Growth stocks have been falling in popularity in 2022 as investors have been shifting to safer investments. And over the past year, as the excitement around meme stocks has waned, some otherwise solid stocks have seen significant declines in trading volumes.
Shares of Innovative Industrial Properties (IIPR -0.17%), Palantir Technologies (PLTR 3.73%), and GoPro (GPRO 1.17%) are much more thinly traded than they were a year ago. For investors, overlooking these stocks could be a big mistake as they could make for good buys in the long run.
IIPR 30-day average daily volume. Data by YCharts.
1. Innovative Industrial Properties
Innovative Industrial Properties (IIP for short) has quietly been falling in value over the past year through no fault of its own. The business continues to grow and pay a solid dividend that yields 3.5% right now (the S&P 500 average is around 1.3%). It's one of the safer ways to invest in the cannabis sector as IIP is a real estate investment trust (REIT) and not an actual producer.
The REIT's tenants include some of the top names in the industry, including Curaleaf Holdings, Trulieve Cannabis, and Cresco Labs. Grounded with some of the most-stable companies in the business, there isn't a whole lot of risk here. In 2021, IIP's revenue totaled $205 million, up 75% from the previous year. And as the industry grows and producers need more space, IIP can continue adding to its portfolio of assets through sale-and-leaseback agreements.
The 22% price decline IIP has been on in 2022 likely has more to do with general cautiousness surrounding growth stocks in general -- the ARK Innovation ETF, which is often synonymous with high-growth stocks, is down 27% year to date. Once pot stocks get back into the limelight (and that can happen if there's progress on anything to do with legalizing cannabis nationwide), IIP can quickly become a hot buy again. Between its high yield and net profit margins that are more than 50% of revenue, investors should be careful not to overlook this promising growth stock.
Image source: Getty Images.
2. Palantir
One of the more surprising stocks that investors seem to have been paying less attention to these days is tech stock Palantir, generally a pretty popular investment among retail investors. Its decline in volume over the past year isn't as steep as the other two stocks on this list, but there's definitely been a noticeable drop.
Although retail investors have been driving much of the hype around the company, this is not your average meme stock. Palantir's business isn't profitable today, but its sales continue to rise. Governments trust its counterterrorism technology. And by focusing on data analytics, there can be many industries that Palantir can serve. Whether it's uncovering money laundering, or assisting with clinical trials, or minimizing travel disruptions in aviation, there's significant growth potential for the business.
Palantir's management maintains its target of generating 30% annual revenue growth through 2025. In 2021, its top line rose by 41%, hitting more than $1.5 billion in revenue. If the company can come through and hit its targets (and at this point there's little reason to doubt that it will), Palantir can be a popular growth stock to own for the foreseeable future.
Its shares are down 25% in 2022. But investors shouldn't be down on this stock for long as consistently high-growth businesses are hard to come by, and it could be only a matter of time before Palantir recovers from this decline.
3. GoPro
Shares of GoPro are down 15% year to date, and this can be a good investment to hold if you're bullish on a return to normal in the economy this year.
Pent-up travel demand could lead to strong sales of GoPro's cameras this year. The small cameras -- designed to make it easier to record people's adventures whether they're on a bike or skydiving -- can be ideal accessories for risk-seeking travelers.
The company makes it easy to share content through its subscription service. For an annual fee of $59.99, it provides users with unlimited cloud backup and automatic uploads.
GoPro's business has been unprofitable for years, but in 2021 that changed when it reported net income of $371 million on revenue of $1.2 billion. And its free cash flow of $224 million was also more than double the $89 million it reported in the previous year.
The business has been generating better margins by focusing on subscriptions and selling more product through its website versus retail channels. In 2021, retail accounted for two-thirds of its revenue compared to more than 88% back in 2019. If GoPro can continue pushing more people to buy directly from its own site, that can improve its financials even further.
At a forward price-to-earnings multiple of just 9, GoPro is an incredibly cheap stock right now.
