Over the last few weeks, the financial markets have been quite unstable as investors try to make sense of various economic and policy changes. The tech-focused Nasdaq Composite has experienced a notable decline, officially entering correction territory by dropping over 13% from its recent heights as of the end of trading on Monday.
In turbulent times like these, it’s easy for investors to succumb to panic and start selling off, but astute investors see such volatility as a chance to pick up worthwhile stocks at a discount. Two standout stocks feeling the pinch right now are Costco Wholesale (COST -0.42%) and SoFi Technologies (SOFI 0.72%), marking a prime opportunity to consider adding these to your portfolio.
1. Costco: A Stalwart of Consistent Revenue and Growth
At first glance, Costco might not scream high-growth potential like your typical tech company—it’s rooted in consumer goods and has been around for decades. However, don’t let its category fool you. Costco has consistently proven to be a stellar performer, fueling robust sales growth and remarkable profits.
During its fiscal 2025 second quarter, which wrapped up on February 16th, the company saw a 9% year-over-year sales increase, driven largely by a 6.8% rise in comparable-store sales. The e-commerce segment shined brightly too, with a 21% surge during the quarter. Management is actively expanding its share in significant areas, like big and bulky items, and optimizing its digital strategy by leveraging warehouses as delivery hubs.
Costco’s quarterly earnings per share also nudged up to $4.02 from last year’s $3.92, showing its profitability is powered significantly by its annual membership fees. The blend of low prices and membership fees fosters strong customer loyalty and consistent sales growth, with the membership fees providing a steady stream of revenue. The number of paid member households rose by 6.8% in the second quarter, with renewal rates in the US and Canada hitting 93%.
While Costco’s stock price has traditionally been seen as expensive—with its price-to-earnings ratio surpassing 60—it’s now about 13% off its previous peaks, currently trading at around 55 times its trailing-12-month earnings. Though this may seem steep, investor confidence in Costco’s perpetual growth makes it a valuable stock for long-term investment.
2. SoFi: Pioneering Tomorrow’s Financial Landscape
In contrast to Costco, SoFi is a younger, tech-centric company within the financial sector, and it’s seen some stock volatility since going public through a special purpose acquisition company (SPAC) a few years back. Despite this, SoFi has reported impressive growth and is consistently moving into profitable territory.
In the fourth quarter of 2024, SoFi’s revenue jumped 27% year-over-year, transforming from a loss of $301 million to an impressive profit of $499 million. Several elements are fueling this growth, most notably its ability to attract millions of new users annually. These users are primarily young professionals keen on SoFi’s all-digital platform that simplifies financial management, aligning perfectly with their tech-savvy lifestyle.
Originally acting as a lending co-op, SoFi has since broadened its offerings to include a variety of financial services like banking and investment tools. It’s also sought to provide unique investment opportunities, such as allowing users to invest in SpaceX funds and gaining access to initial public offerings (IPOs) typically unavailable to individual investors.
SoFi’s financial services segment is booming, with sales up by 84% year-over-year in the fourth quarter. Non-lending segments, including its tech platform, now account for 49% of sales, relieving some pressure off the lending section and paving the way for new growth avenues.
Currently, SoFi’s stock sits 57% below its all-time high, trading at a forward P/E ratio of 23 based on future earnings estimates. Although it’s not a stock for the risk-averse investor, for those willing to embrace some risk, this may be an opportune moment to invest in SoFi and hold on for its long-term potential.
