At the time of writing, the Nasdaq composite is down around 26% off its all-time high, pushing the index into a bear market. In addition, as fears swirl about a possible recession amid record-high inflation, the S&P 500 is also down 17% in 2022.
While the initial reaction might be to sit on the side while the turbulence dissipates, some of the world's wealthiest investors continue to put money into the market.
The best and most reliable way of investing in stocks during volatile times is to invest in rock-solid businesses and hold them for as long as they remain that way throughout.
Thus, in an inflation-driven market, here are our top picks for August 2022:
1. Salesforce
Salesforce's suite of applications, which drives productivity across sales, customer service, marketing, and commerce has led the CRM (customer relationship management) industry for nine consecutive years, making it the fastest-growing enterprise software company in history.
In the fourth quarter of 2019, Robert Shafir of Sculptor Capital acquired a sizable stake in the company and added his last position in the first quarter of 2022. Currently, the stock ranks as the fifth-largest holding in his hedge fund.
With digital transformation making the world more connected, CRM software has become critical. By 2021, Salesforce gained solid momentum when it captured a 24% market share, leading to impressive financial results.
The company's strong revenues, climbing 24% to $7.4 billion in the recent quarter and its addressable market 2025 outlook of $248 billion, makes Salesforce well-positioned to maintain that momentum in the coming years.
Trading at 6.3 times sales, cheaper than the 3-year average of 9.1, gives enough reason to believe it's a good time for investors to follow in Shafir's footsteps to add the stock to their portfolio.
2. Peloton
The provider of interactive fitness platforms, Peloton Interactive, was founded as recently as 2012.
Yet, with a trailing 12-month revenue of $3.8 billion compared with Nautilus, its direct competitor operating for nearly four decades, which generated trailing 12-month sales of just $590 million, Peloton is the clear leader in the at-home fitness market.
Throughout 2020, when coronavirus restrictions forced people to stay at home and find alternative ways to keep active, Peloton greatly benefited from the trend, soaring 434% and almost reaching a market cap of $50 billion but plunged dramatically, with net sales coming in at a loss of $757 million in the last quarter.
Arguably, Peloton has the best combination of hardware and software in the industry and is adored by customers, similar to Netflix and Apple.
Moreover, with CEO Bary McCarthy's emphasis on turning things around and growing the subscriptions side of the business, research analysts believe the stock deserves some attention and that investors willing to buy the dip and be patient could see potential solid returns.
3. PayPal
PayPal boasts 429 million active accounts and over $1.2 trillion in annualised payment volume, and in the first quarter of 2022, PayPal's total payment volume increased 15% year-over-year, on top of pandemic-fueled gains of the comparable 2021 period.
While the company's recent active user growth has been disappointing and having conceded its growth targets weren't going to happen, it isn't really a cause for concern.
PayPal has been increasingly focused on monetizing its consumer-focused digital wallet, Venmo, of which payment volume rose 12% year over year to $58 billion.
In addition, with free cash flow of more than $5 billion expected in 2022, PayPal's business is remarkably profitable while the company continues to generate solid revenue and total payment volume growth.
If you're a long-term investor, PayPal looks like a good pick for August as it's still the largest money transfer player as it shifts from cash to digital payments.
4. Revolve Group
When looking at the clothing industry and how it's been faring over the past few years, experienced investors will note a shift in trends as large companies start focusing on digital and rely on social media influencers to promote their products.
Fashion e-commerce company Revolve Group considers itself a shopping "experience," offering more than 700,000 products curated from the company's artificial-intelligence-derived algorithms, dropping around 1,300 new styles weekly.
The frequently changed products and its unique social media marketing strategy have led sales to skyrocket and profits increasing during its first quarter of 2022. Revenue rose 58% year-over-year, while its high-fashion sister site, FWRD saw even better success.
Whether the impressive numbers have filtered down into the second quarter remains to be seen when earnings results come out on 3 August, but Revolve's long-term view on consumer shopping experience seems compelling.
So far, the stock is down 46% this year, and with shares trading at only 21 times trailing 12-month earnings, investors could potentially lock in gains should the stock explode when the market turns around.
5. Apple Inc.
Apple has positioned itself remarkably well as a global leader in multiple industries and with a market cap of $2.3 trillion, the tech giant currently boasts the largest company in the world.
However, with inflation running rampant and fears of recession looming, Apple hasn't been immune to broader market selloffs.
Fundamentally, Apple looks better than ever and has fared better than most other tech companies on the market this year. In its latest earnings results, the company reported revenue rising to a new fiscal record of $83 billion, suggesting that Apple is weathering a slowdown in spending.
Although Apple could potentially face a bigger threat amid slowing growth compared to its past, the company has more than enough cash on its balance sheet to thrive in the coming years.
Most notably, the latest drop in share prices has given investors the perfect opportunity to open a position in one of the best stocks to buy and hold.
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