Buying a stock on the dip can be a great way to lock in a lower price for an investment, especially if the underlying business is still solid. It can increase the odds that you'll make a good profit from the stock. However, you might need to act fast -- declines may not last long if the sell-off isn't due to true company struggles.
While the S&P 500 rose by more than 2% last month, Teladoc Health (TDOC -2.91%), Barrick Gold (GOLD 3.39%), and Beyond Meat (BYND 4.62%) all crashed 16% or more. And despite those sharp declines, these businesses remain in great shape and their stocks could make for solid long-term investments.
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1. Teladoc
Teladoc is coming off a rough month; its shares plummeted more than 16% in February. There wasn't a glaring reason to dump the stock as the company didn't even release its latest earnings results until the tail end of the month. And when the earnings report came out on Feb. 24, the numbers weren't bad by any stretch. For the period ending Dec. 31, 2020, Teladoc's fourth-quarter revenue of $383.3 million was up 145% from the prior-year period. And the number of telehealth visits topped 3 million, which was an increase of 139% year over year. It is projecting that next quarter those numbers will rise higher, with revenue potentially hitting $455 million and visits hitting a range of 2.9 million to 3.1 million.
The company still isn't profitable, but given the growth that it is generating and the rising popularity of telehealth (even as vaccinations pick up around the country and the pandemic is brought under control), the healthcare stock still looks poised for more gains in the future. Teladoc only completed its merger with Livongo Health on Oct. 30, 2020, and the long-term gains from that partnership alone could make this an attractive investment to hang onto for many years. As Teladoc reaches more patients -- Livongo focuses on chronic care and diabetes management, in particlar -- it could just be scratching the surface in terms of its overall potential.
2. Barrick Gold
Barrick Gold is another example of a company that is doing well, but whose stock isn't following suit. On Feb. 18, the gold mining company released its fourth-quarter results. Sales of $3.3 billion for the period ending Dec. 31, 2020, grew 13.7% from the same period last year. The company benefited from a higher realized price per pound of gold ($1,871 versus $1,483), which boosted its free cash flow from $429 million a year ago to $1.1 billion this past quarter.
The company has so much cash that it is proposing to return some capital back to shareholders, to the tune of $0.42 per share. That is in addition to its $0.09 quarterly dividend, which currently yields 1.6%. This is a business swimming in so much cash that it can actually afford to distribute such a big payout back to its investors. Although the price of gold has been falling in recent months amid greater optimism for the pandemic ending now that there are multiple vaccines available, it is still above $1,700 per ounce and higher than it was a year ago. And if there is a larger crash in the markets, it could quickly shoot back up.
Barrick is a solid long-term investment, and scooping up its shares can be a good way to hedge in the event the markets become a bit shaky. Like Teladoc, its shares also fell more than 16% last month.
3. Beyond Meat
The worst decline on this list of underperforming stocks belongs to Beyond Meat. The manufacturer of plant-based meat products saw its shares fall more than 18% in February. The company also released its quarterly results for the last three months of 2020. But its numbers weren't nearly as impressive when on Feb. 25 Beyond reported that its net revenue of $101.9 million increased by just 3.5% year over year as it felt the impact of COVID-19 and a decline in demand from its foodservice channel. The uncertainty around the road ahead is a key reason why the company is not providing any guidance for 2021.
But it is not all doom and gloom for the company -- Beyond Meat recently announced a deal with McDonald's. Beyond will be the "preferred supplier" of a new plant-based burger called the McPlant under an agreement that will span three years. Even though many eat-in restaurants may be closed or under restrictions during COVID-19, fast-food chains like McDonald's can easily serve customers via drive-thrus. So even if you are concerned about the long-term impact of the pandemic, there's still a path for Beyond to grow beyond just the retail segment -- which in Q4 grew at a rate of 76.3% in the U.S. and 139.2% internationally.
The best-case scenario for the stock would involve a full recovery of the economy this year, which isn't all that unlikely now that vaccines are on the way. Although it is coming off a tough quarter, Beyond could still generate some strong growth numbers for many years, and buying the stock now may prove to be a great move.
