Apple stock climbed roughly 40.7% over the past year's trading, pushing its market capitalization to a staggering $3 trillion. Meanwhile, Microsoft's stock price jumped approximately 52% across the same stretch, pushing its market capitalization to roughly $2.51 trillion. The performance of these two stocks alone has radically shifted the overall narrative on growth stocks and led some to assume that the category as a whole has become overvalued.
This picture is misleading. While some mega-cap tech giants are indeed trading at record levels, investors will miss out on some incredible opportunities if they write off some of the other growth stocks this year. Read on for a look at two tremendous stocks that trade at big discounts at the moment and are primed for stellar performance in 2022 and beyond.
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1. Fiverr International
Fiverr International's (FVRR 1.99%) gig labor platform makes it easy for people to hire or take on jobs on a contract basis. If you wanted footage of a wedding edited into a nicely put-together video, there's a good chance you could find someone on Fiverr to do a professional-level job at an affordable rate. If you're running a business, you might find that it makes more sense to hire a remote worker on a contract basis through Fiverr than to bring on a full-time employee to handle the role.
Contract labor's ability to cut down on office and employee benefit expenses is a catalyst that points to huge growth for the gig economy and for Fiverr in particular. So why is the stock down 42% over the last year and 66% from its 52-week high?
After sales grew 77% in 2020, the company's momentum admittedly slowed substantially in 2021, and investors are worried that there will be less demand for its services as pandemic-related conditions ease and people increasingly head back to the office. On the other hand, the company is still posting impressive momentum, and it's still small enough that it could deliver explosive growth.
Revenue climbed 42% year over year in the third quarter, and the number of active buyers on the Fiverr platform rose 33% to reach 4.1 million. The company also appears to be well-positioned to shift into delivering significant profits and earnings growth, having posted a gross margin of 83.1% over the trailing-12-month period.
With a market cap of roughly $4.2 billion and a very favorable long-term growth outlook for the gig economy, Fiverr offers massive upside. Concerns that the business will wilt as office life moves closer to normal are misplaced, and I expect that investors will thank themselves for pouncing on this beaten-down, underappreciated stock.
2. Zynga
Zynga (ZNGA) is a top publisher in the mobile gaming space and is best known for franchises including FarmVille and Words With Friends. However, internal development initiatives and a huge acquisitions push over the last decade mean that the company is far from being reliant on those legacy properties. The publisher now has one of the strongest collections of mobile development studios in the industry, and it's on track to benefit from an expanding global audience and new monetization opportunities.
Unfortunately, some of the company's acquisitions and growth projects have been cast in a less favorable light following changes to mobile user data tracking by Apple and Alphabet that have altered the landscape of the digital advertising space. Zynga has been buying game studios and specialists with a heavy focus on in-game advertising and ad technologies, and the new systems put in place by the two mobile platform giants mean that the strategic value of these acquisitions might have been significantly diminished.
Due to the advertising headwinds and recent bookings growth looking paltry compared to 2020's blockbuster numbers, the market has turned its back on Zynga stock. The company's share price is down approximately 35% over the last year and 48% from its 52-week high, and I'm confident that investors will benefit from pouncing on this promising stock at current prices.
With a market capitalization of roughly $7.2 billion and shares trading at approximately 2.3 times this year's expected sales and 15.5 times expected earnings, this potentially explosive stock is too cheap to pass up. As of the company's last update, it had roughly $1 billion in cash and short-term equivalents against zero debt, and Zynga's collection of development studios should help drive strong growth through the next decade and beyond. The stock could conceivably double within the next year, and its long-term outlook is even more appealing.
