2 Stocks to Buy on the Dip and Hold for 10 Years

Key Points

• Just a year after its initial public offering, Reddit is already turning a profit.

• Pool Corp.'s repair business will maintain its revenue stream even when people aren't installing pools.

• 10 stocks we like better than Reddit ›

Not every stock is a winner all the time -- and that's OK. If you're a buy-and-hold investor like me, you understand that every stock and every market has a down patch sometimes. The overall stock market experiences a bear market every 3.5 years or so, but that doesn't keep the market from gaining on average around 10% per year.

However, when a stock is sagging, that can be the best time to buy. I'm not suggesting you try to catch a falling knife and invest in a company that's crumbling, but there are times where a company falters through no fault of its own -- for instance, temporary market conditions or early growing pains. During the COVID-19 pandemic's height, I loaded up on Delta Air Lines and Royal Caribbean Cruises because I knew they would be back -- and I ended up making a sizable profit after holding each for two years.

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So, it can pay off to look at today's investing also-rans and find some companies that are on sale for a serious discount. Two of them that I highly recommend are Reddit (NYSE: RDDT) and Pool Corporation (NASDAQ: POOL).

Let's take a look at both.

Image source: Getty Images.

Reddit: Down 11% YTD

Reddit's been around for 20 years, but it just became a publicly traded company last year. The social media company is different from others because its users are largely anonymous. It has a highly structured system of communities, called subreddits, where users can discuss specific topics.

The company says it has an audience of 400 million people who visit or log on each week, with 108.1 million daily active unique users -- a measure that was up 31% on a year-over-year basis in the first quarter. Revenue for the quarter jumped 61% to $392.4 billion, and advertising revenue was up to $358.6 million.

The company also turned a profit, recording net income of $26.5 million versus a loss of $575.1 million in the same quarter a year ago.

I think those numbers are solid. Reddit stock is also up 325% from its IPO price of $34. But if you look at Reddit on a year-to-date (YTD) basis, you see the stock down 11%.

Is that a huge issue for Reddit? Not at all. Remember, this is a company that's just getting started and just starting to turn a profit. It's learning how to monetize its user base, sell advertising, and generate consistent earnings. That takes time, so I'm not surprised at all that Reddit pulled back from its all-time high set in February.

I'll give you an example. Another social media company, Facebook, went public in May 2012. It dropped 31% in its first year before turning around to begin steady growth. Today, now known as Meta Platforms (NASDAQ: META), the company has the sixth-greatest market capitalization in the world, with a valuation of $1.7 trillion.

META data by YCharts.

I'm not suggesting that Reddit will be the next Meta. But I will say that the stock is on sale right now, and it should be an excellent investment for the next decade.

Pool Corporation: Down 8% YTD

Pool Corporation is a distributor and seller of outdoor equipment that's best known for selling and installing swimming pools, and for its sales of replacement parts to both individuals and distributors.

Not surprisingly, this is a tough business to be in right now. Installing a new swimming pool can cost tens of thousands of dollars, and the U.S. economy has been volatile for several months. Inflation, tariff threats, and supply chain challenges make investing in a new swimming pool a leap of faith that some people aren't willing to take right now.

But remember, Pool Corp. isn't just an installation company. It's currently getting 64% of its revenue from maintenance and repair services, with only 14% coming from new construction and 22% from making renovations. That means Pool still has a solid business, even when the economy is finicky. Revenue in Q1 2025 was $1.07 billion, down from $1.12 billion a year ago. Profits also took a hit, dropping from $78.8 million to $53.5 million.

However, even in these times Pool is turning profit, with Q1 earnings per share of $1.42 (down from $2.05). Pool also pays a solid dividend of $1.20 per share (up $0.10 from a year ago), with a dividend yield of 1.7%.

The economy won't be like this forever, and when it bounces back and people start building pools again, Pool Corp.'s profits could go through the roof. Down 8% on a YTD basis, Pool Corp. seems positioned for long-term gains if you're a patient investor.

Should you invest $1,000 in Reddit right now?

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Patrick Sanders has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Meta Platforms. The Motley Fool recommends Delta Air Lines. The Motley Fool has a disclosure policy.