It can be challenging to go through a stock market sell-off. Watching equities you own lose significant value practically overnight is never fun.
However, it's essential to make the most of it, and one of the best ways to do that is to look for great stocks to buy while they're down. There's usually no shortage of those during downturns.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »
This time is no different. Here are two great examples: Shopify (NASDAQ: SHOP) and Apple (NASDAQ: AAPL). Read on to find out why these top stocks are worth investing in for the next decade.
Shopify's shares are down 8% this year, though not because the company did anything wrong. The e-commerce specialist actually delivered excellent fourth-quarter results, a continuation of the solid earnings it has been posting for a while.
Revenue growth remains strong, and thanks to relatively recent changes to its business, its profitability metrics have improved significantly. The company's net income and free cash flow were both positive last year.
SHOP Revenue (Annual) data by YCharts.
Investors can't get too excited about Shopify beating expectations for several quarters, but the stock looks to be in position to perform well in the long run. The company has built a name and brand around the services it offers: a one-stop shop for everything merchants need to build online storefronts.
The company has captured a more than 10% share of the ruthlessly competitive U.S. e-commerce market thanks to its approach, which includes an app store with thousands of options merchants can use to customize their storefronts in ways that match their unique needs.
That also creates switching costs; the company should retain most of its customers in the long run, along with a decent share of the fast-growing e-commerce market. Shopify wants to be a 100-year company.
It's too early to tell if it can pull that off, but it should certainly benefit from the increased shift to online retail over the next decade. So, beyond tariffs threats and trade wars, Shopify looks like a top stock to buy on the dip and hold for the next decade.
The current challenges facing the economy are hitting Apple hard. The tech giant does a lot of manufacturing abroad, especially in China, which is President Donald Trump's favorite target for tariffs.
Geopolitical tensions with China, combined with Apple's slowing revenue growth, have led many investors to abandon the stock. Shares are down 16% year to date.
However, the company still has many weapons. The stock may not be able to match the returns it delivered in the 2010s, but it should still produce competitive performance in the long run.
Let's consider three reasons why.
First, Apple generates a significant amount of free cash flow. The company can deploy that money to decrease its exposure to China. A recently announced $500 billion investment in the U.S., some of which will be used to expand its manufacturing capacity in this country, should only be the start.
Second, management's long-term plans depend less on its hardware business and more on its services segment. True, iPhone sales still make up the bulk of the company's top line, but with 2.35 billion devices in circulation, it has deployed multiple monetization efforts.
Apple already has more than a billion paid subscriptions, but the tech leader will seek even more monetization initiatives. In the next decade, expect Apple's high-margin services segment to grow significantly faster than the rest of its business. That will positively affect the company's bottom line.
Third, Apple is an excellent dividend stock, although it isn't necessarily known for that. High-yield seekers won't find what they are looking for here. The company's forward yield is just 0.5%, well below the S&P 500's average of 1.3%.
However, the company consistently raises its payouts and has done so by 92.3% in the past 10 years. There is plenty more room for dividend growth, considering its incredibly conservative cash payout ratio of 14%. Buying Apple shares and opting to reinvest the dividend automatically could lead to superior returns.
Before you buy stock in Shopify, consider this:
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Prosper Junior Bakiny has positions in Shopify. The Motley Fool has positions in and recommends Apple and Shopify. The Motley Fool has a disclosure policy.