It's not uncommon during a bull market to hear investors say that they can't wait for a pullback to buy shares at basement prices.
But when the market does eventually take a turn for the worst – as it has done recently – they decide that investing in stocks is simply too risky at that time.
There's little doubt you're familiar with this scenario. Whether it applies to you, or someone that you know, many investors inherently buy at precisely the wrong time of the market's cycle, and sell at the worst time.
Selling into the panic is the worst thing you could do. That's when the losses actually become real.
As difficult as it can be to buy during such downturns, that's where the real gains are made.
Australian investors have been given this opportunity in recent weeks. Right now, the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) is hovering around the 5,070 point mark – up 0.8% for the day – but down more than 15% since April this year.
I'll be the first to admit how painful it is to watch your portfolio plunge in value. But I can also say that I've bravely topped up on a few companies recently which I believe were oversold, and I believe I will be well rewarded in the long run as a result.
With that in mind, here are five other companies that could make for exceptional buys today…
- Veda Group Ltd (ASX: VED) has fallen considerably since it announced its full-year earnings results just under a fortnight ago, and could be a great pick-up today. The data analytics group maintains a defensive earnings stream and has forecast double-digit growth for the current financial year.
- Westfield Corp Ltd (ASX: WFD) is in a box-seat position to benefit not only from a recovering US economy, but also a falling Australian dollar. The company owns and operates all Westfield-branded shopping centres in the United States and United Kingdom and offers a tasty dividend yield as well.
- XERO FPO NZ (ASX: XRO) has been sold off heavily in the market's recent downturn. Although the accounting software provider remains a risky bet (considering it is not yet profitable) and is investing heavily in its future – a strategy I believe will reward long-term shareholders handsomely.
- Cover-More Group Ltd (ASX: CVO) is Australia's biggest travel insurance provider. While some investors might remain hesitant to buy as a result of the falling Australian dollar (based on the belief this could broadly impact international travel plans), it is important to remember that outbound travel trends have historically remained strong through events such as economic downturns, disease outbreaks and even terrorist attacks.
- Collection House Limited (ASX: CLH) is another company presenting as good value right now. The debt collection agency is growing at an impressive rate and boasts a 3.8% fully franked dividend yield – an attractive combination in this low interest rate environment.
Given the level of uncertainty currently facing the market, going "all in" on the stock market wouldn't be the wisest idea. Besides, it's always advisable to have some cash laying around in case things do get worse.
In saying that however, investors who choose to put some money to work in the market today could be well rewarded in the long run. In the event that shares fall even further, that could be a good time to put more money to work to reduce your average cost base.
