On March 13, the S&P 500 finished the day down 10% from its previous all-time high. This officially pushed the stock market into what's known as "correction" territory, even if this is a misnomer. After all, who's to say whether the price of the S&P 500 is more correct today versus yesterday or tomorrow?
It's not important to know that a 10% pullback is called a market correction. There are two things more important. First, stock market corrections happen every couple of years -- it's normal. Second, stock market corrections have always been a great time to pick up shares of good companies for cheap.
As I look across the stock market, I feel as though I'm seeing more buying opportunities than I usually do, making it quite easy for me to come up with a list of five stocks that are simply too cheap to ignore. I could have named even more if I needed to. But today, I want to highlight why Lyft(NASDAQ: LYFT), Shift4 Payments(NYSE: FOUR), Comfort Systems USA(NYSE: FIX), Crocs(NASDAQ: CROX), and Airbnb(NASDAQ: ABNB) could all be timely stocks to buy today.
1. Lyft
Lyft stock is down more than 40% from 52-week highs due to general fears that it's failing to compete in the ride-sharing space. The company's metrics, however, tell another story. It ended 2024 with all-time high quarterly active riders of 24.7 million and all-time highs for quarterly rides at nearly 219 million, which was up 15% year over year.
Record adoption drove record financial results for Lyft as well. The big development is the company's full-year free cash flow, which was positive for the first time at $766 million for 2024. This means that Lyft stock trades at a paltry 6 times its free cash flow, as of this writing.
That's too cheap to ignore as it is. But Lyft expects to further grow its top line in 2025 and it expects margins to improve, thanks in part to growth in its advertising business. In a nutshell, Lyft stock is attractive because adoption is hitting records, shares are cheap, and 2025 should be even better for the business.
2. Shift4 Payments
On Dec. 4, President Donald Trump nominated Shift4 founder and CEO Jared Isaacman to head up NASA. Since then, Shift4 stock is down 15% and down 33% from highs in 2025. Investors are concerned about the transition in leadership underway at the company. Moreover, analysts weren't enthused with its recently announced $1.5 billion acquisition of tax-free shopping network Global Blue.
I believe these fears are overblown. Shift4 is steadily becoming a more important financial services stock, as evidenced by its payment volume growth. In the fourth quarter of 2024 alone, the company facilitated end-to-end payment volume of nearly $48 billion -- that's seven times higher than volume in the same quarter of 2020. In short, more business than ever is flowing through Shift4, making it an important service to its customers.
For 2025, Shift4 expects top-line growth of greater than 20%, which is a strong growth rate for any business. Moreover, the company is consistently profitable with net income of nearly $300 million in 2024. This means that it trades at its cheapest price-to-earnings (P/E) ratio ever at 28. Considering its torrid growth rate, that's a great price at which to buy shares for the long haul.
3. Comfort Systems USA
Over the past decade, few stocks have been as great as Comfort Systems -- it's up nearly 1,700%. That said, it's down nearly 40% from its all-time high, marking its second-biggest pullback of the decade. In short, it rarely goes on sale and the current sale on this monster stock shouldn't go to waste.
Comfort Systems is a rare opportunity to invest in an older "boring" business that's tremendously aligned with huge long-term growth trends. The company does a lot but its electrical systems are particularly useful for data centers and semiconductor manufacturing plants. And thanks to the artificial intelligence (AI) trend, there's plenty of new construction to meet these needs, providing Comfort Systems with a fast-growing backlog.
As of the fourth quarter of 2024, Comfort Systems had a backlog of $6 billion, up about 16% year over year and up 50% from the end of 2022. According to Fortune Business Insights, the global AI data center market is expected to grow at a nearly 26% annual rate through 2032, positioning Comfort Systems USA (and its shareholders) for incredible growth in the coming decade. And trading at just 23 times earnings now, the stock is attractively priced for the opportunity.
4. Crocs
From an earnings valuation perspective, Crocs stock is the cheapest on this list, trading at just 6 times its earnings. For comparison, the S&P 500 is nearly five times more expensive at 29 times earnings, according to YCharts. Granted, shoe stocks such as Crocs usually trade for cheap valuations. But as the chart below shows, Crocs trades at nearly half of its five-year average.
To be clear, Crocs stock isn't for growth investors -- 2024 revenues were only up 3.5% year over year and management only expects about 2% growth in 2025. That said, the business is solidly profitable with an adjusted operating margin of 25% last year and an expected 24% margin this year. And this gives it plenty of money to return to shareholders.
Right now, Crocs' management is authorized to buy back $1.3 billion of its stock -- that's over 20% of shares outstanding, which could boost shareholder value in a hurry. Moreover, it repaid over $300 million in debt in 2024 and could continue reducing it in 2025. In other words, it might not grow the top line by much. But management will be using its hefty profits for the benefit of investors.
5. Airbnb
Finally, Airbnb stock hit an all-time high way back in 2021 and is currently more than 40% below that now more than four years later. But I think that this business is far too high-quality and holds too much promise to trade sideways for much longer.
Despite relentless bearish sentiment regarding adoption on its platform, Airbnb continues to surge to new records. The company now has over 8 million active listings along with 5 million hosts. This along with strong demand from travelers allowed it to generate record revenue of $11.1 billion in 2024, which was up 12% year over year.
Not only did it have record revenue, Airbnb also generated free cash flow of $4.5 billion, good for a stunning 40% margin. And this is where things get interesting. Given current trends, management expects growth to drop into the single-digit range in the upcoming first quarter. But, thanks to its strong free cash flow, it also intends to invest $200 million to $250 million to launch new business ideas later in the year.
In other words, Airbnb's core business is strong, growing, and the stock is cheap. But the company is also gearing up for its next phase of growth, which is something that I believe most investors are ignoring.
I've selected these five stocks intentionally. Not only are all five now too cheap to ignore, in part thanks to the stock market correction they also might have the makings of a good mini-portfolio. For example, Lyft and Comfort Systems provide exposure to important growth trends such as ride-sharing and AI. And Crocs offers a degree of safety thanks to the simplicity of the shoe space compared to Shift4, which does business in an ultra-competitive financial technology space. And finally, Airbnb offers some still-unknown opportunities, thanks to the new business ideas it's launching this year and beyond.
For this reason, I'll refrain from saying which of these five stocks I like best today. In reality, I like all five. And as a group, I believe that returns for investors over the long haul will outperform the market.
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Jon Quast has positions in Airbnb, Crocs, Lyft, and Shift4 Payments. The Motley Fool has positions in and recommends Airbnb and Shift4 Payments. The Motley Fool recommends Crocs. The Motley Fool has a disclosure policy.
