2 Growth Stocks Down 46% to 65% to Buy in 2022

Despite commencing 2022 with some early jitters, the S&P 500 stock market index remains about 3% below its all-time high. But although the index tends to be the most widely followed benchmark, it's not telling the entire story right now.

Some of the strongest high-growth technology stocks throughout 2021 have suffered treacherous declines over the past few months, as investors weigh the risks of faster interest rate increases and the omicron coronavirus variant. 

For patient investors, this might spell opportunity. The steep 46% to 65% discounts on the following two stocks could result in supercharged returns over the long run, but they're not for the fainthearted.

Image source: Getty Images.

1. Bill.com: Down 46%

At the beginning of 2020, Bill.com Holdings (BILL 1.68%) was a $38 stock. It soared about 800% to a high of $342.26 by November 2021, as the pandemic created a favorable environment for companies focused on digital innovation. But its recent dip in share price might be a great entry point for long-term investors, given the rapid expansion of its business.

Bill.com delivers a cloud-based payment management system for small and mid-sized businesses designed to alleviate the issues associated with issuing and receiving a high volume of invoices. Its digital inbox solution serves as an aggregator to prevent invoices from being missed, lost, or routed to the wrong location. Bills can be paid with one click from the inbox, and because it integrates with leading accounting software providers, bookkeeping is updated automatically.

But the company wants to offer a much broader solution to its business customers. In June 2021, it acquired expense management platform Divvy, and in September it bought Invoice2go, which added back-office services to Bill.com's arsenal. The result is an accelerated fiscal 2022 revenue growth projection, on top of an incredibly strong 51% growth rate in 2021. 

Data source: Bill.com, Yahoo! Finance. CAGR = Compound Annual Growth Rate.

In the first quarter of fiscal 2022, Bill.com processed $46.9 billion in payment volume for its 126,800 customers. But long-term growth from its acquisitions could be significant, with Divvy set to introduce 13,500 additional businesses to Bill.com's ecosystem, plus 226,000 subscribers from Invoice2go. 

The company's stock still trades at an expensive forward price-to-sales multiple around 30, but for investors willing to combine its revenue growth rate with some patience, 2022 could be the time to buy with a holding period of five years (or more). 

Image source: Getty Images.

2. Latch: Down 65%

Latch (LTCH 1.70%) is reinventing security for apartment buildings and the business model that goes with it. The company offers both hardware and software that incorporates smart access, guest management, and sensors, and over 30% of all apartments being built across the U.S. right now are using its products. 

Latch is new to the public markets, going public through a special purpose acquisition company (SPAC) last year. After surging to $17.68 last February shortly after the merger plans were announced, its stock has steadily declined, down 65% to $6.17 as of Thursday's close. The pandemic injected uncertainty into the construction industry, turning investors cold on Latch. But in 2022, the company might be set for a resumption of its former strength.

Building apartment blocks takes time, so Latch reports total bookings, which is an indication of future revenue. In the most recent third quarter of 2021, the company revised its full-year 2021 guidance for bookings to as much as $365 million, representing 121% year-over-year growth. Moreover, once an apartment block is built, Latch earns recurring revenue from each unit for its software on a subscription basis. 

Keep in mind, Latch's full-year 2021 revenue is expected to come in at $42 million, so it's clear to see the potential for astronomical growth in the future. According to analysts' estimates, that revenue growth is set to kick in during 2022.

Data source: Latch, Yahoo! Finance. 

As Latch continues to build its bookings pipeline, its revenue should accelerate as a consequence. One concern is the company's loss per share at the moment, which will be as high as $1.18 for 2021 once it reports its full-year earnings result. Operating in the red is to be expected with Latch in its early stages; scale is critical, and its gross profit margin should expand as revenue ramps up. 

Any stock that loses 65% of its value comes with inherent risks. Still, Latch has built a suite of products that are clearly in demand, with an attractive recurring revenue stream that could eventually pave the way to profitability. And if it gets there, this stock could supercharge your portfolio over the long run.