For the past five weeks, new and tenured investors have been given a reminder that stock market corrections and crashes are a normal part of investing. The peak 10% decline in the S&P 500 in January represents its first double-digit drop since March 2020. Then again…
it’s the 39th double-digit drop for the index since the beginning of 1950.
Although corrections can be scary, primarily because they feed off investors’ emotions, they’re a perfect opportunity to buy into high-quality companies at a discount. There are currently five game-changing growth stocks down 58% to as much as 88% that look to be screaming buys as the market corrects lower.
Nio: 63% below its 52-week high
There’s little question that electric vehicles (EVs) will be one of the fastest and most sustainable growth trends throughout the decade. The problem is that electric car stocks have been priced at nosebleed valuations. But as a result of this correction, China-based Nio (NYSE:NIO) appears ripe for the picking.
Even with semiconductor chip shortages representing an industrywide issue, Nio’s annual run-rate output increased to approximately 130,000 EVs in November and December, before decelerating slightly in January. Given management’s recent precedent for meeting production expansion goals, the expectation is for Nio to increase its annual run-rate to 600,000 EVs by years’ end. This’ll be accomplished by producing more of the company’s existing line of EVs, as well as introducing a trio of new vehicles. With approximately $6.8 billion in cash on hand, Nio has more than enough capital to boost capacity and innovate.
Aside from operating in the No. 1 global market for autos (China), Nio’s out-of-the-box thinking deserves credit for what should be resounding future success. In August 2020, the company launched its battery-as-a-service (BaaS) program. Buyers enrolled in BaaS receive a discount on the initial purchase price of the EV, as well as the ability to charge, swap, or upgrade batteries in the futures. As for Nio, it generates high-margin recurring revenue with BaaS and keeps early buyers loyal to the brand.
PubMatic: 66% below its 52-week high
Just because a company sports a small-cap valuation doesn’t mean it’s not a game-changer. Cloud-based programmatic ad platform PubMatic (NASDAQ:PUBM) is a perfect example of a beaten-down growth stock worth buying hand over fist.
PubMatic is what’s known as a sell-side provider in the programmatic ad space. In plainer terms, this means it uses machine-learning algorithms to optimize the selling and placement of ads for its clients — the publishers selling their display space. Interestingly, PubMatic’s platform doesn’t always choose the ad that’ll pay the most. Rather, it’s always trying to put relevant messages in front of users. This way, advertisers remain happy and the company’s clients (the publishers) can benefit from improved ad-pricing power over time.
The real lure for investors is the…
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