Stocks That Are Down To Buy ((TOP))
In 2022, the S&P 500 lost 20%, posting its worst year since 2008. It was a tough year for investors and growth stocks specifically, as rising interest rates and geopolitical uncertainty put pressure on companies with lofty valuations.
stocks that are down to buy
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Sell-offs in the market can be painful, but for investors, times like this present an opportunity to buy quality companies at cheap valuations. The following beaten-down growth stocks trade near their lowest valuations this decade and represent an intriguing buying opportunity today for investors with a long time horizon.
Shopify (SHOP 3.08%) provides small businesses the tools to handle everything from payments to inventory management. Shopify investors have endured a roller-coaster ride regarding the stock price. It was a huge winner during the pandemic when lockdowns and travel restrictions pushed consumers to spend more money online than ever before.
During the two years ending in 2021, Shopify's revenue surged 192% and it saw record profits of $2.9 billion. Management for the e-commerce platform believed this was the beginning of a trend that would see a massive shift to online shopping and poured millions into expanding the business.
The sell-off presents an attractive opportunity for long-term investors. Management admitted that it overshot projections, and began cutting costs midway through last year. Additionally, long-term trends still favor the e-commerce giant.
Before the pandemic, e-commerce accounted for 15% of retail sales. Morgan Stanley analysts estimate that 22% of sales are through e-commerce today, and it expects it to grow to 27% of all retail sales by 2026.
Another pandemic-era winner that was beaten down in the last year is PayPal Holdings (NASDAQ: PYPL). Over two years ending in 2021, PayPal added 122 million new accounts, grew revenue by 43%, and surpassed $1 trillion in total payment volume for the first time. Management set aggressive goals for the fintech back in February 2021, aiming to double its active accounts and free cash flow by 2025. Those goals were a little overenthusiastic.
The reopening of the economy and lifting of travel restrictions resulted in slower growth for PayPal, leading to multiple revisions to its guidance last year. It also shifted its focus from growing new accounts to increasing the transactions per active account (TPA). These changes resulted in a sharp sell-off, with the stock down 75% since it peaked two years ago. The fintech now trades at its cheapest valuation since it spun off eBay in 2015.
PayPal is a lot cheaper today than it was, but its long-term growth prospects are solid. PayPal is the most accepted digital wallet in North America and Europe, with over 79% of the 1,500 largest retailers accepting it. Apple Pay is the next most accepted at 28%. Juniper Research estimates that digital wallet users will exceed 5.2 billion globally by 2026, a 53% growth rate from today.
While the past year was challenging for the stock market, start-ups had an even tougher time as falling valuations and tepid capital markets caused funding to dry up during the year. According to Crunchbase, VC funding plummeted 35% in the last year. The pullback in funding was larger than that of the great recession in 2008, and the dot-com bubbled, according to Preqin and reported by Bloomberg.
Even after climbing roughly 4% across 2023's trading, the S&P 500 index still trades down approximately 16.5% from its high, and many companies in that index have seen valuation pullbacks far exceeding that level. While trading could remain volatile in the near term, history suggests the market will eventually bounce back and go on to set new highs -- and building positions in strong companies before that recovery takes place could help investors score big wins.
Parkev Tatevosian: Now that it's down 51% off its 2021 all-time highs, this might be an excellent time to consider buying Walt Disney (DIS 2.07%) stock. This century-old business was hurt by the COVID-19 pandemic, but it's recovering quickly.
Notably, Disney's theme parks segment is now more profitable than ever. The company tweaked its operations during the time it was forced to shut its doors, and those changes have had a positive effect on the top-line growth of the company. A digital reservation system helps Disney manage attendance and pricing to optimize park efficiency. And the Genie pass, which lets visitors skip lines for a fee, is attracting users. In its most recent quarter, the segment that includes theme parks saw revenue jump by 21% year over year to $8.7 billion, while operating income increased by 25% to $3.1 billion.
One challenge Disney does face is navigating the consumer migration to streaming over cable or satellite TV. That transition has been somewhat bumpy. Disney still owns several popular broadcast and cable networks that are gradually losing viewers to streaming. While Disney's various streaming services (the Disney+, Hulu, Star+, and ESPN+ platforms) have accumulated more than 200 million subscribers globally, the segment is not yet profitable. The big takeaway is that people want to watch Disney content, but perhaps they just prefer to stream it. The company was already doing an excellent job profiting from previous preferred formats, and it would be reasonable to expect Disney to monetize its content effectively once the transition is further along.
Keith Noonan: While it was once a high-flying pandemic-stock darling, Fiverr International's (FVRR 3.01%) valuation has plummeted in conjunction with the pullback for the broader market and slowing sales growth for its business. This gig-economy-based marketplace platform's share price is trading down 88% from its high.
Fiverr's most recent guidance calls for sales between $350 million and $365 million this year, representing growth of roughly 6% annually at the midpoint of the target. That's down from growth of 77%, 57%, and 13% in 2020, 2021, and 2022, respectively. In response to the more challenging macroeconomic backdrop, the company is cutting back on spending to drive growth and focusing on improving profitability.
The gig economy is still on track for huge growth over the long term, and Fiverr will have opportunities to facilitate and benefit from the trend. Analysis from Industry Research suggests that the annual size of the global gig economy will grow from $355 billion in 2021 to $873 billion in 2027.
With gig labor offering companies the chance to save on payroll taxes, office costs, and employee benefits, there are strong catalysts and incentives to power the long-term growth of the gig economy. Fiverr also has a huge opportunity to expand the base of freelance workers on its platform in international markets. Consider that $100 can go a lot farther if you're hiring a freelancer from Eastern Europe or Southeast Asia than hiring an employee or contract worker living in the heart of San Francisco or New York City.
2023 isn't going to be a flashy year for Fiverr, but the company maintains a leading position in the gig-labor marketplace niche, and its growth potential is being underestimated. With the stock down precipitously from its high, Fiverr presents an attractive risk-reward profile for long-term investors.
For investors seeking beaten-down stocks with the potential to deliver market-crushing returns, there's a lot to like about Disney and Fiverr. While both companies face some headwinds right now, each operates a category-leading business and has strengths and market opportunities that open the door to valuation recovery and long-term growth.
Averaging down works best when you are confident that an investment is a long-run winner. As such, buying the dips will have you accumulating your position at progressively better prices, making your ultimate profit potential greater."}},"@type": "Question","name": "Can You Lose Money Averaging Down?","acceptedAnswer": "@type": "Answer","text": "Yes. If you keep buying more shares a stock sinks without bouncing back, you will end up holding a larger position at a loss.","@type": "Question","name": "What Is Averaging Up?","acceptedAnswer": "@type": "Answer","text": "Opposite from averaging down, averaging up involves buying more shares as a stock rises. This increases the average price paid for a position, but if you are buying into an up-trend, it can amplify your returns. Like averaging down, an average-up strategy could result in larger losses if the stock falls sharply from a peak."]}]}] Investing Stocks Bonds Fixed Income Mutual Funds ETFs Options 401(k) Roth IRA Fundamental Analysis Technical Analysis Markets View All Simulator Login / Portfolio Trade Research My Games Leaderboard Economy Government Policy Monetary Policy Fiscal Policy View All Personal Finance Financial Literacy Retirement Budgeting Saving Taxes Home Ownership View All News Markets Companies Earnings Economy Crypto Personal Finance Government View All Reviews Best Online Brokers Best Life Insurance Companies Best CD Rates Best Savings Accounts Best Personal Loans Best Credit Repair Companies Best Mortgage Rates Best Auto Loan Rates Best Credit Cards View All Academy Investing for Beginners Trading for Beginners Become a Day Trader Technical Analysis All Investing Courses All Trading Courses View All TradeSearchSearchPlease fill out this field.SearchSearchPlease fill out this field.InvestingInvesting Stocks Bonds Fixed Income Mutual Funds ETFs Options 401(k) Roth IRA Fundamental Analysis Technical Analysis Markets View All SimulatorSimulator Login / Portfolio Trade Research My Games Leaderboard EconomyEconomy Government Policy Monetary Policy Fiscal Policy View All Personal FinancePersonal Finance Financial Literacy Retirement Budgeting Saving Taxes Home Ownership View All NewsNews Markets Companies Earnings Economy Crypto Personal Finance Government View All ReviewsReviews Best Online Brokers Best Life Insurance Companies Best CD Rates Best Savings Accounts Best Personal Loans Best Credit Repair Companies Best Mortgage Rates Best Auto Loan Rates Best Credit Cards View All AcademyAcademy Investing for Beginners Trading for Beginners Become a Day Trader Technical Analysis All Investing Courses All Trading Courses View All Financial Terms Newsletter About Us Follow Us Facebook Instagram LinkedIn TikTok Twitter YouTube Table of ContentsExpandTable of ContentsWhat Is Averaging Down?When to Apply Averaging DownAveraging Down FAQsThe Bottom LineTradingTrading StrategiesAveraging Down: What It Is and When to Use ItFirst, determine the reason for the fall in stock price 041b061a72