The year was off to a rocky start for many top stocks. I'm talking about companies with attributes that could equal future performance -- such as solid revenue or profit growth, market leadership, and customer loyalty.
It can be tempting to buy the best-performing stocks and avoid the struggling ones. But often, these down-on-their luck players represent tomorrow's winners. And the good news is that today, we can get them at a bargain price. Let's check out five struggling stocks to buy at a discount right now. They've each posted double-digit percentage losses since the start of the year.
Image source: Getty Images.
1. Moderna
It's difficult to imagine coronavirus vaccine giant Moderna (MRNA -1.22%) trading at a discount. After all, the company has delivered billions of dollars in revenue and profit over the past few quarters. And the biotech company says full-year 2021 vaccine revenue is likely to total $17.5 billion. Moderna also predicts product revenue for this year of about $18.5 billion -- and that number could move higher if the company signs more advance purchase agreements.
Yet, the stock is trading at less than six times forward earnings estimates. At the same time, Moderna's working on 40 pipeline programs. If even a small number make it to commercialization, Moderna and its investors could win big in the future.
2. Teladoc
Teladoc Health (TDOC -4.64%) is a leading provider of online medical visits. Business soared during the worst days of the pandemic. But even as doctors' offices returned to normal operations, Teladoc's growth continued. For example, third-quarter revenue jumped 81% and online medical visits increased 37%. So Teladoc is showing its success isn't tied to the pandemic. People continue to opt for its services.
Teladoc shares today are trading at about six times the company's sales. That's down from more than 24 a year ago. This is a steal considering Teladoc's growth prospects. The company predicts a compound annual growth rate for revenue of 25% to 30% through 2024. And its revenue target for the 2024 full year is more than $4 billion.
3. Nike
Nike (NKE 1.20%) has struggled with supply chain issues in recent months. That's because certain factories temporarily closed due to the pandemic. Otherwise, the company considers itself stronger than it was prior to the health crisis. The maker of athletic footwear and apparel grew its digital business and solidified its direct relationship with fans during the pandemic. And digital revenue continues to increase -- by 12% in the most recent quarter. Cash levels rose by more than $3 billion to $15.1 billion. And gross margin increased too. I also like the fact that free cash flow and return on invested capital are on the rise.
NKE Free Cash Flow data by YCharts
Nike trades at around 39 times forward earnings estimates. That's down from more than 48 just three months ago. This is a deal for a company with Nike's brand strength and financial strength.
Image source: Getty Images.
4. Starbucks
Starbucks (SBUX 0.29%) disappointed some investors as inflation, a difficult labor market, and higher costs weighed on earnings in the most recent report. In fact, the coffee shop giant revised its operating margin and earnings per share guidance lower for this year due to these factors. But these are temporary problems. And that means recent declines represent a buying opportunity for the long-term investor. The stock is trading at 29 times forward earnings estimates, down from 39 last July.
Here's why I'm bullish on Starbucks. The company says demand is increasing across products and throughout times of the day. U.S. active Starbucks Rewards program members climbed 21% to more than 26 million in the most recent quarter. And revenue advanced 19% to a record $8.1 billion. Coronavirus restrictions are hurting growth in China now -- but again, this is a temporary situation. Starbucks now has more than 5,500 stores in that market. This should be a solid growth driver over the long term.
5. Etsy
Etsy (ETSY -0.48%) soared during the first year of the pandemic. Shoppers flocked to the online seller of handcrafted items for face masks and other products. But recently, Etsy has fallen out of favor with some investors. The concern is that the online retailer can't repeat the triple-digit gross merchandise sales (GMS) and profit gains it posted during the worst of the pandemic.
That may be true. But Etsy still offers long-term investors a solid growth opportunity. For example, in the most recent quarterly report, GMS rose more than 17% to $3.1 billion. An important point: Habitual buyers increased 65%. These frequent buyers are Etsy's fastest-growing buyer segment. And recent acquisitions of a Brazilian online marketplace for handmade items and a fashion resale marketplace add new growth drivers to the mix. Today, Etsy trades for only 33 times forward earnings estimates -- down from more than 80 just a few months ago. That's a great bargain for the growth Etsy is likely to offer in the years to come.
