Should Investors Scoop Up These 2 Stocks on Sale?

If you're going bargain hunting for stocks in February, you've come to the right place. In this segment of Backstage Pass, recorded on Jan. 26, Fool contributors Jason Hall and Rachel Warren discuss two great stocks trading at lower-than-usual valuations that investors should consider scooping up right now.

Jason Hall: I think for most investors that are looking for that stability, they might also be thinking about prioritizing income. Because as good as it is to have stocks to give you ballast, they're going to hold up their value and maybe not be so volatile in terms of managing your portfolio and managing yourself as much as your portfolio.

I think owning companies that can pay you really good income is another way to do that, and there is a company that I need to look and see when they're going to be reporting earnings. I know it's going to be coming up pretty soon, but it entered the top of my mind when I was on earlier on "Beat and Raise" talking about earnings for a bank that I covered.

And I started thinking about the Bank of N.T. Butterfield & Son (NTB 0.25%), ticker is NTB, and this is a bank that is an offshore bank. So I think their headquarters is maybe in Bermuda, but they operate in Bermuda and the Cayman Islands.

They're also in the Channel Islands, which are in the English Channel, so it's offshore banking approximate to Europe into the United Kingdom. So they target wealthy elites. They tend to use these offshore bank financial services providers, but they also do a lot of banking for businesses, too. So not just high net wealth people.

But what's really interesting to me about N.T. Butterfield is that over the past couple of years, they've prioritized building out their financial services. So this is a business that does a lot of high-touch banking as it is, so they built out more of their non-interest income. So that fees-based income that they can generate I think is really valuable.

They've built that a lot and it's going to continue to grow. Then we have the tailwind of rising interest rates that should be good because their cost of capital is pretty reasonable. As interest rates move higher, their loan book will generate more net interest income as well.

So those are two tailwinds that I think are really good, but it's really a stable business. It's growing but not at a super high rate, but the dividend yield is well over 4%. The dividend is really safe by their earnings and by their cash flows.

But if you're looking for that balance but also a company that can kick off cash, N.T. Butterfield & Son is really attractive to me. I think it really is. I'd tell you guys a stock that I really want to buy, but for various reasons, I can't buy it just yet, and one of those is that I'm about to talk about it.

Rachel Warren: [laughs]

Hall: Rachel, this is one I know you like a lot. It's Fiverr International (FVRR 0.12%), ticker FVRR.

Warren: Oh, yeah.

Hall: As of market close today, it's down 77.9% from its 52-week high. It's up 4.5% from its 52-week low. So it's basically at the all-time low. I mean, it's within five percent of the all-time low. It's a great business. Their take rate continues to grow.

You think about things like the gig economy continuing to be more important around the world for lots of people, whether it's a side hustle to make money in addition to your day job or you just want that flexibility to work for yourself and you make a living in a career using these kind of platforms, I think Fiverr is a real leader. It's still really small.

I think it's under-appreciated how small it is, considering how much its revenues have grown. A lot of those network effect benefits we talked about, Taiwan Semi (TSM -0.36%) being so large and having so much pricing power and having those cost advantages because the flip side of that on these social network-y, platform-y businesses like Fiverr, there's a big network effect benefit because there's lots of people that have the skills that companies are looking for on the platform.

It brings more companies to the platform to find those people. Because there's more company coming to the platform to find people, it brings more people with those skills to the platform. It's really powerful. It's a virtuous cycle that feeds itself. I think it's only going to get bigger. I love Fiverr, basically, 80% off of its all-time high, it's a great buy.

Warren: Oh, man, I agree. I've been watching the stock for so long now and I keep talking about it. Like you, I have been unable to yet make a purchase of the stock, but I think that the market is really misunderstanding this company right now in many ways, in which actually could be to the advantage of investors who are interested in buying this company on sale because the gig economy is not going anywhere, it's only going to grow.

One of the big trends we've been seeing with so many people quitting their jobs, it's not so they can go home and just sit, in many cases, it's people seeking different types of work and more flexible kind of work, and the gig economy offers a ton of opportunity for that.

I would say Fiverr is the premier platform offering that ability for buyers and sellers of these various freelance services to connect. I think the fact that its take rate has grown so considerably, has given it a real competitive advantage over a company like Upwork (UPWK -0.67%), for example, which I also like. So absolutely agree.