During 2024, the S&P 500 had an incredibly strong year. However, it dipped by about 9% at one point during the year. This is quite common, as corrections (a drop in the market by more than 10%) occur about every other investing year. Investors need to have a shortlist of stocks that they are ready to buy during these drops, as the recovery can be quite swift once they are complete.
If the market drops in 2025, I'm planning on loading up on two stocks: CrowdStrike (CRWD 3.36%) and Taiwan Semiconductor Manufacturing (TSM 3.49%). Both of these stocks have great long-term tailwinds and already occupy my portfolio. However, if there's a pullback, I'll be glad to add more.
CrowdStrike
CrowdStrike is a dominant cybersecurity software provider in its space. Although it started by offering endpoint protection software (which secures network endpoints like a laptop for exterior threats), it has greatly expanded its product offering. By attempting to become a near one-stop shop for all things cybersecurity, CrowdStrike has built powerful relationships with its clients. In the third quarter of fiscal year 2025 (ending Oct. 31), 66% of CrowdStrike's clients were using at least five products. Twenty percent were using at least eight, which shows there's still plenty of room to upsell its existing client base.
All of this contributes to management's goal of achieving $10 billion in annual recurring revenue (ARR) by the end of FY 2031 (ending January 2031). Right now, they company is at $4.02 billion in ARR, which was up 27% year over year. For it to reach the $10 billion goal, CrowdStrike will need to post a compound annual growth rate of 16%. That seems feasible, and achieving that goal will be possible if CrowdStrike continues to onboard new clients and expand existing customers' product usage.
However, the market isn't blind to CrowdStrike's success. It has become a fairly expensive stock, trading for 23.6 times sales.
CRWD PS Ratio data by YCharts
While plenty of other software companies trade for a much higher premium than that, it's still a bit rich for my taste. As a result, I'll be keeping an eye on CrowdStrike's stock, especially if the market dips. If it does, I'll be sure to scoop up a few shares, as it is a promising long-term investment.
Taiwan Semiconductor
Taiwan Semiconductor (TSMC) is the world's leading contract chip manufacturer. It has the production capacity that many big tech companies like Nvidia and Apple rely on to produce the chips they need for their products. TSMC's clients design the chips and then send that design to TSMC to be produced. This means TSMC is often making chips for competitors, placing it in a great position.
This especially rings true in the realm of artificial intelligence (AI) investing. An investment in TSMC doesn't require you to pick an AI winner, as any eventual winner would be extremely likely to develop the model on a device powered by TSMC chips. AI-related revenue has been a huge boom for TSMC, with management expecting it to triple this year.
All of this enthusiasm has caused the stock price to swell, nearly doubling in 2024. However, I think it's still fairly priced at about 23 times 2025 earnings.
TSM PE Ratio (Forward 1y) data by YCharts
Considering that TSMC is one of the most vital companies in the world for all things technology, this seems like a fair price to pay. TSMC is one of those companies that I'm not waiting for a market dip to buy more of. But, if one occurs, I'm certainly going to be aggressive in increasing my position size.
