The Beatles' classic hit "The Long and Winding Road" wasn't about growth stocks. But the idea certainly applies. It's never a straight path upward -- even for the most promising stocks.
We've seen a perfect example of this in recent months. Many top stocks have plunged. And that actually makes them even better picks for long-term investors. Here are three growth stocks to buy that have crashed more than 60%.
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1. Teladoc Health
Shares of Teladoc Health (TDOC -3.10%) have plummeted close to 70% from the peak set in early 2021. Investors worried that the virtual care provider's valuation got too frothy after a huge run-up fueled by COVID-19 lockdowns.
However, it's a mistake to think that Teladoc's fortunes hinge on the coronavirus. The company's revenue growth and visit volumes have continued to increase even with most lockdowns becoming a distant memory. People who have tried virtual visits liked their experience. Eighty-two percent of consumers said that telehealth was equal to or better than in-person care, according to a survey conducted by Piper Sandler.
Teladoc estimates that its total addressable market tops $260 billion annually. To put that into perspective, the company will probably record revenue of around $2 billion for 2021 and currently sports a market cap of $12 billion. What's even more impressive is that $75 billion of Teladoc's total addressable market opportunity lies within its existing member base.
Sure, Teladoc faces some competition. But it's indisputably the leader in virtual care with the broadest array of products and services, the widest geographical reach, and the biggest client base.
2. Pinterest
Like Teladoc, Pinterest (PINS 0.37%) stock is down close to 70% from its high set early last year. The steep sell-off stemmed primarily from declining monthly average user (MAU) volumes.
However, those falling MAU numbers really aren't as troubling as some might think. The underlying reason is the explosion in users that Pinterest experienced during the 2020 pandemic lockdowns. Even with the declines, the company's MAU numbers remain well above pre-pandemic levels.
Importantly, Pinterest's average revenue per user (ARPU) continues to grow robustly. It has plenty of room to improve. The company's ARPU is less than one-sixth of what Meta Platforms pulls in with its Facebook, Instagram, Messenger, and WhatsApp apps.
There's a good argument that Pinterest's best days are yet to come. The company doesn't face the controversies that have plagued other top social media stocks. Thanks to the big decline over the past 12 months, its shares are also attractively valued. Once Pinterest moves past its challenging year-over-year MAU comparisons, the stock could deliver a strong rebound.
3. Novocure
Novocure's (NVCR -2.04%) share price has plunged more than 65% since June 2021. The primary issue for the company is that its revenue growth has been weak. But investors should focus on Novocure's long-term prospects instead of its current malaise.
Don't look for a return to soaring sales growth this year. Novocure projects that the number of patients using its Tumor Treating Fields (TTF) to treat glioblastoma (an aggressive type of brain cancer) and malignant pleural mesothelioma will increase only 2% to 5%.
However, TTF holds promise in using electrical fields to disrupt the replication of tumor cells in other types of cancer. Novocure expects to report results from its phase 3 study of TTF in treating non-small cell lung cancer and its phase 2 study in gastric cancer this year. The company also anticipates that an interim analysis from a late-stage study for platinum-resistant ovarian cancer will wrap up in the second quarter of 2022. Final data from this study should be on the way next year.
In addition, Novocure plans to kick off a limited launch in Europe later this year for its next-generation array. The company thinks this array will increase TTF's dose delivery with less heat generation, which could increase the efficacy of the therapy.
Several catalysts are on the way for this beaten-down healthcare stock. Patient investors who buy Novocure could be richly rewarded.
