S&P 500 correction creates buying opportunities in stocks

The S&P 500 index entered a correction last week, marking its first pullback since 2022. A correction occurs when stock prices drop between 10% and 20% from a peak. This gives investors a chance to buy shares of quality companies at lower prices. Three stocks that are currently down significantly and may be good opportunities to invest are PepsiCo, Ulta Beauty, and PayPal. PepsiCo is well-known for its beverages and snacks. The company recently acquired Poppi, a prebiotic soda brand. Currently, Pepsi's stock is about 25% lower than it was earlier in 2023. This is a good buy because it trades at a lower price compared to its average earnings over the past decade. Although consumers are spending less and resisting price hikes, Pepsi is still expected to grow in 2025. The company's dividend yield is approaching 4%, and it has increased this dividend for 53 years. Ulta Beauty operates more than 1,400 stores offering cosmetics and salon services. The company is seen as resilient during economic downturns. However, its stock has dropped nearly 40% due to slow growth and a decrease in its profit margins. Despite these challenges, Ulta is expected to earn $1.3 billion in operating income this year. The stock is considered cheap, and Ulta plans to buy back shares to support its price. PayPal, a well-known fintech company, is also experiencing setbacks. The stock rose nearly 40% in 2024 but then fell almost 20% at the start of 2025. This drop is linked to a general decline in fintech stocks. However, PayPal is improving its transaction margin under new management, which could lead to increased earnings in the coming years. The stock is currently trading at a low price of 17 times its earnings, making it an attractive option for investors. Overall, PepsiCo, Ulta Beauty, and PayPal are considered strong choices for investors looking to buy during this market correction.