Tech Sell-Off: Buy two Growth Stocks and Sell one

Tech Sell-Off: Buy two growth stocks and sell one

When looking for opportunities in a sagging market, it's critical to be picky.

Investing in a bear market for stocks can be difficult, particularly when the selling pressure has been as irrational as it has been in 2022. Almost every part of the market has been hurting, which suggests that investors are selling out of fear instead of planning for the long term.

For investors with money to invest and the fortitude to ride out this difficult era, it's the kind of atmosphere that creates opportunity. After all, history shows that given enough time, the stock market always recovers.

Nevertheless, it's crucial to invest in top-notch stocks that have the potential to perform well. Here are two excellent instances and one that investors ought to avoid.

Amazon is the first stock to buy.

The largest e-commerce company in the world, Amazon (AMZN 1.42 percent), has experienced such amazing growth over the past 25 years that even Warren Buffett, arguably the greatest investor in history, regrets not having purchased the shares earlier.

The key to Amazon's success is diversity; the company has expanded beyond e-commerce to become the leader in fields like cloud computing.

16 different industries can choose from among the cloud solutions provided by Amazon Web Services (AWS), whether their businesses merely need to move their operations online or could benefit from cutting-edge capabilities like machine learning to grow faster. AWS is the company's main source of income; in the past year, it brought in all of Amazon's operating income.

But Amazon also has a growing ad business that, over the past year, has outperformed Alphabet's YouTube in terms of sales. It is also trying out electric cars because it owns a growing manufacturer called Rivian Automotive.

Amazon continues to diversify, has generated $477.7 billion in total sales over the past 12 months, and has a track record that should inspire confidence in its future from any investor.

Microsoft is the second stock to be purchased.

Microsoft (MSFT 1.47 percent) is well-known for its Windows operating system and Office 365 digital document suite, which are used by billions of people worldwide. And like Amazon, this business is growing and entering new markets.

Azure powers its cloud services division, which directly competes with Amazon Web Services but frequently falls behind.

Whatever the case, since Azure was established just 12 years ago, the cloud is now Microsoft's largest revenue division, which testifies to the company's ability to pivot into quickly expanding possibilities.

It's not always simple to change the course of a $1.9 trillion corporation.

Microsoft has also established a very lucrative consumer hardware company.

Products like the Xbox game system and the Surface line of laptops and tablets are what fuel it.

Both have become independent billion-dollar brands.

The gaming sector of the economy could experience a significant boost if Microsoft successfully completes its $68 billion acquisition of Activision Blizzard, which is presently being investigated by regulators

Popular games like Call of Duty and World of Warcraft are owned by Activision.

Another business that will probably be around for decades to come is Microsoft, which generated $192.6 billion in total sales over the past 12 months.

Given that the company's stock is currently down 26% from its all-time high, now might be a perfect moment to invest in it. In the long run, the current stock market volatility might just be a speed bump for business.

Robinhood Markets is the stock to sell.

A bear market can occasionally reveal flaws in some companies that were previously covered up by a robust economy. During the general market turbulence of 2020 and 2021, Robinhood Markets (HOOD -4.46 percent), a stock and cryptocurrency investment platform, was booming, thanks largely to the trillions of dollars in U.S. government stimulus payments that went into the purses of young, novice investors.

These investors utilized the Robinhood platform to create a frenzy in firms like GameStop and AMC Entertainment that, under normal market conditions, had a dubious possibility of long-term success. Since transaction fees are how Robinhood generates revenue, the more volume its consumers produced, the better the company did.

But by 2022, the youthful customer base of Robinhood seems to have lost interest in investing. The number of monthly active Robinhood users has decreased by 25% since the start of 2021, from 21.3 million to 15.9 million most recently. During the same time period, the company's revenue from each user dropped by 61 percent, from $137 to $53, indicating that customers are making purchases far less frequently.

But the stock of Robinhood, which fell from an all-time high of $85 to barely $9 as of this writing, has experienced the sharpest loss. The company still has regulatory issues to deal with, which might have an impact on how it generates income and require it to change its gamified smartphone app, which might be promoting risk-taking.

All things considered, this isn't a stock that investors want to gamble on in uncertain market circumstances.