Volatility is an unavoidable feature of the stock market, and it’s especially pronounced in growth stocks. Investors can count on this market segment being among the first to recover when a broader rally begins. On the flip side, growth stocks tend to fall hard in the early phases of a sell-off.
If you can, it’s helpful to think of these drops as opportunities to pick up quality businesses at reduced valuations rather than something to be feared. A little preparation in the form of a watch list can make all the difference in ensuring you are ready to make moves when the next cyclical downturn begins.
With that goal in mind, let’s look at some excellent growth stocks worth considering in a stock market sell-off.
1. Microsoft
Microsoft (NASDAQ: MSFT) stock isn’t cheap these days. The rally in the tech world has helped push the software giant’s valuation to about 14 times annual sales. That translates into one of the highest premiums you could pay for a profitable tech leader. Apple shares are available at 7 times revenue, for context, and Amazon is even cheaper at just 3 times sales.
Microsoft’s many growth avenues help explain why investors love this stock. It has lots of exposure to the artificial intelligence (AI) boom both through its OpenAI partnership and through the tech’s availability across its own software portfolio. You don’t have to wait for AI to supercharge sales gains, either, thanks to Microsoft’s quickly expanding enterprise services division. Growth here helped the company log a 16% sales spike in the most recent quarter.
2. Costco
Costco Wholesale (NASDAQ: COST) shares never seem like a steal, in contrast with the consumer staples products that the warehouse retailer sells in bulk by the millions. The stock has been a huge winner for shareholders in the past year, jumping over 40% in 12 months while the wider market is up 26%. That rally pushed its valuation above 1.3 times sales, or double the rate you’d pay to own rival Walmart. You might be better off waiting for a stock market drop before diving into Costco stock at that price.
Sure, Costco is firing on all cylinders right now. Customer traffic is up, membership renewal rates are at a record high, and shoppers are flocking to its online business thanks to innovative merchandise offerings like the recent gold bar craze. Yet the company could disappoint investors this year given high expectations around a membership fee hike and rising profitability.
I’d look to buy the stock if there’s a pullback due to the chain falling a bit short of those lofty Wall Street targets.
3. Meta Platforms
Meta Platforms (NASDAQ: META) is among the biggest winners of the “Magnificent Seven,” having gained over 130% in the past full year. The rally makes sense given that the social media giant’s business is on an incredible roll. Despite a tough digital advertising market, revenue rose 16% last year and earnings soared 66% to $39 billion. “We had a good quarter as our community and business continue to grow,” CEO Mark Zuckerberg said in a February press release.
Wall Street is salivating at the potential for more earnings growth once the digital advertising market starts recovering. Watch the average price per ad metric for signs of that rebound starting over the next few quarters. In the meantime, keep Meta on your watch list in case a downturn delivers a more compelling valuation. Shares do seem a bit pricey right now at their current premium of 33 times earnings.
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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Demitri Kalogeropoulos has positions in Amazon, Apple, Costco Wholesale, and Meta Platforms. The Motley Fool has positions in and recommends Amazon, Apple, Costco Wholesale, Meta Platforms, Microsoft, and Walmart. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
3 Unstoppable Growth Stocks to Buy if There’s a Stock Market Sell-Off was originally published by The Motley Fool
