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S&P/ASX 200 plunges 2.4% but the smart money is buying

The S&P/ASX 200 (INDEXASX: XJO) fell 2.4% last week which is a significant move in just five days. Even more alarming is the fact the index is fast approaching a 10% decline from its recent September high which would signal a technical correction.

Stay calm

It’s important to remember that in every trade there must be two parties – a buyer and a seller. What this means is for every buyer who presumably thinks they have identified a great investment opportunity, there is also a seller who thinks it’s time to get out!

So while in the last week and indeed the last month we have seen a number of willing sellers heading for the exits and driving down share prices, there have also been plenty of buyers snapping up stocks they find appealing.

Here are three stocks which have been getting cheaper, and no doubt some savvy investors have been busily adding them to their portfolios.

Carsales.Com Ltd (ASX: CRZ) – shareholders in the vehicle classifieds business have watched the share price slip 10.3% in the last month. The falls mean the stock is now trading on a more attractive forward price-to-earnings (PE) multiple of 20.8x.

SEEK Limited (ASX: SEK) – shares in this leading employment classifieds business have dropped 10.9% over the last 30 days, taking the stock’s forecast PE down to 24.6x.

REA Group Limited (ASX: REA) operates leading online property classifieds websites. REA’s share price has sunk 12.2% in the past month, providing investors with the opportunity to purchase the stock on a FY 2015 PE of 26.3x.

An even better opportunity

These three tech companies have much better growth profiles than your average business, however, there are few who would deny that their share prices reflect their growth potential.

For some investors, the recent price declines may be offering an appealing entry point into these high quality, leading tech stocks, but for other investors the prices being asked could still be too rich…which is exactly why The Motley Fool’s #1 Tech Pick is so enticing!

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Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.

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