Buying stocks when most other investors are running for cover is one of the greatest ways to build your wealth over the long term. Investors are being given that opportunity right now with the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) plunging more than 8% since late April.
These opportunities are a perfect demonstration of why it is vital for investors to maintain a cash balance – not only to protect some of your wealth from the market's downturns, but also to enable you to buy stocks at a discount when they come crashing down.
With that in mind, if I had $10,000 to spend on shares right now, here are four I would likely look to buy…
- G8 Education Ltd (ASX: GEM): The childcare centre operator has generated enormous returns for shareholders in recent years, but has shed 33% of its price over the last nine months, giving investors a fantastic opportunity to buy. The company stands to benefit from the Coalition government's Federal Budget (which offered an additional $3.5 billion of funds allocated to the sector), while it also offers a forecast 6.6% fully franked dividend yield (which it pays on a quarterly basis).
- Woolworths Limited (ASX: WOW) is arguably one of the greatest stocks long-term investors could buy right now, despite the fact that the near-term outlook remains cloudy. Woolworths' shares are now trading near a three-year low at $27.25, and it offers a generous 5.1% fully franked dividend yield. Management has outlined an initiative to strengthen the business over the long term, which is great news for investors who are willing to remain patient.
- Altium Limited (ASX: ALU) is an electronics design software company which recently soared to an all-time high of $5.31, but has since retreated 16% to $4.45. Like G8 Education and Woolworths, Altium offers a generous dividend yield while it also boasts strong U.S. dollar exposure, scalability of operations and a huge cash balance. The stock's recent decline is an excellent opportunity for investors to buy a high quality business.
- Somnomed Limited (ASX: SOM) is a small-cap stock that offers treatments for sleep-related breathing disorders such as sleep apnea. While they mightn't be quite as effective as the products offered by rivals ResMed Inc. (CHESS) (ASX: RMD) and Fisher & Paykel Healthcare Corp (ASX: FPH), they are a lot cheaper and less invasive which could see demand soar over the coming years.
