5 Stocks to Buy in the September Sell-Off

History has shown that a market sell-off is a great time to add quality companies to your portfolio. Although no one can predict when that will happen, a 10% drop occurs about once every two years. That’s why I’m highlighting five high-quality companies to buy if the most recent swoon persists. 

I can’t tell you where Adobe (NASDAQ:ADBE), Markel (NYSE:MKL), Take Two Interactive Software (NASDAQ:TTWO), Vertex Pharmaceuticals (NASDAQ:VRTX), and Boston Beer (NYSE:SAM) will trade next week or next month. But I’m confident they will significantly outperform the market over the next three-plus years. Here’s why. 

Adobe

At a market capitalization of $300 billion, Adobe is one of the largest software companies in the world. Its applications are the backbone of a lot of the content creative professionals produce. Through the years, it has also given them the ability to manage, measure, and monetize their output. The company breaks its results into three categories.

Digital media encompasses the company’s creative cloud offering. It’s a subscription service that houses applications for virtually anyone creating or delivering content. The digital experience segment is a cloud platform that helps companies deliver the most engaging customer experiences. It provides everything from marketing management and automation to digital commerce and predictive analytics. Finally, its publishing and advertising division contains legacy products in addition to its advertising cloud offerings.

The business has performed amazingly well. Over the past decade, sales and free cash flow have grown 241% and 281%, respectively. Through the first nine months of its fiscal 2021, it posted revenue of $11.7 billion. That was up 24% from the same period last year and 43% over 2019. It carries little debt and its return on invested capital is 33%. That’s slightly better than Microsoft.

CEO Shantanu Narayen sees strength across the business and believes the digital transformation will power the company’s financial performance even while it invests in what it calls “massive market opportunities.” There is no question the runway is long. That’s why I believe any significant sell-off is a gift to investors. Take advantage if you get it and buy shares of Adobe.

Markel

Markel has been called the “baby Berkshire” for its resemblance to Berkshire Hathaway. It is also an insurance company that uses some of its float — premiums collected on policies that haven’t been paid out in claims — to invest in stocks and buy businesses. It also manages those businesses in a similar way, treating its holding period as forever. 

One big difference is that Markel is only a $16.5 billion company. That gives it more flexibility in what it can buy and offers the potential for decades of steady, market-beating returns for shareholders. Want proof? Would it surprise you to find out Markel’s stock has outperformed Berkshire Hathaway…