Investors never know when the next market correction — a drop of from 10% to 20% in an index — is coming, but we know that it will eventually happen. And because that’s true, it makes sense to make a list of the stocks you’d like to buy if they dip during a correction.
The next big market correction could happen next week, next month, or next year. Investors who scoop up shares of Intuitive Surgical (ISRG 0.48%) and Sports Radar (SRAD 0.34%) if they dip during the inevitable correction could come out miles ahead over the long run. Read on to see why these two belong on growth stock investors’ watch lists.
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Intuitive Surgical
Since the turn of the century, Intuitive Surgical has been leading the trend toward minimally invasive surgical procedures performed with the aid of its da Vinci robots. Medtronic and Johnson & Johnson are growing their footprint in this lucrative space, but they generally develop their devices to perform procedures that da Vinci robots haven’t already dominated.
In 2024, Intuitive Surgical launched an updated system called da Vinci 5, which could significantly reduce procedure times and complications. That combination makes spending over $1 million on a da Vinci system and training surgeons to use it a worthwhile investment for hospitals. During the 12 months that ended this March, the number of da Vinci systems installed worldwide grew 15% to 10,189.
All of those da Vinci machines use instruments and accessories that need to be replaced between procedures. First-quarter instrument and accessory sales rose 18% year over year to $1.4 billion. Since Intuitive Surgical is the only company hospitals can buy these instruments from, investors can reasonably expect continued growth at this pace.
Shares of Intuitive Surgical have been trading for more than 75 times trailing earnings, and valuations this high aren’t unusual for this magnificent growth stock. During the bear market of 2022, though, its valuation sank below 50 times trailing earnings. Folks who keep this one on a watch list and jump on it during the next downturn that takes it down could reap enormous gains over the long run.
Sportradar Group
Keeping box scores was my favorite part about watching ball games as a kid. So naturally I’m fascinated with Sportradar Group, a company that takes recording and sharing sports statistics to a new level.
Sportradar is quickly becoming the go-to data provider to media outlets and the growing online sports betting industry. At the end of February, online sports betting was legal in 34 U.S. states, according to the American Gaming Association.
Well-established relationships with sports leagues such as Major League Baseball and the Union of European Football Associations give Sportradar a level of access to stadiums that its future competitors won’t have. On the data consumption side, Sportradar is already partnered with Flutter Entertainment and DraftKings, which don’t have much choice when it comes to information providers.
Sportradar grew sales by 26% in 2024 to $1.3 billion, which is just a tiny fraction of the revenue its clients generate with help from its data services. In the U.S. market alone, online sports betting raked in $115 billion last year.
Sportsbook (betting) providers rely on accurate data to set lines that don’t result in huge losses for the house. As betting during sporting events becomes increasingly normalized, people will demand more information that media outlets can only get from Sportradar. With media outlets and betting operators beating a path to its doors, at least another decade of growth at a double-digit percentage isn’t an unreasonable expectation.
Sportradar stock has been trading at 22 times management’s adjusted EBITDA expectation for 2025. This valuation is high, but it isn’t unacceptable for a rapidly growing business with a large growth runway and a lack of competitors. However, I think it would make sense to start only a small position now, then add heavily during the next market correction that brings its valuation down.
Cory Renauer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Intuitive Surgical and Sportradar Group Ag. The Motley Fool recommends Flutter Entertainment Plc. The Motley Fool has a disclosure policy.