), Amazon Web Services accounted for three-fourths of the company's operating income, while accounting for less than one-sixth of its revenue. Amazon Web Services' operating income was also up 56% during the first quarter of this year, extending a long-standing growth streak. Moreover, Amazon finally disclosed how much ad revenue it's generating, reporting a total of $31.2 billion worth of advertising business for last year.

These two fast-growing ventures are also far more profitable than selling goods and services ever was for the company, setting the stage for a bright future most investors may not fully appreciate awaits.

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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. James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Intel, Lam Research, Palo Alto Networks, Salesforce, Inc., and Taiwan Semiconductor Manufacturing. The Motley Fool recommends the following options: long January 2023 $57.50 calls on Intel and short January 2023 $57.50 puts on Intel. The Motley Fool has a disclosure policy.

Source: The Motley Fool