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3 Growth Stocks That Are Down Big

By Jose Najarro - May 18, 2021 at 8:00AM

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Is the current growth market correction giving investors a tremendous buying opportunity for these three stocks?

In today's video, I look at the following growth stocks: Shopify (SHOP -4.83%)Twilio (TWLO -5.09%), and Redfin (RDFN -9.72%). The stock prices for each have dropped roughly 25% to 48% from their 52-week highs. Below I share three bullish reasons for each stock on why you should add them to your watch list.

Three reasons to add Twilio to your watch list

  1. Twilio reported 62% year-over-year revenue growth for the first quarter of 2021, and more than 235,000 active customer accounts compared to 190,000 at the same time last year.
  2. Twilio has strong fundamentals as it is positive in cash flow from operations and has substantially more cash and short-term investments than debt. 
  3. Twilio's forward price-to-sales ratio has dropped to roughly 15.4, making it more attractive compared to a few months ago when it reached levels of over 23.

Three reasons to add Shopify to your watch list

  1. Shopify reported 110% year-over-year revenue growth and 62% year-over-year monthly recurring revenue growth for the first quarter of 2021. 
  2. Shopify has exceptional fundamentals as it is profitable, positive in cash flow from operations, and has substantially more cash and short-term investments than debt. 
  3. Shopify's forward price-to-sales ratio has dropped to roughly 22.7, making it more attractive compared to a few months ago when it reached levels of over 35.

Three reasons to add Redfin to your watch list

  1. Redfin reported 40% year-over-year revenue growth and 229% year-over-year gross profit growth for the first quarter of 2021. 
  2. Redfin has strong fundamentals as it is positive in cash flow from operations and has more cash and short-term investments than debt. 
  3. Redfin's forward price-to-sales ratio has dropped to roughly 2.5, making it more attractive compared to a few months ago when it reached levels of over five.

Click the video below for my full thoughts. 

*Stock prices used were the closing prices of May 14, 2021. The video was published on May 15, 2021. 



Jose Najarro owns shares of Redfin, Shopify, and Twilio. The Motley Fool owns shares of and recommends Redfin, Shopify, and Twilio. The Motley Fool recommends the following options: long January 2023 $1,140 calls on Shopify, short January 2023 $1,160 calls on Shopify, and short May 2021 $65 puts on Redfin. The Motley Fool has a disclosure policy. Jose is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through his link, he will earn some extra money that supports his channel. His opinions remain his own and are unaffected by The Motley Fool.

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Stocks Mentioned

Shopify Inc. Stock Quote
Shopify Inc.
SHOP
$35.08 (-4.83%) $-1.78
Twilio Inc. Stock Quote
Twilio Inc.
TWLO
$76.58 (-5.09%) $-4.11
Redfin Corporation Stock Quote
Redfin Corporation
RDFN
$10.27 (-9.72%) $-1.10

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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