3 stocks down more than 75% to buy now

Jits market has gone crazy. At the time of this writing, the S&P500 and Nasdaq-100 the indexes are respectively down 18% and 29% from all-time highs. However, these high-cap indexes hide more serious pain. Many stocks are down much more.

To take Roku (NASDAQ: ROKU), loan club (NYSE:LC)and PayPal Credits (NASDAQ: PYPL), for example, each down at least 75% from its highs. Despite the intense pain, however, three Fool.com contributors think everyone is a buy right now. Here’s why.

Image source: Getty Images.

Roku: Soaring sales and plummeting stock prices

Anders Bylund (Roku): Media streaming tech expert Roku is one of my favorite long-term investments. It’s also a hot stock sell today, down more than 81% from all-time highs of last summer. So you can invest in a top quality company at a bargain price. Where can I register ?

Roku may not seem cheap from the perspective of traditional value measures. Stocks change hands at 99 times earnings, 64 times free cash flow and four times sales. Dyed-in-the-wool value investors are now reaching for their smelling salts and water bottles. That’s not what they’re looking for.

But growth investors like yours have also noticed that Roku sales have skyrocketed at a compound annual growth rate of 47% over the past five years. Here’s what it looks like:

ROKU Earnings Chart (TTM)

ROKU Revenue Data (TTM) by YCharts

Additionally, Roku is already far enough along in its long-term growth story to generate reliable bottom line earnings and free cash flow. Most hypergrowth stocks cannot make this claim.

The company is a global leader in user-friendly platforms for digital media services, which has made Roku a huge success as this market continues to take over the cable, satellite, broadcast and internet industries. old fashioned cinema. Remember, Roku is a winner no matter what media services people choose to consume on Roku’s software-powered smart TVs and media dongles. Additionally, Roku is also expanding its revenue streams through video advertising and its own original content.

Roku shares are down due to overblown market fears, and it’s a smart move to take a few stocks at these low prices.

This fintech has been battered by industry fears, but its new business model is booming

Billy Duberstein (LendingClub): LendingClub stock is down 74% from its 52-week high reached in November and more than 90% from its all-time high in late 2015. With that kind of performance, you would think the company itself was malfunctioning; Yet, in contrast, one could argue that LendingClub’s business is working better than ever.

LendingClub began its entrepreneurial journey as a platform that used big data to underwrite personal loans at lower rates than credit cards. It then sold these loans to investors looking for yield. But like Assets received investors are learning now, platforms depend on loan volume and partner banks and investors willing to buy loans. In times of economic downturn, there are fears that the demand for loans will dry up.

However, last year LendingClub completed the significant acquisition of Radius Bank. This acquisition was truly transformative for LendingClub. First, it reduces regulatory costs and allows LendingClub to support its own deposits, thereby reducing its funding costs. LendingClub now plans to hold between 20% and 25% of its loans on its balance sheet, while selling the rest to other investors through its marketplace.

The hybrid model is ideal for flexibility and economy. LendingClub now generates significantly more revenue and profit per creation, thanks to its net interest income on loans held on the balance sheet. The balance sheet also allows for some flexibility if loan demand from partners slows for a period of time. Meanwhile, its market still allows LendingClub to build a large network of customers and get more out of its direct marketing costs.

Although LendingClub has fallen significantly over the past two months, it has actually beaten revenue and profit in the two earnings reports it has released since then. In the last quarter, LendingClub significantly exceeded its revenue and earnings forecasts, and raised its full-year guidance, unlike Upstart. Midway through the new guidance, LendingClub expects $1.2 billion in revenue, up 47%, and $155 million in net profit at the midpoint. At the current market cap of $1.32 billion, this represents a forward P/E ratio of just 8.5.

It is difficult to justify this assessment based on LendingClub’s current growth trajectory. Although a recession may increase charges, LendingClub has recently made a concerted effort to target preferred customers with FICO scores above 700 and incomes above $100,000. Meanwhile, LendingClub continues to roll out more loan products, such as car loans, which are only a small portion of originations but are growing rapidly.

Overall, LendingClub has been caught up in selling fintech, but it’s a much more profitable business and a cheaper title than many of its peers. For long-term investors, equities look awfully tempting here.

A top brand among a host of online payments competitors

Nicholas Rossolillo (PayPal): Nowadays, there are a multitude of payment options for e-commerce. PayPal is the biggest of the big guys, but it could also be considered a legacy tech at this point. Companies like Block are more nimble and grow much faster than PayPal. Tech giants like Apple and Alphabet‘s Google have also nudged into PayPal territory, not to mention the little upstarts.

Still, when it comes to online and app-based payments, PayPal and its subsidiary Venmo remain a formidable foe when it comes to competing for younger generations of consumers. Indeed, according to Piper SandlerIn the Spring 2022 “Taking Stock With Teens” report, Venmo and PayPal ranked #2 and #4 respectively as young people’s favorite payment app (Apple Pay was #1 and Cash App was #3 three) . And PayPal’s “Pay in 4” service was the favorite buy-it-now, pay-later (BNPL) service.

That’s all well and good, but finances are what really matters. The company is experiencing a serious slowdown from early levels of pandemic growth and expects currency-neutral revenue growth of 11% to 13% in 2022 (or 15% to 17% if we exclude eBay, which is splitting off from PayPal with its own digital payment service). Free cash flow is expected to drop around 10% this year to around $5 billion as the company invests to keep its large user base engaged.

It’s a tough time to be a shareholder of PayPal as it transitions from a high-growth business to a slower, more stable blue chip, but the 75% drop from its all-time high last year strikes me as be a buying opportunity. The stock currently trades for just 19 times free cash flow. If PayPal can continue to manage steady expansion and achieve profit margin growth as it scales, that could be long-term value right now.

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Suzanne Frey, an executive at Alphabet, is a board member of The Motley Fool. Anders Bylund has positions in Alphabet (A shares) and Roku. Billy Duberstein has positions in Alphabet (C shares), Apple and LendingClub and has the following options: short July 2022 $10 puts on LendingClub. Its clients can hold positions in the companies mentioned. Nicholas Rossolillo holds positions at Alphabet (C-shares), Apple, Block, Inc., PayPal Holdings, and Upstart Holdings, Inc. His clients may hold positions at the companies mentioned. The Motley Fool has positions in and recommends Alphabet (A shares), Alphabet (C shares), Apple, Block, Inc., PayPal Holdings, Roku and Upstart Holdings, Inc. The Motley Fool recommends eBay and recommends the following options: long $120 March 2023 Calls on Apple, $57.50 July 2022 Short Calls on eBay, and $130 March 2023 Short Calls on Apple. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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