Since the beginning of this year, the stock market has been in correction territory as the Federal Reserve hinted at a rise in interest rates from near zero as soon as March after bond-purchase tapering ends. The market is predicting four rate hikes in 2022 due to omicron-induced inflationary pressures.
However, according to The Conference Board, the U.S. real GDP is expected to rise 3.5% in fiscal 2022. This should bode well for stocks that possess solid growth attributes.
So, it could be wise to bet on growth stocks, Pinterest, Inc. (PINS) and Duolingo, Inc. (DUOL), which have declined significantly over the past month. Wall Street analysts expect these stocks to soar more than 80% in the near term.
Pinterest, Inc. (PINS)
PINS provides a visual discovery engine internationally. The company's engine allows people to find inspiration for their lives, including recipes, style, home inspiration, and DIY. It shows them visual recommendations based on people's tastes and interests.
On November 4, 2021, PINS announced that it expects its Q4 revenue to grow in the high teen’s percentage range year-over-year, and non-GAAP operating expenses to grow in the low teens quarter-over-quarter as they continue to invest in their business, including native content/Creator ecosystem, and brand marketing campaign.
PINS’ revenue surged 43% year-over-year to $632.93 million in the third quarter, ending September 30, 2021. The company’s adjusted EBITDA grew 117% year-over-year to $201.47 million. Its non-GAAP net income came in at $190.55 million, representing a 119% year-over-year increase. Also, its non-GAAP EPS came in at $0.28, up 115.4% year-over-year.
PINS’ EPS is expected to increase 27.3% year-over-year to $0.14 for the quarter ending March 31, 2022. In addition, it surpassed Street EPS estimates in each of the trailing four quarters. The company’s revenue is expected to increase 24.6% year-over-year to $3.19 billion in fiscal 2022.
PINS’ has lost 28.5% over the past month to close yesterday’s trading session at $26.88. However, Wall Street analysts expect the stock to hit $50.50 in the near term, which indicates a potential upside of 87.9%.
Duolingo, Inc. (DUOL)
DUOL develops a language-learning website and mobile app in the United States and China. The company offers courses in 40 languages, including Spanish, French, Japanese, and German. It also provides a digital language proficiency assessment exam.
On November 10, 2021, Luis von Ahn, Co-Founder and CEO of DUOL, said, "I’m very proud that we continue to grow rapidly, even on top of last year’s extraordinary performance, furthering our mission to develop the best education in the world and make it universally available."
DUOL’s revenue surged 40% year-over-year to $63.60 million in the third quarter, which ended September 30, 2021. The company’s gross profit grew 41% year-over-year to $45.50 million. Its total assets came in at $617.78 million for the period ended September 30, 2021, compared to $175.74 million for the period ended December 31, 2020.
Analysts expect DUOL’s EPS and revenue to increase 0.8% and 30.9% year-over-year, respectively, in fiscal 2022. While the stock has declined 21.2% over the past month to close yesterday’s trading session at $86.88, Wall Street analysts expect the stock to hit $158.40 in the near term, which indicates a potential upside of 82.3%.
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PINS shares were trading at $26.20 per share on Friday afternoon, down $0.68 (-2.53%). Year-to-date, PINS has declined -27.92%, versus a -7.69% rise in the benchmark S&P 500 index during the same period.
About the Author: Nimesh Jaiswal
Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles.
2 Beaten Down Growth Stocks That Will Rally 80% or More, According to Wall Street StockNews.com
