3 Stocks to Add to Your Portfolio in the Event of a Market Downturn

After a tough year in 2022, the market seems to be in recovery mode in 2023. The tech-heavy Nasdaq Composite index has gained 31% since the start of the year, and some investors are talking about a new bull market (although it's not yet official). Still, there are some mixed signals regarding the economy, and not all stocks have returned to growth mode.

The federal funds rate, the Federal Reserve's benchmark rate, jumped from near zero to 5.5% at a very fast pace, rising to its highest level in two decades. Those high interest rates affect everything from commercial real estate to bank lending to auto sales to credit cards and more. That raises uncertainty about the broader economy and where it's headed over the next year.

For long-term investors, the goal is to own quality companies for the long haul. So when you buy doesn't matter greatly. But you can enhance those returns further by investing in quality companies when they trade at cheap valuations. Those instances often appear in a market downturn. Three stocks that I have on my watchlist to buy in the event the market goes south are Meta Platforms (NASDAQ: META), Roku (NASDAQ: ROKU), and Goosehead Insurance (NASDAQ: GSHD). Here's why.

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Source Fool.com