3 Stocks to Buy on the Cheap Following the Market Selloff

Stocks to buy

The recent market sell-off has felt rather painful. It’s certainly been a while since we’ve witnessed stocks falling into an extended losing streak. Additionally, the concentration of selling in the tech sector is another reason why many newer and beginning investors (many of whom are heavy in the tech and AI names) feel like we’ve been through a bear market when the S&P 500 hasn’t even officially entered a correction (a 10% decline) just yet.

Only time will tell if the past week of relief gains is the start of a new trend or if September will see us hit new lows. Regardless, some hard-hit stocks are starting to get cheap after the recent pummelling. So, if you still like tech and the AI theme, perhaps the latest market sell-off is a great time to act. Here are three stocks to buy on the cheap after the latest plunge.

Corning (GLW)

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Corning (NYSE:GLW) was in melt-up mode back in early July, eventually leading to a painful downfall as tech stocks rolled over. Though GLW stock has since recovered some ground, they’re still down 15% from their 52-week highs. I’m in the camp that views the sudden drop in Corning shares as a golden buying opportunity. After all, the data center opportunity hasn’t really gone anywhere.

Deutsche Bank upgraded GLW stock to a Buy from Hold in late July, calling for growth to accelerate in the second half due to generative AI-driven demand and a “ramp in [telecom] carrier activity.”

The disappointing guidance that followed an otherwise solid quarter has really tempered investor enthusiasm. Perhaps it’s time to step in as a contrarian before all things that touch the AI data center boom start making up for lost time again.

Microsoft (MSFT)

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Microsoft (NASDAQ:MSFT) definitely stands out as one of the safer and most dominant AI companies to bet on for the long run. Still down 13% from all-time highs, the enterprise AI and cloud behemoth seems like a no-brainer buy on the dip.

Though MSFT is still historically pricy at more 34.4x trailing price-to-earnings (P/E) ratio, the company remains committed to staying at the front of the AI marathon (as opposed to race). Recently, the $3 trillion giant teamed up with data analytics firm Palantir (NASDAQ:PLTR) to do some cloud and AI work for the U.S. government. The deal was a bigger needle mover for PLTR stock than it was for MSFT.

Either way, I view the move as another compelling driver for Microsoft that the market seems more than willing to ignore right now.

IMAX (IMAX)

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The movie theater business may be in a nasty spot right now, but IMAX (NYSE:IMAX) is arguably the best way to bet on the return of the silver screen. Indeed, IMAX and other large-format viewing experiences may come with a higher price of admission. But whenever there’s a blockbuster hit, IMAX or something similar tends to be a must for moviegoers with enough extra cash in their pockets.

The Canadian company, which also designs and develops movie cameras and equipment, clocked in impressive second-quarter results. With installation guidance for 2024 recently raised, things seem to be looking up for IMAX stock.

After dipping close to 6% from its 52-week high, the stock goes for 22.6x forward earnings, a fairly modest price to pay for a firm that could play a starring role come the next box office bounce.

On the date of publication, Joey Frenette held a long position in Microsoft. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article. 

Joey Frenette is a seasoned investment writer specializing in technology and consumer stocks. Contributing to the Motley Fool Canada, TipRanks, and Barchart, Joey excels in spotting mispriced stocks with long-term growth potential in a fast-paced market.

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