While buying a roughed-up stock "on the dip" seems like a no-brainer, the unfortunate truth is that many of these embattled businesses may actually prove to be "falling knives."

However, if investors prioritize high-quality, market-leading, innovative companies, buying the dip can occasionally make perfect sense. I'd argue this is especially true when the stock in question is trading at what appears to be a once-in-a-decade valuation, which is the case for the business we will examine today.

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Operating in three industry verticals buoyed by long-term megatrends, Nice (NASDAQ: NICE) and its artificial intelligence (AI) innovations could prove to be an excellent buy-the-dip candidate, especially since its stock is down 48% from its highs.

Nice looks to build upon its leadership position

Nice is a leading software-as-a-service (SaaS) business, providing AI-powered solutions to enterprises via its cloud platform. The company primarily serves three areas:

• Customer engagement (About 75% of sales): Nice offers end-to-end SaaS solutions that help clients automate their customer service operations while augmenting their human workforce with agentic AI. The cornerstone of this effort is its center-as-a-service (CCaaS) platform, which Forrester ranks as one of the leaders in this niche.
  
• Financial crime and compliance (15% of sales): Nice's AI-embedded tools help corporate customers battle fraud, money laundering, and suspicious activity while providing compliance and surveillance services. It uses machine learning to parse through mountains of financial data and AI to automate more mundane tasks. Many top U.S. and European banks use this service.
• Public safety and justice (10% of sales): In its smallest segment, Nice helps with emergency response optimization and digital evidence management. Nice and Axon Enterprise are the two leaders in this niche, according to IDC, acting like the Coca-Cola and PepsiCo to the public safety and justice market. Nice's offerings are used by 85% of U.S. and Canadian cities and 94% of the United Kingdom's police stations.

Thanks to its leadership in these three niches -- and counting 85 of the Fortune 100 enterprises as customers -- Nice is an undeniable SaaS leader with sales in over 150 countries.

Yet, despite this powerful presence, the company's growth story could still be in its early chapters. With fraud and money laundering schemes increasing in complexity by the day, digital evidence growing exponentially, and AI providing a tailwind in each market, Nice could be positioned for decades of growth if it can successfully harness the power of AI.

Nice: AI innovator, not disruptee

Far and away, the most important thing for investors to watch going forward with Nice will be whether it remains an AI innovator, not a disruptee. The company is off to a tremendous start so far, with AI solutions at the forefront of its platform.

In 2024, 97% of Nice's CXone Mpower contracts worth $1 million or more included AI offerings. This figure grew to 100% as of the first quarter of 2025, demonstrating that the company is, if nothing else, AI-first.

Furthermore, while overall cloud revenue grew 12% in Q1, Nice's AI and self-service sales grew by 39%. This data point will be paramount to watch going forward, as this outsize growth suggests that Nice is leading the AI innovation race, rather than getting disrupted by it.

Similarly, its cloud net retention rate of 111% highlights additional customer "buy-in." Measuring the spending of existing customers from last year to this year, this 11% increase indicates that the company is successfully upselling and cross-selling its new solutions, most likely AI-powered offerings.

A once-in-a-decade valuation

Despite reporting top-notch AI sales growth, Nice's shares slid following its Q1 earnings, mainly due to what the market deemed weak guidance. This drop leaves the company trading at just 14 times free cash flow (FCF).

NICE Price to Free Cash Flow data by YCharts

This price-to-FCF (P/FCF) ratio of 14 is near a decade-long low and is almost half of the company's historical average of 27. Even accounting for the dilutive effects of stock-based compensation, Nice trades at just 18 times FCF, far below the S&P 500's average P/FCF ratio, which is somewhere north of 30.

Perhaps the biggest signal that Nice's valuation today may be a once-in-a-decade opportunity comes from management currently buying back shares at the fastest rate in the company's history.

NICE Stock Buybacks (Quarterly) data by YCharts

Nice is armed with more than $1 billion in net cash, compared to its market capitalization of $11 billion, so it could easily continue buying back shares at what looks like an incredible valuation.

Altogether, Nice's combination of leadership positioning, AI integration, and discounted valuation makes it a super growth stock to buy on the dip. However, it'll be of the utmost importance to keep an eye on Nice's AI sales in each quarterly update and ensure the company remains the AI innovator, not the disruptee.

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

Before you buy stock in Nice, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nice wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $657,385!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $842,015!*

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Josh Kohn-Lindquist has positions in Axon Enterprise and Coca-Cola. The Motley Fool has positions in and recommends Amazon, Axon Enterprise, and Nice. The Motley Fool recommends Gartner. The Motley Fool has a disclosure policy.

So far this year, the S&P 500 has dropped as much as 16% from its highs by April, only to rally and gain all but 4 of these percentage points back.

Whether it's tariff concerns, an uncertain housing market, lower consumer confidence, or the implications of artificial intelligence (AI) disrupting the workforce, there is no shortage of news to spook investors.

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However, with this turbulence comes opportunity. This notion could be especially true if investors expand their time frame and remember to look at stocks through a three-year lens (if not one that's decades-long).

I believe public safety leader Motorola Solutions (NYSE: MSI) could prove to be one of these promising opportunities, particularly with its stock down 19% due to overblown tariff concerns.

Here's what sets this magnificent S&P 500 dividend growth stock apart and why it could be an excellent pick in today's uncomfortable market.

Motorola's many layers of safety

Motorola is a leader in the public safety niche, and its stock has been an eight-bagger over the last 10 years. It sells equipment for land-mobile radio (LMR) communication (walkie-talkies for police, for example), fixed and mobile video security and access control (including police body cameras), and command center solutions for 911 services.

The company also sells software and services that support each of these units, which now equal 36% of total revenue.

Recession-resilient products

With 5 million cameras deployed across 300,000 sites, 13,000 LMR networks set up worldwide, and a presence in 60% of the 911 call centers in the United States, Motorola has a massive role within public safety. Just as importantly, its products serve some of the most essential customer bases.

The company gets 70% of its sales from public safety agencies like police, fire, EMS, national security, and crucial infrastructure. The remaining 30% comes from private enterprises, most of which are also essential, like hospitals, utilities, schools, and manufacturers.

Motorola's redundant and "always on" LMR networks are essential to public safety, especially during natural disasters when cell towers may be down. Its police body cameras, fixed cameras for combating shoplifting, and 911 command center equipment are also must-haves, rounding out the company's suite of recession-resilient products.

Its multiyear LMR contracts, the recurring revenue from its software and services, and its all-important customer base offer investors a lot of stability.

Robust and rising free cash flow

The recurring revenue from its software and services grew from 21% of sales in 2015 to 36% today. This increase is noteworthy to investors because these cloud-based services come with much higher margins. Since 2016, the company's free cash flow (FCF) margin rose from 13% to 21% in 2025.

Fundamental Chart data by YCharts.

This improved FCF generation adds another layer of safety for investors thinking of buying Motorola, providing financial resilience and the ability to continue funding its dividend. Its ballooning FCF also funds Motorola's penchant as a successful serial acquirer.

Masterful M&A

Since 2015, Motorola spent $7 billion buying 29 businesses across each of the company's three product verticals. Though mergers and acquisitions (M&A) aren't typically seen as a safety feature for most stocks -- if anything, they're usually a significant risk -- management has a lengthy track record of success.

The company currently has a cash return on invested capital (ROIC) of 31%, placing it in the top 10% among its S&P 500 peers. This means Motorola earns outsized cash returns from the debt and equity it devotes to acquisitions, proving its mastery at scooping up and integrating new businesses.

This allows the company to diversify its products and services, fortifying its position as the top dog in the public safety space.

The dividend looks poised to keep going higher

Though Motorola's 1% dividend yield may not scream "lifetime passive income," its dividend growth does. With 12 consecutive years of payout increases, the company's passive income potential could prove to be massive.

MSI Dividend data by YCharts.

To give some context to this steadily growing dividend, investors who purchased the stock in 2012 would now be receiving a 9% yield compared to their original cost basis.

Said another way, dividend growth stocks like Motorola often become high-yield dividend stocks if held long enough. Looking a decade down the road, I'm hoping to re-create these results.

Best yet for investors, the company's dividend payments should keep rising for years to come, for two key reasons. First, it currently only uses 30% of its FCF for its dividend payments, leaving plenty of wiggle room for future increases. Management could technically double its dividend payments tomorrow and still have excess cash for capital expenditures and M&A activity.

Second, the company's backlog continues to skew more heavily toward higher-margin software and services sales. This shift means that its FCF and margins could continue increasing, creating even more cash to return to shareholders over time.

Backed by the company's safe and stable operations, this steadily growing dividend makes Motorola one of my favorite investments for growing my long-term passive income, especially in a volatile market.

Should you invest $1,000 in Motorola Solutions right now?

Before you buy stock in Motorola Solutions, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Motorola Solutions wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $617,181!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $719,371!*

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Josh Kohn-Lindquist has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Shares of leading cybersecurity juggernaut Fortinet (NASDAQ: FTNT) were down 8% as of 1:15 p.m. ET on Thursday, according to data provided by S&P Global Market Intelligence.

The next-gen firewall specialist reported first-quarter earnings on Wednesday and delivered 14% sales growth alongside record-setting free cash flow (FCF).

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However, with the company trading at 44 times FCF prior to earnings, the market expected perfection from Fortinet, and management's guidance didn't live up to these hopes.

90 days' worth of information doesn't erase Fortinet's dominance

While Fortinet met analysts' expectations for Q1, its guidance for 13% sales growth and a mere 4% increase in adjusted earnings per share in the upcoming quarter spooked the market.

In my opinion, this is a classic case of a market-beating stock priced for perfection delivering "adequate" earnings. Nothing was really "wrong" with earnings or guidance, but it wasn't perfect.

As always, it's crucial to look beyond what Fortinet's potential numbers could be over the next 90 days and focus on its long-term investment thesis. Fortinet is:

• No. 1 in firewalls deployed globally
• Ranked No. 7 on Forbes' list of most trustworthy companies
• Used by 80% of the Fortune 100 and 72% of the Global 2000
• A Gartner Magic Quadrant leader in firewalls, SD-WAN, and wired and wireless LAN
• A Gartner Magic Quadrant challenger in its nascent Secure Access Security Edge (SASE) and Security Service Edge (SSE) business lines

Founder and CEO Ken Xie summed up Fortinet's moat during the earnings call, saying, "We remain the only vendor to have organically developed all of the core SASE capabilities within a single operating system, FortiOS."

With its up-and-coming SSE and Unified SASE solutions growing billings by 110% and 18% in Q1, Fortinet's growth story should have many chapters remaining.

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

Before you buy stock in Fortinet, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Fortinet wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $623,103!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $717,471!*

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Josh Kohn-Lindquist has positions in Fortinet. The Motley Fool has positions in and recommends Fortinet. The Motley Fool recommends Gartner. The Motley Fool has a disclosure policy.

Shares of cybersecurity leaders CrowdStrike Holdings (NASDAQ: CRWD), Palo Alto Networks (NASDAQ: PANW), and Fortinet (NASDAQ: FTNT) rallied 13%, 6%, and 13%, respectively, this week as of noon ET on Friday, according to data provided by S&P Global Market Intelligence.

The primary reason for these increases is related to a 90-day pause on the newly proposed tariffs that the United States announced, prompting a virtually marketwide rally.

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However, there was also company-specific news that added to this rally.

On Monday morning, Wedbush Securities listed CrowdStrike and Palo Alto Networks as two "defensive" plays in an era of potentially higher tariffs. Then, on Thursday, HSBC upgraded Palo Alto to a hold from a sell while reiterating that Fortinet was its top cybersecurity stock.

Here's why I can't help but agree with these bullish notions on these three stocks.

A trio of defensive growth stocks

These three cybersecurity leaders grew sales between 14% and 25% in their most recent quarters. Despite their status as growth stocks, it is also fair to call each of the businesses a defensive stock, as Wedbush stated.

A recent survey by cybersecurity provider Red Canary of security leaders at an array of businesses found that 63% of companies increased their cybersecurity spending. Still, only 37% thought it was enough to be entirely secure. Cybersecurity spending remains crucial for businesses, with numerous hacks costing hundreds of millions of dollars (if not over a billion) in recent years.

And the need will only become more pressing as we continue to move into an artificial intelligence-influenced world. The same Red Canary survey found that roughly 62% of security leaders said that AI threats make it more challenging to keep their businesses safe.

Simply put, CrowdStrike, Palo Alto, and Fortinet offer investors the best of both worlds: high growth and defensive, recurring sales.

The case for CrowdStrike

CrowdStrike is best known for its leadership in detecting endpoint threats, and its cloud-based Falcon platform is quickly becoming a full suite of cybersecurity safeguards. Its AI-powered platform is a must-have for most of the biggest names in the business world and is currently used by roughly 70% of the Fortune 100, 18 of the top 20 U.S. banks, and 44 of the 50 U.S. states.

The company's newer products for identity protection, cloud security, and security information and event management grew by 70% to 140% since last year, so this notion of a full-suite platform continues to gain momentum.

The stock won't be confused as being cheap, trading at 84 times free cash flow (FCF). But management is forecasting $10 billion in annual recurring revenue (ARR) by 2031 -- up from $3.9 billion today -- so it could quickly outgrow this valuation.

The case for Palo Alto Networks

Palo Alto Networks has generated annualized returns of 26% since its 2012 initial public offering (IPO) while becoming a leader alongside Fortinet in firewall solutions. But this success didn't prevent the stock from being hammered in early 2024 as it shifted from individual solutions to a platform model, which it dubbed "platformization."

This adjustment meant it had to entice many existing customers to come along for the ride by temporarily offering deeply discounted solutions (if not free ones) while they acclimated themselves to the new setup. Just one year later, though, this shift seems to be a success.

The company grew sales, remaining performance obligations (RPO), and next-generation ARR solutions by 14%, 21%, and 37%, respectively, in its latest quarter, so it looks to have made the right move (so far).

It might be a leap of faith for investors to buy tech-dense cybersecurity offerings like Palo Alto, but it has several leadership ratings from Gartner's Magic Quadrant rankings across several niche categories.

Should sales and FCF growth accelerate to match the company's impressive 21% growth in RPOs (a forward-looking metric), it could prove to be a fantastic investment at 40 times FCF, thanks to its mission-critical offerings.

The case for Fortinet

Fortinet and Palo Alto are the two top dogs in their firewall niche. Like Palo Alto, Fortinet has delivered incredible 30% annualized returns since its IPO in 2009.

Both companies hold leadership rankings from Gartner in several cybersecurity categories, so they will always seem to be linked together.

One area where Fortinet is dissimilar -- in a good way -- from its two peers in this article is that it protects shareholder value better. Whereas CrowdStrike and Palo Alto have let their number of shares outstanding rise by 15% and 14% over the last five years, Fortinet has lowered its count by 5%.

This ballooning share count from CrowdStrike and Palo Alto stems from hefty stock-based compensation (SBC), which equals roughly 22% and 13%, respectively, of their total revenue. Meanwhile, Fortinet's SBC only accounts for 4% of revenue. This signals (in my opinion) that Fortinet does a better job of protecting shareholder value.

Fortinet works with 77 of the Fortune 100 and virtually all of the business leaders in each industry, much like CrowdStrike. This scale, paired with the fact that Fortinet has nearly twice as many U.S. patents as CrowdStrike and Palo Alto combined, hints that the company will be hard to disrupt anytime soon.

The stock trades at 39 times FCF, and management is guiding for more than 12% billings growth over the next five years. So it should be a great example of a defensive growth stock.

The final takeaway

All told, I believe buying a basket of this trio of defensive growth stocks might be the way to go.

Although they all compete with one another, the last five to ten years have shown that the rising tide of the cybersecurity industry -- which is growing by double digits seemingly in perpetuity -- is plenty to lift all three stocks' boats, helping them to beat the market.

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

Before you buy stock in CrowdStrike, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and CrowdStrike wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $496,779!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $659,306!*

Now, it’s worth noting Stock Advisor’s total average return is 787% — a market-crushing outperformance compared to 152% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 10, 2025

HSBC Holdings is an advertising partner of Motley Fool Money. Josh Kohn-Lindquist has positions in CrowdStrike and Fortinet. The Motley Fool has positions in and recommends CrowdStrike and Fortinet. The Motley Fool recommends HSBC Holdings and Palo Alto Networks. The Motley Fool has a disclosure policy.