Equity markets in the United States and overseas have experienced a fair degree of negative volatility in the first quarter of 2022 amid an expected shift in the Federal Reserve’s monetary policy and the beginning of a relatively unexpected armed conflict between Russia and Ukraine.
Elevated inflationary pressures increased the odds of multiple interest rate hikes possibly taking place this year in the US and the Fed has already confirmed this scenario. As a result, the riskier segments of the equity market – i.e. the stocks with relatively weaker fundamentals – have experienced their fair share of pain.
In this article, we will be naming 3 stocks of companies whose business is growing rapidly and that are currently trading at least 70% below their 52-week high.
Upstart (NASDAQ:UPST) – 70% Below 52-Week High
Upstart (UPST) is a California-based financial technology company that is using artificial intelligence to expedite the process of analyzing and approving loans on behalf of financial institutions.
In just 4 years, the company has managed to grow its revenues from $51.2 million to as much as $801.3 million and analysts are forecasting that it could hit the $1 billion mark by the end of 2022.
The company is already turning a profit – $135.4 million in 2021 to be exact – and the business is cash flow positive already. Upstart has achieved this without overleveraging its balance sheet.
Based on the market’s consensus estimate for 2022, the stock is trading at just 39 times its forecasted earnings for this year. This appears to be a highly conservative multiple considering the rapid pace at which the firm’s bottom-line profitability could grow in the future.
FuboTV (NYSE:FUBO) – 77% Below 52-Week High
FuboTV (FUBO) is considered by many the future Netflix of sports. This video streaming platform has been growing both its top-line results and user base quite rapidly while the management has many ambitious plans to keep monetizing its subscribers.
In just 3 years, revenues have grown from nothing to $638.2 million while the number of subscribers moved from 316,000 to 1.13 million from 2019 to 2021 excluding acquisitions.
This year, revenues are expected to surpass the $1 billion mark while the firm’s total user base (including acquisitions) is expected to grow to almost 1.8 million subscribers.
Alongside subscription revenues, FuboTV has the possibility of developing another two revenue streams: sports betting and advertising. The latter is already bringing some money to the business while the former is in the process of being officially launched.
Based on the management’s revenue forecast for 2022 (around $1.1 billion), FuboTV is trading at roughly 1.1x that figure.
Fiverr (NYSE:FVRR) – 79% Below 52-Week High
The pandemic showed companies the tremendous benefits of having a remote workforce and freelancers were among the most benefitted by this situation as their services were in high demand while most of the world’s population remained confined within their homes.
In this context, Fiverr (FVRR) – a gig-economy marketplace – has emerged as a strong winner as both awareness and revenues have grown at an even faster pace than they were before the health crisis.
Revenues last year ended at $297.7 million or 57% higher than the previous year, gross margins stood above 80%, and the number of active buyers increased 23% compared to a year ago at 4.2 million.
With the world migrating somehow permanently to hybrid work methodologies, Fiverr seems to be well positioned to become a major player in the growing remote workforce marketplace.
Last year, the company produced positive operating cash flows and managed to secure an injection of capital in the form of convertible notes to keep financing its growth. Since the business model is cash flow positive already, this extra money can give Fiverr enough fire power to keep expanding its reach in the next few years.
Based on the market’s consensus revenue forecast for 2022, the stock’s forward price-to-sales ratio is standing at 7.2x.
Bottom line
Even though market conditions have deteriorated in the past few months, once sentiment turns positive once again, some of these heavily battered stocks could deliver sizable gains as investors will once again look for the best and most promising opportunities out there.
