Here's what we're buying now

Here's what we're buying now     February 07, 2016 Hi fellow Fool - At The Motley Fool, the topic of our water cooler talk rarely (if ever) changes. It's a non-stop stream of conversations on the market - trends we're watching, and debates on stocks we're tearing our hair out analyzing. The office is full of sharp investors who ask some pretty tough questions. So, while I've used recent columns to explore topics like what happens in years the market starts off with a crash (more often than not, the rest of the year is pretty good)... ... And how you can filter out the noise when the media is full of "experts" screaming to sell everything (check out our podcasts for some sanity)... ... I realize that one of the biggest questions on investors' minds right now is how to take advantage of the recent market selloff ... And one of the best sources for potential answers to that question is right down the hall from my desk. So I grabbed my notepad and spent some time next to our water cooler and coffee machines and asked some of the smartest investors I know a simple question: "What's the most recent stock you bought after last month's selloff?" Allow me to go first I'll start it off. In the past few weeks I've added to different six positions I already own. I'm confident in the long-term success of all of those companies, so I'll take the market's offer of putting them "on sale" for a limited time. My most recent brand-new buy was a British chip company named ARM Holdings (Nasdaq: ARMH). Why'd I buy ARM? Plenty of companies talk about being the next Intel, but ARM is the real company you'll find in just about every next-generation device. ARM low-power chips are ideally suited for mobile and any number of devices in the burgeoning "Internet of Things." They're so dominant that 12 billion ARM-based chips were sold in 2014 (that's precisely 10X the number of smartphones sold)! ARM has consistently grown as mobile devices have exploded. The company has posted double-digit revenue growth in 20 of the past 23 quarters. Best of all, trends like the Internet of Things and self-driving cars are a future boon to the company. I've been watching ARM for years, always kicking myself for having not bought in. So I used the market's selloff and a recent 28% drop in its share price to finally buy into this exceptional company. Time to buy Tesla and Netflix? I stopped Million Dollar Portfolio and Rule Breakers analyst Simon Erickson to get the low down on what he's been buying in recent weeks. Simon's most recent buys came just this week; on Wednesday he scooped up shares of Tesla (Nasdaq: TSLA) and Netflix (Nasdaq: NFLX). Both companies have been huge winners in recent years, but are well off recent highs. Is their drop a short-term opportunity for savvy investors, or the first sign of a bursting bubble? Simon brushed off concerns about both companies' valuations (Netflix produces few profits while Tesla loses money), by noting that both are forgoing profits to instead reinvest in their businesses and maintain their edge in huge trends. When the market dramatically sells off in a short time, it's these kinds of fast-growing companies that often get hit the hardest. While Netflix does always look expensive, I couldn't disagree with Simon's take on the company. It's managed to roll out its services globally in a shockingly short amount of time. With 75 million members (and a long runway of growth ahead), I believe someday Netflix will be the world's largest media company. Tesla, meanwhile, is a company I own and have written about in this column. Today it's burning cash completing a massive "Gigafactory" to produce batteries in Nevada. The completion of that project will allow Tesla to transform into much more than a car company - energy storage is its next big thing. Both of these companies are potentially very volatile - but worth a look from investors. A lesser-known company Finally I stopped Brendan Matthews from the Stock Advisor team. His most recent purchase doesn't get as many headlines as Tesla and Netflix, but that doesn't mean it's any less intriguing as a potential investment. For his most recent buy, Brendan picked up shares of WisdomTree (Nasdaq: WETF) in mid-January. The company is down 55% from early August highs. (Are you sensing a trend in what people are buying?) WidsomTree is a leader in the booming exchange traded fund (ETF) field. Its revenues have been growing like wildfire as money poured into ETFs in recent years. Revenue surged from $40.6 million in 2010 to $272 million in the past 12 months. Recently, plunging markets have helped lead to money flowing out of WidsomTree's funds. Yet, Brendan argued that near-term woes will be outweighed by new ETFs targeting popular strategies that should expand the company's profit margins and lead to market-beating returns. It's hard to argue with WisdomTree's recent history of expanding sales, and its valuation looks reasonable. The company has no debt, $212 million in cash on hand (versus a market cap of $1.6 billion), and has a P/E of 23... just slightly above the general market. In other words - in case you don't have all the language of investing down yet - it's definitely worth a look for your investing dollars. I hope you found some profitable ideas from these water cooler chats. With so many places to find "stock ideas" floating around the Internet, sometimes it helps to just let people put their money where their mouth is. Until next week, Fool on, Eric Bleeker, CFA P.S. If you're looking for more investment ideas, Brendan and the other analysts at Stock Advisor compile a monthly list of Best Buys Now. The newsletter service, which also boasts a pick from each of the Fool's founders every month, has better than tripled the market since its inception. We've set up a free trial for you to check it out!   Having trouble seeing this email?  View on Web We work fervently, feverishly, and Foolishly to make sure all the facts and figures we publish in our emails are 100% accurate and up to date. Brendan Mathews owns shares of WisdomTree Investments. Eric Bleeker, CFA owns shares of ARM Holdings and Tesla Motors. Simon Erickson owns shares of Netflix and Tesla Motors. The Motley Fool owns shares of Netflix and Tesla Motors. To ensure you receive the latest and greatest from us, add Fool@foolsubs.com to your address book. Don't want any more emails? No problem... unsubscribe now, or change your email preferences here. This is a promotional message from The Motley Fool | 2000 Duke St. | Alexandria, VA 22314 Copyright ©1995-2016 The Motley Fool. All rights reserved. Legal Information.