along with S&P 500 Index The benchmark index is currently down only 1% from its all-time high and may be on the verge of hitting a new high and ushering in the next sustained bull market.
But while the index has posted impressive gains in trading this year and is teetering on the edge of entering a new bullish phase, the S&P 500’s sharp gains this year have been driven largely by large-cap stocks that have taken a leading position in artificial intelligence. Driven by technology stocks, e.g. Nvidia, Microsoft, letter, meta platformand apple.
But when the next bull market with legs arrives, those quality stocks that are still down significantly from their previous highs have a good chance of rebounding and delivering strong performance. With that in mind, read on to see why two Motley Fool contributors think investing in these top companies right now would be a great move.
SoFi Stock: Down 61% from Highs
Jennifer Sebill: I’m wary of the hype around me Sophie Technology (NASDAQ:SOFI) When it went public through a merger with a special purpose acquisition company (SPAC) in June 2021. It’s untested, its valuation is astronomical, and it’s unprofitable. I wouldn’t be surprised if the stock fell off a cliff in a bear market.
However, something has happened since then. Growth remains high, but valuations have declined and profits are improving. And that’s just the top layer of the story.
SoFi’s one-stop digital financial services resonate with its core customer base of students and young professionals. It acquired Golden Pacific Bancorp in 2022 and subsequently obtained a banking license. It now offers a full suite of services including bank accounts and bank accounts. credit card.
It focuses on providing an easy-to-use interface, low fees, and high rates, and as members join and have a positive experience, they add more services. This allows for scale without incurring significant additional marketing costs, thereby increasing profitability.
In the third quarter of 2023, revenue increased by 27% annually, slower than in previous quarters, but there were 717,000 new members, an annual increase of 47% (accelerated), and more than 1 million new products.
Adjusted advance profit after interest, tax, depreciation and amortization (Interest, tax, depreciation and amortization in advance) grew 121% to $98 million. This is how SoFi measures profitability, and it’s important to pay attention to changes in this metric.
But it’s also important to note how well it’s making net profit, as well as how well it’s generating cash. Its net loss actually ballooned in the quarter due to a goodwill impairment, but management reiterated that it will achieve a net profit in the fourth quarter. As for cash, since SoFi now has deposits in addition to its original loan products arm, it has plenty of cash to run its business.
At current prices, the stock is trading at price to sales ratio 4.6. While not objectively cheap, this valuation takes into account SoFi’s phenomenal growth. At this point in the story, SoFi has proven that it can maintain revenue growth momentum while driving profitability.
It looks like a bull market is coming, and SoFi is the kind of growth stock that thrives in positive market conditions. If it starts reporting net profits, expect the stock to soar in 2024.
Airbnb stock price: down 32% from high
Keith Noonan: although Airbnb (Nasdaq: ABNB) The company’s share price has experienced some volatility since going public in December 2020, but the company has generally continued to post very encouraging business results. Third-quarter revenue increased 18% year-on-year to $3.4 billion, and adjusted net profit soared 33% to $1.6 billion, with a net profit margin of 47%.
Meanwhile, the business now generates $4.2 billion in free cash flow (free cash flow) during the trailing 12-month period, accounting for approximately 44% of total sales during that period. That’s a very good profit margin, and it suggests the stock has the potential to deliver solid returns for investors who adopt a buy-and-hold strategy at today’s prices.
Airbnb, with a market capitalization of about $95 billion, is valued at less than 23 times its trailing free cash flow. With margins in the business being so strong and revenue still growing strongly, the rental platform leader’s valuation remains attractive to investors. Long term investor.
Airbnb’s growth story may just be beginning. The total number of active listings on the platform increased 19% year-over-year in the third quarter, and management continues to make smart moves to ensure its platform is attractive to both landlords and tenants.
The growing number of listings on the platform should help ensure a variety of products are available at a variety of price points. Increasing active listings could also be a key catalyst in driving the still-present “work anywhere, live anywhere” trend, an undervalued contributor to the platform’s long-term expansion potential.
With the stock still down 32% from its valuation peak reached in February 2021, Airbnb looks poised to deliver plenty of long-term upside, making it a smart choice for investors looking for growth at a reasonable price.
Should you invest $1,000 in SoFi Technologies right now?
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Randi Zuckerberg is the former director of market development and spokesperson for Facebook, the sister of Meta Platforms CEO Mark Zuckerberg, and a board member of The Motley Fool. Suzanne Frey is a senior executive at Alphabet and a board member of The Motley Fool. director, director. Jennifer Sebill Worked at Airbnb and SoFi Technologies. Keith Noonan There are jobs on Airbnb. The Motley Fool has positions and recommendations on Airbnb, Alphabet, Apple, Meta Platform, and Nvidia. Motley Fool has disclosure policy.
Bull market is coming: Two growth stocks are worth buying after falling 61% and 32% Originally published by The Motley Fool
