Do you have $10,000 you can afford to invest in stocks today? If yes, then there are a couple of growth stocks you should consider buying up right now. With many of them falling sharply in value over the past few months, there's an opportunity for investors to scoop up some deals.
Among the most promising investments that could take off later this year are Align Technology (ALGN -2.41%) and Southwest Airlines (LUV 0.76%). Both are strong businesses that could benefit from a surge in demand this year.
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1. Align Technology
Align Technology is coming off a strong year in 2021 where its net revenue came in at just under $4 billion, rising by 60% year-over-year. Its pre-tax profit of more than $1 billion was 167% higher than the $379 million it reported a year earlier. But despite the stellar performance, shares of the medical device company have fallen a staggering 42% this year, while the S&P 500 has declined by 12%.
The company, known for its popular Invisalign brand and its clear aligners, could become a lot more popular later this year as the economy continues to open back up. According to the American Dental Association, dentists are getting busier, with practices 83% full in February compared with 77% a month earlier. An increase in visits to the dentist's office could translate into more demand for aligners, which could help make 2022 another strong year for Align.
While investors right now are down on growth stocks and worried about inflation and geopolitical issues, that's not a reason to sell Align shares. The company is an incredible business, reporting cash from operating activities of $1.2 billion last year. Its margins are also strong, with Align's cost of revenue only chipping away 26% of revenue, leaving the remaining 74% of gross profit to cover overhead and other operating expenses.
There's plenty of promise in this healthcare stock. And many Wall Street analysts agree, setting price targets of more than $600 for the stock, which would suggest an upside of at least 58% from where it is right now.
2. Southwest Airlines
Oil prices have been on the rise in 2022, and that's typically bad news for airline stocks. Southwest's 7% decline year-to-date looks modest, but over the past 12 months it has crashed 34%; a lot of the bleeding already took place before the end of 2021 due to the emergence of the omicron COVID-19 variant.
But with its shares down around their 52-week lows, Southwest could be another attractive recovery stock to load up on. The peak travel season is right around the corner, and with COVID-19 restrictions loosening up, demand may be strong. Although there's risk that the Russian invasion of Ukraine could interrupt some travel plans abroad, that's also why Southwest, which predominantly focuses on domestic travel and nearby beach destinations, may present a better option for investors than other airline stocks.
The low-cost airline could deliver some promising results later this year. In its last earnings report for the period ended Dec. 31, sales for the quarter totaled $5.1 billion and rose an impressive 151% year-over-year. The company even squeaked out a $68 million profit, which was a big improvement from the $908 million loss it incurred in the prior-year period.
Buying the stock now before travel demand improves -- and while the focus remains on oil and gas stocks -- could be a great way to beat the bull rush that's likely to follow as conditions in the economy improve. While there is some risk that oil prices and inflation could derail Southwest's progress this year, it's one that may be worth taking given the stock's low valuation and all the pent-up travel demand that's been accumulating for the past two years.
