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3 Stocks to Add to Your Portfolio in a Market Pull-Back

There’s no way around it — the stock market has been falling sharply in recent months. The S&P 500 index of America’s biggest companies was recently down 19% from its 52-week high, while the Nasdaq was down a whopping 30%. Thus, many great stocks are now on sale.

You might look into whether you want to buy any such stocks now, or you might just refine your watch list and plan to buy certain stocks if they fall even further, deeper into bargain territory. Here are three contenders to consider adding to your watch list, if they’re not already on it.

1. Universal Display

Shares of Universal Display (NASDAQ: OLED) were recently down more than 50% from their all-time high, leaving the company with a market value near $5.5 billion. The company’s ticker symbol, OLED, offers a clue about what it does: OLED stands for organic light emitting diodes.

OLED technology is prevalent in all kinds of screens — for smartphones, TVs, and more — and it’s regarded as superior to LED and LCD technology by many, due to its wider viewing angles and how it deals with darkness. OLED screens consume less energy and can be better for our eyes, too, emitting less blue light.

Universal Display has been growing admirably for years. Its first quarter featured total revenue up 12.3%, year over year, with net income down 3.3% — which, in fact, is better than one might expect since the cost of materials rose markedly, up 20.3%.

Management remains bullish, noting: “As we look out, we believe that consumer electronic OEMs, panel makers and the ecosystem are setting the stage for a significant new wave of OLED capital investments and OLED market proliferation.”

With a recent price-to-earnings (P/E) ratio of 31, well below the five-year average of 71, Universal Display’s stock seems appealingly priced. Any further pullback will only make the stock more attractive. It also offers a dividend that recently yielded 1%, and it’s rolling out improved technology, too.

2. W.P. Carey

Shares of real estate investment trust (REIT) W.P. Carey (NYSE: WPC) were recently only off 4% from their 52-week highs, and with a P/E ratio near 30 and slightly above its five-year average, the stock doesn’t appear to be a screaming bargain. But a pullback in the stock could move it into undervalued territory — and it would also boost its already-high dividend yield, recently at 5.2%.

As you might know, REITs are companies that own lots of real estate properties, leasing them out and collecting rents. By law, they’re required to pay at least 90% of their income to shareholders, making them attractive to dividend seekers.

Many REITs focus on one or perhaps two niches, such as apartments, medical buildings, industrial sites, data centers, retail spaces, and so on, but W.P. Carey is extra diversified. Its website notes that 63% of its revenue comes from the U.S., and 34% from Europe. Meanwhile, by property type, it generates roughly 26% of revenue from industrial properties, nearly 24% from warehouses, 19% from offices, close to 18% from retail locations, and about 5% from self-storage facilities, among other things.

Even better, its properties recently had a 98.5% occupancy rate, and 99% of leases for its 356 tenants had rent escalations built in. There’s a lot to like about W.P. Carey.

3. Qualcomm

Qualcomm (NASDAQ: QCOM) has seen its stock slide 31% from its 52-week high recently, making its shares (which recently sported a P/E ratio of 14, well below their five-year average of 27) look rather attractive. Any further pullback will only make them more of a bargain.

The company calls itself “the world’s leading wireless technology innovator,” noting that “Our portfolio includes products for processors, modems, platforms, RF systems, and connectivity, plus products based on the end-use application of your design.” Qualcomm has long been known for its smartphone chips, but it’s been rapidly growing its offerings for the Internet of Things and automotive markets, among others.

In Qualcomm’s second quarter, revenue surged 41% year over year, while net income grew by 67%. Management credited its strong performance to “the successful execution of our growth and diversification strategy and strong demand for our wireless and high-performance, low-power processor technologies across multiple industries.”

If any of these three strong businesses interest you, take a closer look at them. You might decide to add them to your watchlist, waiting for a pull-back, or you might just buy some shares now.

Selena Maranjian has positions in Universal Display and W.P. Carey. The Motley Fool has positions in and recommends Qualcomm. The Motley Fool recommends Universal Display. The Motley Fool has a disclosure policy.

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