The stock market had an incredible run in the past couple of years. Beginning in 2020 through the end of 2021, the S&P 500 delivered an impressive 52% return -- despite a global pandemic wreaking havoc on the economy.
The market has come under pressure in recent months, with the S&P 500 down nearly 10% since the new year began. Not only that, many stellar growth stocks have taken an even bigger hit and are trading at steep discounts. Five growth stocks you can add today that have had their prices slashed in recent months are PayPal Holdings (PYPL -1.14%), Marqeta (MQ -2.72%), Silvergate Capital (SI -20.00%), Upstart Holdings (UPST -1.25%), and Tradeweb Markets (TW -0.79%).
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1. PayPal: The digital payments giant 64% off its 52-week high
Digital payments company PayPal crushed it the last couple of years, with the pandemic shifting consumers toward more digital payment methods. The company put up an excellent year in 2021, which Chief Executive Officer Dan Schulman called "one of the strongest years in PayPal's history." The company surpassed $1 trillion in total payment volume (TPV) for the first time last year. Revenue growth was a solid 18% compared to 2020 and 43% compared to 2019.
The stock ticked down for a few reasons. For one, market conditions have not been favorable for growth stocks in recent months. Last year PayPal's price-to-earnings (P/E) ratio was around 75 midyear. There are also concerns about slower consumer spending trends. Retail sales were down 2.5% in December, while consumer spending was down 0.6%. This slowing growth led PayPal to lower revenue growth forecast to 15% to 17% -- down from its 18% projection just a few months earlier.
Investor concerns have dragged the stock down 64% since peaking in late July 2021. PayPal is a stellar digital payments play that still projects solid growth. The company looks like a great buy now, with a P/E ratio of 31.5 and a forward P/E ratio of 19 -- making PayPal cheaper than credit card companies Visa and Mastercard.
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2. Marqeta: The modern card issuing platform 69% below its 52-week high
Marqeta is the self-described "modern card issuing platform" because of its success in creating customizable spending cards for a wide variety of companies, including Block, DoorDash, Google, and Goldman Sachs. Marqeta's advantages include the speed of creating spending cards, the customizability of those cards, and fraud prevention built into those cards. The fintech is still in the early stages and hasn't generated a profit yet, which is why its stock has gotten beaten up.
Marqeta does have positives going for it, though. Through the first nine months of last year, its total processed volume was $78 billion, up 89% from the year before. This increased volume helped drive revenue growth of 79%. The company also recently added Mike Milotich as its chief financial officer. Milotich brings a decade of experience from Visa and leadership positions at American Express and PayPal before that.
Marqeta, down 69% from its 52-week high, now sports a market capitalization of $5.7 billion -- not much above the $4 billion valuation given during its last round of funding before going public in May 2020. Marqeta is a solid company for the long haul because it serves as the plumbing for payments, creating flexible solutions for the digital world. It has partnerships with Visa and Mastercard, which have a vested interest in seeing the company succeed.
3. Silvergate Capital: The cryptocurrency bank 47% below its 52-week high
Silvergate Capital is unlike other banks. The company's specialty is serving cryptocurrency customers, and it was one of the first to do so in 2013. The bank recognized an undeveloped market with a complex and uncertain regulatory environment and pivoted its entire business to serve these markets.
Its largest product right now is the Silvergate Exchange Network (SEN). This payment network helps customers transfer U.S. dollars between exchanges, like Coinbase Global and Binance. Along with building up its SEN product, it has also introduced SEN Leverage. This product lets institutional investors take loans out using Bitcoin as collateral, and it has generated a lot of interest. SEN Leverage has seen its usage explode, up 591% to $570 million in the fourth quarter.
Silvergate is down 47% from its 52-week high and has taken a hit with other growth stocks and cryptocurrencies. However, the company is a trusted provider in the cryptocurrency industry and is a stellar company with a bright future.
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4. Upstart Holdings: The AI consumer lender 63% below its 52-week high
Upstart Holdings is a fintech that, through its lending partners, makes personal loans using artificial intelligence (AI) to analyze 1,600 variables. By leveraging AI, Upstart can approve loans to more people who are not considered creditworthy by traditional credit score standards. It then connects these borrowers with partner banks, which hold the loans on their books. Upstart gets paid a referral fee and platform fees from its bank partners.
Upstart put up fantastic results in 2021, generating more cash than it did in its previous eight years of existence. In the fourth quarter, the company made $4 billion in loan transactions -- the highest ever for the company. Not only that, but it has begun to scale up its automotive lending platform, too.
The company is set up for success because of its AI model, which makes credit available to more people while reducing the lenders' risks. Upstart has been profitable every quarter since going public -- and now is an excellent time to add to your position.
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5. Tradeweb Markets: The trading platform for big players down 18% from its 52-week high
Tradeweb Markets is a trading platform used by big institutional investors across various markets. You can think of this as a platform like E*Trade or Robinhood Markets, but for big investors -- including hedge funds, insurance companies, and central banks. Tradeweb trades at a steep valuation, with a P/E ratio of 76. As a result, the stock has been caught up in the sell-off in growth stocks.
However, its valuation is high because its growth trajectory is stellar. From 2016 through 2021, Tradeweb has increased revenue by 15.7% annually. Its rapid growth comes as more customers turn to Tradeweb for its platform. Tradeweb has done really well listening to customers and constantly upgrading the platform to meet customers' needs.
As a result, its share of the U.S. Treasury market has grown from 7.5% in 2016 to 17.5% in 2021. It is also grabbing an increasing share of the corporate debt markets and expanding into exchange-traded funds (ETF), making block trading more efficient for those big firms.
The company could also benefit from volatility in the markets. Tradeweb Chief Executive Officer Lee Olesky said the company "welcome(s) additional volatility in the markets, especially that's come with the rate rises" as the platform would likely see higher volume and thus increasing revenue as volatility increases.
