After a spectacular run in 2020, several tech stocks have taken a breather in the last few trading sessions. Investors are worried about steep valuations of growth stocks, rising inflation numbers, and the threat of higher interest rates, in addition to the Omicron variant.
However, every pullback should be viewed as a buying opportunity as you can purchase quality stocks at a lower multiple. Let’s take a look at three beaten-down tech stocks you can buy for 2022.
A company that went public in late 2019, Peloton (NYSE: PTON), has taken investors on a wild ride. The COVID-19 pandemic allowed Peloton to increase sales from $1.82 billion in 2019 to $4 billion in 2020. Peloton’s solid revenue growth meant the stock rose by more than 400% in 2020. However, as economies and fitness centers reopened, shares of Peloton lost steam in the last year and are now down close to 80% from all-time highs.
Peloton is currently valued at a market cap of $11 billion and is forecast to increase sales to $5.8 billion in 2022, pricing the stock at a price to sales multiple of less than 2x, which is very attractive.
Peloton ended Q3 with $1.27 billion in inventory, up from $937 million in Q2 of 2021. A higher inventory balance will allow the company to take advantage of surging demand amid the holiday season and offset supply chain disruptions.
A fintech company with massive upside potential is Upstart (NASDAQ: UPST). Valued at a market cap of $9.7 billion, Upstart has increased sales from $96 million in 2018 to $227.6 million in 2020. Analysts expect revenue to touch $807 million in 2021 and $1.2 billion in 2022.
While several tech companies are wrestling with negative profit margins, Upstart is forecast to increase adjusted earnings from $0.23 in 2020 to $2.35 in 2022.
Upstart stock is also down 70% from record highs but has still returned 300% to investors in just over a year. The company leverages artificial intelligence tools to disrupt the legacy lending industry. It has onboarded several banking partners and derives 97% of sales from fees charged for Upstart’s proprietary services fees.
It recently acquired Prodigy Software to gain traction into the auto-loan segment, creating another revenue stream for the company. Analysts tracking the stock expect shares to more than double to $263 in the next 12-months.
The final tech stock on my list is Roku (NASDAQ: ROKU) which has returned 725% to investors in just over four years. However, it’s also down 60% from 52-week highs, valuing the company at a market cap of $26 billion.
Roku is a streaming giant and is well poised to expand top-line given the massive opportunity in the connected-TV segment. It ended Q3 with an active user base of 56 million, allowing it to derive $583 million from the platform business.
In the last 12-months, Roku has increased sales by 66% year over year to $2.5 billion while its free cash flow stood at $266.2 million. Comparatively, its free cash flow stood at a negative $32 million in the year-ago period.
Wall Street expects Roku stock to touch $376 in the next year, up from its current trading price of $193.83.
Contributing Writer at MyWallSt
Aditya took an interest in the stock market during the financial crash of 2008-09. His favorite stocks include Roku and Apple as both companies enjoy a leadership position in their respective verticals and are poised to beat the broader markets consistently going forward.