When markets turn volatile in response to political unrest as well as the promise of higher interest rates to combat rising inflation, savvy investors should remember the importance of cost averaging dollars when buying stocks.
Whether it’s starting a new position by buying in thirds or adding a few dollars every week (using fractional shares), it will benefit your long-term portfolio to continually add money to the market. – no matter where we are. an economic cycle.
With that in mind, let’s take a look at three high-growth stocks that are excellent candidates for average buy, especially after taking a beating from the market recently.
Image source: Getty Images.
1.SoFi Technologies
Following its initial public offering (IPO) in 2020, fintech specialist Sofi Technologies ( SOFI -4.25% ) was one of several volatile special purpose acquisition companies (SPACs) to enter the markets over the past two years.
SoFi is trading in a stock price range of $9 and $24, and its current $10 mark is almost exactly where it was when it went public, suggesting it might be worth a shot. be seen again.
Through its mission “to help people achieve financial independence to achieve their ambitions,” SoFi operates in three business segments: lending, its Galileo Technology platform, and financial services. Initially famous for its new era approach to helping people refinance student loans, it quickly transformed into a full-service fintech.
With this operational expansion, SoFi saw massive adoption of its offerings across the board, posting 87% member growth and 54% year-over-year sales growth for the fourth quarter. The company has nearly quadrupled its customer base in the past two years alone and now has nearly 3.5 million members.
In addition to this membership growth, what makes SoFi appealing to investors is its tremendous product optionality. First, its fledgling financial services unit (think checking, savings, investing, credit cards, etc.) quintupled its year-over-year revenue in the fourth quarter, bolstering SoFi’s overall ecosystem.
Second, its all-stock acquisition of Technisys for $1.1 billion showed its ambitions to be the go-to provider for any behind-the-scenes infrastructure needed by fintech companies. Combined with Galileo, which holds a dominant share of the neobank processing market in North America, SoFi is poised to power transactions in an increasingly digital world.
With this option and management’s forecast of $180 million in earnings before interest, taxes, depreciation, and amortization (EBITDA) in 2022, SoFi is poised to grow well beyond its current market capitalization of $8 billion. of dollars.
2. Assets received
Assets received ( UPST -7.34% ) is reinventing the way credit risk is analyzed using artificial intelligence (AI) and machine learning, and it grew annual sales by 264% year-over-year for 2021. Massive growth like this has made Upstart’s share price incredibly volatile, as the market grapples with trying to assign a valuation to the young credit risk specialist.
Despite this volatility and its incredible growth metrics, Upstart offers something most of its high-flying growth and tech peers don’t: profitability.
UPST net income (quarterly). Data by YCharts.
Upstart has quietly built a highly profitable growth machine with a 16% profit margin by connecting consumers to its banking partners through its AI-powered lending platform.
Best of all, despite working in the daunting world of lending and credit risk, 94% of the company’s revenue comes from banking fees and services that expose it to no real credit risk, such as performance loans. Additionally, in Q4 2021, 70% of consumers were instantly approved for a loan without the need to provide additional documentation or contact customer service.
This automation creates a win-win situation for consumers, banks and investors and should only get stronger as Upstart’s AI improves. Its stock might seem expensive at 70 times earnings, but if you’re willing to let time work on your side and allow it to continue growing at an incredible rate, it should be a worthwhile investment.
3. Global-e online
Global-e online (GLBE -5.34% ) is emerging as a force in the global e-commerce market by enabling global direct-to-consumer (DTC) sales to entrepreneurial start-ups and large corporations. With its suite of cross-border e-commerce solutions, Global-e generates revenue through service fees and fulfillment services, which account for 39% and 61% of sales, respectively.
The business appears to be running at full steam, growing gross merchandise volume by 87% and revenue by 80% year-over-year in 2021.
Global-e shares are trading more than 50% off their 52-week highs (despite this incredible growth) due to the massive sell-off hammering the high-growth tech market. With this drop now factored in, Global-e’s potential in the e-commerce market could prove far greater than its current market cap of $5 billion, especially given its recent partnership with Shopify.
This partnership allows Shopify-based merchants – like surgical scrub specialist DTC Figs — to merge with the Global-e platform and find tailor-made local solutions for each of the international markets they target. Considering that Shopify already accounts for 10% of e-commerce sales in the US, this partnership could be a win-win as Shopify expands internationally and Global-e expands alongside that success.
Global-e is also seeing improved margins in addition to rapid growth.
GLBE income (TTM). Data by YCharts. TTM = last 12 months.
This time frame, while brief, highlights the improved efficiency across the business. This improvement helps support management’s forecast for EBITDA of $40 million in 2022.
This direction shows that true profitability may not be far off despite the company being in high growth mode. Even with Global-e’s price-to-sales ratio of 18, the company’s growth rates, improved margins and partnership with Shopify have positioned it well to one day become a multibagger from pricing to today – and make it an excellent candidate for the dollar – cost average.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end advice service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.
