2022 has so far been a train ride for investors. The S&P 500 recorded an all-day high of all time in early January, but closed the first quarter of the year with the biggest quarterly drop in almost two years. Individual stocks, of course, plunged. Although this is scary, you could create a lot of wealth in the long run if you buy the dip, provided you know where to look. Here are three stocks that have fallen in recent months and you would like to buy and hold now.
The growth potential here is undeniable
Trapped in the sell-off of emerging stocks, Upstart Holdings (UPST -6.19% ) The stock has lost more than a third of its value this year, and a staggering 66% of its value in the last six months, as of this writing. It is true that the stock of Upstart went up very fast, but it is also true that the company is growing fast and has trillions of dollars of opportunities. If you believe in Upstart development history, now is the time to buy.
Upstart uses artificial intelligence to analyze more than 1,000 data points per borrower to monitor and evaluate lending risks. Thus, while lenders such as banks can use Upstart services to create low-risk loans, potential borrowers can quickly obtain low-interest loans. It is a win-win for both sides. Much of the process is automated and Upstart also does not need to carry credit risk, as it does not lend money, but only helps to create payday loans.
Upstart figures for 2021 reveal astonishing growth:
- Revenue rose 264% to $ 849 million.
- Operating income rose 1.097% to $ 141 million.
- Net income rose 2.164% to $ 135 million.
Such high growth rates may not be sustainable, but Upstart will not stop growing given its target markets. Following unsecured personal loans, Upstart has already taken out car loans and taken advantage of leading automakers such as Volkswagen as initial customers. Upstart then targets small dollar and small business loans and expects to enter mortgages in 2023.
Buying a home equity loan is worth at least $ 4 trillion based on origin, while the car loan market is worth more than $ 700 billion. This is huge and one of the biggest reasons why Upstart stock looks so attractive right now.
This big trend could make the first investors a fortune
If you’ve ever stuck to where to start when it comes to investing, be aware of major trends or structural changes that could change the dynamics of an industry. Even better if the industry is critical to the economy. And then, find top players ready to lead the megatrend. Indicative case: renewable energy sources and Brookfield Renewable Partners (BEP 0.71% ).
In the US alone, solar and wind power accounted for 80% of total added electricity in 2020, down from less than 30% in 2010, according to Statista. Brookfield Renewable is one of the largest renewable energy companies in the world, with a portfolio covering hydroelectric, solar, wind and battery storage operations throughout North America, South America, Europe and Asia.
Brookfield Renewable earned record operating capital (FFO) per unit in 2021 and closed the year with a huge global growth pipeline of 62 gigawatts (GW), including 15 GW in the final stage of development. It also had $ 4.1 billion in liquidity at the end of 2021 to invest in growth. What I really like about the company, however, is its strategy of recycling capital or just selling assets as they mature and reinvesting the opportunity revenue into assets with higher returns. Brookfield Renewable has worked well so far with the development of the FFO.
With the FFO, shareholder returns also increased – between 2013 and 2022, the Brookfield Renewable dividend grew at a compound annual growth rate (CAGR) of 6%.
The company is aiming for a 5% -9% annual dividend increase in the long run, which, combined with Brookfield Renewable’s 3% dividend yield, gives you almost 8% returns immediately if you own the stock. Russia-Ukraine conflict pushes up oil and gas prices and forces more nations to switch from fossil fuels to renewable energy sources to meet future energy needs stronger than ever now.
First driving force in an industry with exponential growth potential
Teladoc Health (TDOC) -4.94% ) is another stock that has been hit by the hammer, but has strong growth potential. Teladoc is the largest telemedicine company in the world and offers virtual primary care services as well as chronic disease management services.
It is true that the COVID-19 pandemic has been one of the biggest drivers of the telegraph market and that Teladoc’s growth rate is likely to slow as economies open up. However, the global telegraph market was worth about $ 144.4 billion in 2020 according to Fortune Business Insightsand most research companies predict that CAGR will increase by at least 30% in the coming years.
Teladoc, for its part, expects revenue to increase by CAGR 25% -30% between 2021 and 2024. The company generated revenue of $ 2 billion in 2021, up 86% from 2020. Visits to its platform increased by 38% to 15.4 million last year.
Following the acquisition of chronic disease management company Livongo in 2020, Teladoc is now focusing on other high-potential areas such as mental health and aiming for higher revenue per member through multiple product offerings. In fact, more than 40% of Teladoc members had access to many products in 2021 compared to less than 10% in 2017, including primary care, general medicine, mental health, specialist medicine, nutrition and dermatology.
There is plenty of room and multiple growth leverage for Teladoc, and the stock has fallen so hard so fast that it is hard to disagree with the current price.
This article represents the opinion of the author, who may disagree with the “official” position of setting up a Premium Motley Fool consulting service. We are motley! Challenging an investment dissertation – even our own – helps us all think critically about investing and make decisions that help us become smarter, happier and richer.