3 Growth Stocks Down 37% to 60% Buy Now
The wide S&P 500 stock Exchange index might be near a historic high, but below the surface some of the most popular technological actions collapsed. Many are down more than 50% from their highs, far exceeding the typical bear market threshold of 20%.
the clearance sale is caused by uncertainty over the new variant of the omicron coronavirus and the prospect of faster interest rate hikes than investors anticipated in 2022. Both of these concerns have dampened the market’s appetite for risk , which means investors are less willing to pay sky-high prices for tech stocks in particular.
But it could be an opportunity for patient investors with a long-term time horizon. Here are three companies that are helping to build the future, with soaring stock prices that are worth buying now.
1. Block: down 40%
To block (NYSE: SQ) is the business and consumer payments giant formerly known as Square. It changed its name to reflect its growing diversification from merchant services to other innovative segments, including blockchain technology.
But despite this new direction, Block has not abandoned its most profitable segments, focused on payment services. For businesses, Block provides materials that allow merchants to process in-store credit card purchases, in addition to loans and other services. And on the consumer side, Block’s CashApp serves as an alternative to bank accounts for its 40 million monthly users, with instant peer-to-peer money transfers, and even a platform for investing in stocks and cash. cryptocurrency.
Excluding Bitcoin, Block’s various segments have achieved a gross profit margin of 55% so far in 2021. This compares to just 2% for the Bitcoin segment, which is primarily derived from CashApp users transacting in crypto -cash.
Block’s stock was recently crushed in the middle of the technology sale, but there is something to get investors excited about. The company is acquire buy now, pay later giant After payment, which will allow consumers to fund small purchases through CashApp, providing a potentially huge boost for Block merchants within the ecosystem.
Analysts expect Block to generate $ 17.6 billion in revenue by the end of 2021, placing the stock at a multiple price / sale about 4.4. This is a significant discount from just two months ago, and as the company is now still profitable, it is certainly worth considering by long-term investors, especially since Block is aggressively developing its business portfolio.
2. Affirm holdings: down 37%
Affirm holdings (NASDAQ: AFRM) is the world’s largest standalone business to buy now, pay later, even despite the recent sale. He’s been tracking Afterpay for the past few years, and when that company was bought out by Block, it looked like Affirm was left in the dust. However, in a dramatic backlash, Affirm recently made a deal with Amazon, the world’s largest e-commerce company.
Affirm will be featured on Amazon’s online platform checkout. When customers make a purchase, they have the option of financing it rather than paying with their own money. When the deal was announced in August, it sparked Affirm’s stock rally from $ 70 to $ 176, eclipsing Afterpay’s $ 29 billion deal with Block.
Unsurprisingly, Amazon offers Affirm huge growth in user numbers and Gross Value of Goods (GMV). Combined with Affirm’s existing agreement with Shopify, he now has an opportunity of $ 600 billion a year. This is a 7,000% increase from the GMV it processed in fiscal 2021, which ended on June 30.
Affirm also extends beyond standard integrations with merchant online stores, into physical cards that consumers can use to buy now, pay short-term funding later where they want.
Affirm’s sharp correction presents a strong long-term opportunity for investors, given its innovative approach to consumer credit and the potential offered by its deals with Amazon and Shopify.
3. Starting holdings: down 60%
The third and final stock that’s down and worth buying right now is Holdings reached (NASDAQ: UPST). It’s one of the top performers of 2021, returning 280% year-to-date, even after factoring in the recent 60% collapse in its stock. At one point in October, Upstart had gained over 800% for the year with a price tag of $ 401, before falling to the $ 155 it is trading at today.
The company has leveraged artificial intelligence to transform the way banks assess potential loans. Upstart’s goal is to use its technology to overthrow the decades-old FICO credit scoring system by analyzing over 1,000 different data points to gain a more comprehensive perspective of potential borrowers. So far this has worked exceptionally well, with loans from Upstart resulting in 75% less defaults for the same approval rate.
The company started in unsecured loans before entering its largest market to date, secured auto loans. He built an impressive network of auto dealerships and did so quickly through his acquisition of Prodigy, a car sales software platform now known as Upstart Auto Retail. In the recent third quarter, 291 dealerships were using the new loan assembly service, up 219% from the same period last year.
Since Upstart is a loan originator, it does not lend money itself and therefore carries almost no credit risk. It receives a commission when its banking partners take out a loan using its algorithm, and also sells its software to institutions that wish to integrate it into their application processes.
In early 2021, Upstart estimated it would generate $ 500 million in revenue for the year. It’s on track to deliver $ 800 million, and in 2022 analysts estimate it will bring in more than $ 1 billion for the first time in the company’s history.
But with the rapid expansion of its vehicle lending segment, it could blow all expectations up again next year, making the stock price currently discounted. a major opportunity.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.