After a huge rally that saw the S&P 500 regularly hit new highs, the stock index recently suffered a losing streak of five consecutive days before snapping out of it. The overall decline was relatively tame, a less than 2% drop.
On the other hand, some stocks that had rallied sharply higher have lost considerably more and now trade at a significant discount to those highs. Some might deserve the hit their market valuations took, but for others, it's only a temporary setback and they still have long-term value inherent in their stocks.
The four stocks below fall into that latter group as their stocks stand anywhere from 25% to 50% below their 52-week highs. While some have begun to march higher again, all deserve your attention.
Airbnb (down 25%)
The travel industry was walloped by the pandemic, and the performance of Airbnb (ABNB 1.73%) was symptomatic of the whole experience. Although the home hosting service didn't go public until December 2020, its business was flattened by the coronavirus outbreak and its losses swelled to $4.6 billion last year.
But Airbnb is a fast-growing outfit that shouldn't be judged by a one-off event, even if it's gone on for a year and a half. Between 2016 and 2019, the number of nights booked and the value of those bookings nearly tripled, and as of the second quarter, the nights and experiences booked had achieved the level they reached in the same period in 2019 while the gross booking value surged 320% over last year.
This is a company still in the early stages of its growth phase, and with people beginning to travel once again (my stepdaughter just checked into an Airbnb in Puerto Rico), expect this home hosting platform to book greater growth.
First Majestic (down 50%)
Silver is considered a good store of value, just like gold. But because it also has commercial and industrial uses, it is not just a precious metal, but a strategic one too. First Majestic (AG) is perfectly positioned to capture the enhanced value of the gray metal, particularly as the economy corrects from last year's collapse.
The silver miner operates three important mines in Mexico, the world's top silver-producing country, and it has a fourth operational mine in Nevada. First Majestic is also one of the few remaining major miners to rely primarily upon silver as the source for the majority of its revenue -- some 70% of its revenue comes from silver.
All-in sustaining costs (AISC) -- an important industry term for measuring the cost of its metals -- were $12.43 per ounce last year, meaning that with silver currently priced a little below $25 per ounce, First Majestic could sustain prices collapsing to $15 per ounce and still be profitable.
Silver generally does well when the economy is in recovery mode, because as demand for goods picks up, the metal should continue benefiting from improving conditions. First Majestic will be along for the ride.
Snowflake (down 28%)
Cloud-based data analytics firm Snowflake (SNOW 8.57%), which had been growing at warp speed, is on the rise again, with shares bouncing 67% above the lows reached in May. Business is looking up so much that the gains made should pale in comparison to those already notched.
Snowflake is unique because its infrastructure is fairly agnostic regarding the cloud services that underlie its offering. Businesses can be using Amazon.com's S3 scalable storage solution, Microsoft's Azure, or Google Cloud, and it doesn't matter for accessing the data on Snowflake's platform. Customers are able to readily analyze their data no matter where it resides, and do it in a cost-effective manner.
As more companies move to the cloud and move ever-increasing amounts of data there, they need a solution that can keep them competitive, and Snowflake does that. It's why it sees itself as being on a path to $10 billion in product revenue for fiscal year 2029.
While investors have worried about widening losses at the tech stock, after a crushing earnings report, they apparently now see it being able to grow to profitability, and they're likely not wrong.
Trupanion (down 32%)
The humanization of pets is one trend consumers and investors can count on. It might not be a particularly sexy industry, but it's one that can be counted on for consistency, even during pandemics, which is why Trupanion (TRUP 4.46%) should be on your radar.
Pet insurance is among one of the fastest-growing segments in the pet industry, with sales expected to grow 20% this year to $9.7 billion. But like many of the other companies in this group, investors seem most worried about the losses Trupanion is incurring as it scales up its business.
In the second quarter, it reported a loss of $9.2 million, though adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) were $0.2 million. Still, last year it enjoyed adjusted EBITDA of $5.5 million. Even so, Trupanion surpassed the 1 million enrolled pets threshold, up 30% year over year, while subscription-enrolled pets were above 643,000, a 22% gain.
Trupanion has only scratched the surface of the market, with only 1% to 2% penetration in the North American market. It believes there is potential for penetration to reach levels similar to the U.K., where 25% of dogs and cats are insured, making Trupanion a long-term growth stock with a large runway ahead.