It's no secret that some of investors' favorite high-growth stocks have been beaten down recently. In this Fool Live video clip, recorded on Jan. 27, Fool.com contributors Travis Hoium, Rick Munarriz, Jose Najarro, and Matt Frankel take a look at a basket of four stocks that have fallen dramatically from the highs to try to find the best opportunity right now.
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Matt Frankel: Jeff Kim says from my portfolio Upstart (UPST -2.14%) is down 51%, Shopify (SHOP 1.20%) down 34%, Lemonade (LMND -1.51%) is down 69%, Square [Block] (SQ 0.85%) is down 54%. My portfolio needs a hug, mine does too. If you were to deploy cash into one stock, which would you pick? Any thoughts?
Travis Hoium: Rick, why don't you just start here?
Rick Munarriz: Sure. Of those four of Square, Shopify, Lemonade, and Upstart, or you said Square you said Shopify, Lemonade, and Upstart of those three?
Frankel: Yeah. Upstart, Shopify, Lemonade, and Square, or Block whatever.
Munarriz: Yeah, Block? Yes, of course. I'm a real fan of Block right now especially, it was $289 over the summer and now it's like $105 and $110 or something like that right now. Clearly, especially Upstart, and Lemonade, and Shopify, they're all basically fintech questions.
Obviously we're in a fintech show, this is a market that's been really slammed, but in all of these companies their fundamentals have only gotten better. Lemonade, maybe it wasn't that rosy story we thought two, three years ago that it was going to be revolutionizing the insurance industry, but it's clearly a larger company now. Upstart is a company that a year-ago we're like, oh, it's going so well but it only have I think two partner banks.
What will happen? The business has become more stable for all four of these companies, Shopify and Block, their latest quarters, they are expanding upmarket now. These are companies that used to be like, Shopify was for the guy selling basically skateboards from his garage or for the pet sitter on using Block Square or Cash App as a way to get paid and stuff like that. Their largest markets right now are the larger-size market. These are companies that are taking advantage of the slow and taking market from the larger players in this field. I think they're all dynamic but I think Block into a second degree Shopify are the two that would really excite me of those four right now.
Hoium: I'm just going to add to that with with Block. This is a company that I think it just has a ton of optionality going forward. I've been a customer of them through my small business. Once you get started with a product like Block or with like Square's, it just spreads across your business. You can basically run up to a medium-sized business, only using Square's products to do everything from payroll, to raise the capital, all different things. The Cash App I think is really where there's a lot of interesting innovations that could be happening over the next few years. Marrying those two, being able to go up to a store and just flash your Cash App QR code to pay for products and then they cut out Visa and Mastercard and all those intermediaries in between. There's something interesting happening there with cryptocurrency. I don't know exactly what it is the X, Y, Z 1, 2, 3, 4, 5, 6?
Munarriz: TBD and a bunch of numbers there.
Hoium: TBD. We don't know exactly but there's something happening with crypto being the underlying intermediary between buyer and seller. That could be really the interesting that I think Block is potentially a leader in that area. That's another optionality takeout. Again, you're there trying to take out Visa and Mastercard. Their 3% so they can expand their margins, and long term I think that's where the opportunity is.
That's a company that I really like. It's obviously been really hit hard recently that the buy now, pay later thing. I don't know what's going to happen with that. I don't know if you guys I know there was a couple of questions in here about that, but does that deal get nixed, do the Afterpay shareholders say no? I don't have a good answer for that but at its core, I like Block out of all these companies is the best.
Jose Najarro: Out of all these four companies I own two. I own Shopify and Square and those are the ones I would probably prefer. I think Travis mentioned Square does have or Block, I always forget. Now Block does have the nice optionality. It depends if you've like the optionality that it's going, maybe some people might not like, hey, that crypto move that is moving in the direction. But if it is, I think Square gives you or Block gives you a nice opportunity there.
Shopify. I'm a user of Shopify, the past few weeks I've actually been learning how to create a quick e-commerce store. Sometimes when I invest in companies, I don't mind putting a few $50 here and there just to try to test out their products to see what works, to see reviews. That's what I've been doing with Shopify lately. It's very straightforward. A single person can start a quick store, a nice what do they call it? Create on delivery drop shipping stuff styles store very easily. I think that's a great perk for Shopify.