If you have $50,000 sitting in your savings account, your nest egg has very likely been losing value to inflation -- which recently hit a 40-year high -- as the supply chain challenges and the Russian-Ukrainian war dragged on.
A common way to overcome inflation is to invest in stocks, but rising interest rates -- which are ironically used to tame inflation -- have been rattling the markets and punishing the frothier growth stocks.
Investors might feel like they're stuck between a rock and hard place, but there are still plenty of lucrative buying opportunities in this difficult market to help get you an inflation-beating return. Let's examine three stocks I personally own, and which I'd be willing to put another $50,000 in today: Meta Platforms (META -0.52%), MercadoLibre (MELI -1.79%), and Qualcomm (QCOM 1.41%).
Image source: Getty Images.
1. Meta Platforms
Meta Platforms, the tech giant formerly known as Facebook, has lost about 42.6% of its stock value over the past three months. Most of that decline occurred after the release of its fourth-quarter earnings report in early February, which featured a bottom-line miss, its first sequential loss of daily active users on its namesake app, and soft revenue guidance for the first quarter of 2022.
The bears believe Apple's privacy changes on iOS and competitive pressure from ByteDance's TikTok and other short video platforms will permanently throttle Meta's growth. They also believe its money-burning virtual reality and metaverse efforts will ultimately go nowhere.
But I believe those concerns are overblown. Meta's family of apps (Facebook, Messenger, Instagram, and WhatsApp) still serves 3.59 billion people -- nearly half of the world's population -- on a monthly basis. It shares a near-duopoly with Alphabet's Google in digital ads, it's firmly profitable, and it ended 2021 with $48 billion in cash, cash equivalents, and marketable securities.
Even after its latest setbacks, analysts still expect Meta's revenue to grow 12% in 2022 and 17% in 2023. They expect its earnings to dip 10% this year as it ramps up its metaverse and short video investments, followed by 17% growth in 2023. Those are solid growth rates for a stock that trades at a mere 16 times forward earnings and four times this year's sales.
Investors who ignore the near-term noise about Meta could be well rewarded if they accumulate some more shares at these bargain bin levels.
2. MercadoLibre
MercadoLibre, the largest e-commerce company in Latin America, lost half of its market value over the past six months as investors fretted over its decelerating growth in a post-lockdown market.
But MercadoLibre's business is still firing on all cylinders. Its unique active users rose 5% to 139.5 million in 2021, its gross merchandise volume (GMV) jumped 35% to $28.4 billion, and its total payment volume (TPV) (from its digital payments platform Mercado Pago) soared 55% to $77.4 billion. Its total revenue increased 78% to $7.07 billion, while all three of its top markets -- Brazil, Argentina, and Mexico -- generated robust growth.
Its gross margin dipped slightly in 2021, but its earnings before interest and taxes (EBIT) margin rose, even as it ramped up its marketing investments and expanded its lower-margin first-party marketplace.
Analysts expect MercadoLibre's revenue to rise 36% in 2022, then grow 35% in 2023. Based on those expectations, MercadoLibre's stock trades at just five times this year's sales, which makes it much cheaper than many other "hypergrowth" stocks with comparable revenue growth rates.
MercadoLibre's profitability will remain uneven as it expands its marketplace and logistics network, but it still has plenty of room to grow as income levels and e-commerce penetration rates climb across Latin America.
3. Qualcomm
Qualcomm is one of the world's largest suppliers of system on chips (SoCs) and baseband modems for mobile devices. Its massive portfolio of wireless patents also grants it a cut of each smartphone sold worldwide.
Qualcomm faces competition from cheaper chipmakers like MediaTek and first-party chips from OEMs like Apple and Huawei. However, most leading Android device makers -- including Samsung and Xiaomi -- still rely on Qualcomm's Snapdragon SoCs to power and connect their latest 5G devices.
Qualcomm has been gradually diversifying away from smartphones with SoCs for notebooks, data centers, Internet of Things (IoT) devices, and connected vehicles. That ongoing expansion makes it a solid long-term play on the 5G market, as well as future wireless networks.
Qualcomm's adjusted revenue rose 55% to $33.5 billion in 2021 as its adjusted earnings more than doubled. That growth was primarily driven by the market's surging demand for its 5G chipsets and modems. Analysts expect its revenue and earnings to grow another 27% and 39%, respectively, in 2022, as hardware makers scramble to accumulate more chips.
Those are impressive growth rates for a stock that trades at just 15 times forward earnings and four times this year's sales. Qualcomm also pays a decent forward yield of 1.8%, and it's reduced its outstanding share count by 24% over the past five years with generous buybacks. That attractive mix of growth, value, and shareholder-friendly measures makes Qualcomm a rock-solid stock for long-term investors.
