The stock market sell-off, which kicked off in November 2021, has gathered further momentum in 2022 amid the prospect of rising interest rates and geopolitical tensions, including those between Russia and Ukraine.
The world has seen many of these issues before. And while we should never discount the potential risks of investing, history suggests that treating the current situation as something more equivalent to short-term noise while taking a five-to-10-year outlook on the market is the best way to generate positive returns.
The following three stocks are selling at steep discounts to their all-time highs, and together they offer investors a broad cross-section of the digital economy. Buying them now could help to supercharge your portfolio over the long term.
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1. Amazon: Down 19.4% from 52-week highs
Amazon (AMZN 3.43%) is the largest e-commerce player in the world, and estimates suggest it accounts for up to half of all online sales in the U.S., but the company has evolved far beyond that one-dimensional business model.
It has expanded into cloud services, where it leads the industry through its Amazon Web Services (AWS) platform, and it's building an advertising segment. Not to mention its foray into electric vehicles through an ownership stake in Rivian Automotive.
AWS is the engine of Amazon's profitability, accounting for 74% of the company's overall operating income in 2021 despite making up just 13% of Amazon's $469 billion in total annual revenue. The cloud industry has incredibly strong prospects, including an estimated value of $482 billion in 2022 alone, as more of the economy shifts online.
But advertising could play an outsize role in Amazon's future. The company revealed the $31 billion segment as a stand-alone line item for the first time in its 2021 earnings report, and while it didn't share any insights as to its profitability, it's already larger than the advertising business of Alphabet's YouTube.
Amazon has a history of dominating almost every business it enters, so as it continues to branch out into new areas, the company is a great long-term bet.
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2. Sea Limited: Down 61% from 52-week highs
Sea Limited (SE 0.05%) operates in some of the hottest sectors in the digital economy. From gaming to e-commerce to payments, the Singapore-based company is growing at a rapid clip, and it is beginning to look like an extremely attractive investment on the back of its beaten-down stock price.
The company is due to report its 2021 full-year earnings results in March, and it has guided for $5.1 billion in revenue from its e-commerce segment, representing 135% year-over-year growth. It's driven by Sea Limited's Shopee app, which is prevalent across Asia and parts of Latin America, with a unique consumer-to-consumer and business-to-consumer hybrid model.
It's the largest contributor to the company's $9.5 billion in expected overall revenue for the year. And while Sea Limited isn't profitable yet, that top-line result would translate to a 108% compound annual growth rate since 2018, when it crossed $1 billion in yearly revenue for the first time.
But the future is even more exciting. The company's gaming segment is headed by its Free Fire battle royal mobile game, which has amassed over a billion downloads since its introduction in 2017. Mobile is now the largest segment of the entire gaming industry, representing 52% of global revenue, and Sea Limited is well-positioned to continue growing its footprint.
Analysts anticipate a big 2022 from the company, including $13.9 billion in total revenue for the year.
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3. Upstart: Down 62.7% from 52-week highs
Artificial intelligence (AI) is a big area of focus in the tech sector for its predictive capabilities and its potential to complete complex tasks in a fraction of the time that humans can. Upstart Holdings (UPST 2.76%) is leveraging the technology to shake up consumer lending, delivering better outcomes for both borrowers and banks.
It's targeting the decades-old FICO scoring system, which assesses borrowers based on a handful of factors like their repayment history and how much they already owe to determine their creditworthiness. Upstart instead uses AI to consider over 1,600 data points to deliver an instant decision 70% of the time -- a workload that could take a human assessor days (or even weeks) to process.
Upstart doesn't lend any money itself; it earns fees when its algorithm originates loans for banks, and the company says loans originated using its algorithm result in 75% fewer defaults compared to those assessed the traditional way.
While Upstart began in unsecured lending, it expanded into secured automotive loans in 2021. Its recent 2021 full-year report revealed that dealerships using its Upstart Auto Retail sales and loan origination platform skyrocketed by 269% year over year, to 410. Similarly, its 2021 revenue soared 264% to $849 million for the year.
But the real kicker is that the company is profitable, with $2.37 in 2021 earnings per share, which sets it apart from most hypergrowth tech stocks.
Upstart stock might be down significantly from its all-time high, but Wall Street bank CitiGroup says it could roar back to $350 per share, representing roughly 134% upside from the current price. Over the long term, that target might even be conservative.
