We all love a good bargain -- especially on a promising stock. Well, I've got something better: A good bargain on a stock that has already proven itself -- and also offers solid future prospects. Here, I'm thinking of companies that have been delivering significant revenue (and in some cases, profit) and expect to continue well into the future.
I've got three stocks that fit the bill right now. Their shares seemed unstoppable in the recent past. And then, they fell out of favor. At the same time, business prospects haven't changed. Let's take a closer look at these three fantastic stock market deals.
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1. Moderna
Moderna (MRNA 0.89%) is selling one of the world's most needed products right now: A coronavirus vaccine. The company has been generating billions of dollars in revenue and profit from this, its only commercialized product. And it expects revenue this year of at least $19 billion, according to advance purchase agreements for the vaccine so far.
The stock soared 434% in 2020 as Moderna brought this vaccine from drawing board to people's arms. But recent times haven't been so bright. The shares have dropped about 30% so far this year. Investors worry about post-pandemic revenue. As I've written before, vaccine revenue is likely to remain strong for a while -- and Moderna has many other candidates that may deliver down the road. The company recently launched pivotal phase 3 trials for two vaccine candidates: One for cytomegalovirus (CMV) and another for respiratory syncytial virus (RSV). Both have blockbuster potential.
Today, Moderna is trading for only about six times forward earnings estimates. That's compared to more than 16 about six months ago. This looks cheap considering Moderna's coronavirus vaccine business and the potential of other pipeline programs.
2. Teladoc
Teladoc Health (TDOC -0.07%) is a leader in the world of online medical visits. The company's shares surged in the early days of the pandemic as people avoided going out and opted for these online visits. The stock jumped 138% in 2020. Since, it has made its way progressively downward. This year, it's lost more than 30%.
At the same time, Teladoc's business performance hasn't changed. The company continues to grow revenue and medical visits. In the most recent quarter, they climbed 45% and 41%, respectively. Teladoc is increasing its number of members and the revenue per member -- two key metrics to help it attain a big goal. And this goal is revenue of more than $4 billion in 2024.
Teladoc is also making its way closer to profitability. Its net loss for the quarter and year narrowed. And Teladoc went from a cash-burn in 2020 to generating nearly $194 million in cash from operations last year.
Right now, Teladoc shares trade for about 4.6 times sales. This is around their lowest since 2016. Demand for online medical visits isn't slowing. And Teladoc's growth shows it is already capturing and keeping quite a bit of the audience. That makes shares at today's level a bargain for those who hold on for the long term.
3. Lululemon Athletica
Lululemon Athletica (LULU -0.03%), the maker of yoga-inspired clothing, showed the strength of its brand by continuing growth through the pandemic. While many retailers suffered, Lululemon connected with its fans online and digital sales soared.
The shares soared too -- more than 100% from the start of 2020 to their peak in October of last year. From that point, though, they've dropped more than 30%. But Lululemon's earnings have remained strong. For instance, in the third quarter, the company said net revenue rose 30% and gross profit increased 32%. And income from operations gained 26%.
But Lululemon disappointed earlier this year when it revised its fourth-quarter forecast lower. It expects revenue and earnings to be around the lower level of its forecast range. Here's why that doesn't worry me. The reason for the revision had to do with temporary factors. The omicron variant resulted in problems such as staffing and reduced operating hours in certain locations. Lululemon's growth so far and its future prospects mean it's worthwhile to weather this storm -- sunnier days should be ahead. The company continues to progress on its long-term growth plan.
Lululemon is trading at 33 times forward earnings estimates. In the past, it's traded at more than 80. So now looks like the ideal time for a long-term investor to get in on this dynamic retail stock.
