Do you enjoy cheering for underdogs? If so, there are plenty of beaten-down growth stocks that could use your services. The iShares S&P 500 Growth ETF is down 11% this year and that's after making a significant recovery.
Right now, shares of UiPath (PATH 5.39%), Sofi Technologies (SOFI 3.71%), and Redfin (RDFN +0.00%) are down to the lowest prices investors have seen in at least a year. Here's how they could come roaring back.
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1. UiPath
This stock jumped out of the gates following its initial public offering (IPO) last April, but the past year has been a rough one. The stock has been beaten down 77% from its post-IPO peak.
UiPath is an up-and-coming player in the workplace automation business and its stock price isn't falling because of poor performance. Fourth-quarter results beat analyst expectations on the top and bottom lines.
NYSE: PATH
Key Data Points
A softer-than-expected outlook caused the bottom to fall out from under this stock. UiPath is an international company that does a lot of business in Europe. Both Ukraine and Russia have large tech sectors that abruptly went offline. Moreover, management thinks Russia's invasion of Ukraine will reverberate across the entire continent with more strength than U.S. investors may expect.
It might not happen overnight, but I expect this stock to recover because the recent beat down of UiPath stock appears overblown. Europe, the Middle East, and Africa combined were responsible for less than one-third of total revenue during the company's fiscal year which ended Jan. 31, 2022. Also, reliance on the EU is fading quickly, because the Americas account for a rapidly growing percentage of total revenue.
2. SoFi Technologies
Shares of this financial services company climbed after its stock market debut last June. Since then, it's tumbled around 65% and is currently down near an all-time low.
NASDAQ: SOFI
Key Data Points
It's been falling recently because the federal moratorium on student loan repayment has been extended through August 2022. To be on the safe side, SoFi updated its forward outlook under the assumption that the moratorium will continue through the end of 2022.
In its early days, student loan refinancing was all that SoFi did. The stock market may be behaving as if student loans are still a cornerstone of SoFi's business, but this isn't the case. Now, SoFi customers can open checking accounts and trade stocks in tax-advantaged retirement accounts. SoFi also offers credit cards, mortgages, and cryptocurrency trading.
In 2021, SoFi's membership roster swelled by 87%, and the number of products those members use more than doubled. A growing base of customers who are enamored with SoFi's diverse offerings gives this stock a great chance to recover and soar again.
3. Redfin
Shares of this real estate stock have tumbled around 77% over the past 12 months. The company's performance in the fourth quarter wasn't anything to complain about, but a disappointing forward outlook caused Redfin to plunge in February and it still hasn't recovered.
NASDAQ: RDFN
Key Data Points
Investors are upset with Redfin because its bottom line dipped into negative territory by $27 million and it will slide even further. The company expects to lose between $115 million and $122 million in 2022 because it's fueling expansion into new territories.
Redfin connects home sellers to thousands of brokers and lets them list homes for a modest 1% fee instead of the standard 2.5% you would pay a single broker. With so much savings to offer, it's no wonder its share of U.S. home sales has risen steadily from 0.67 in 2017, to 1.15% in the fourth quarter of 2021.
Redfin and the other stocks on this list have the means to recover some of their recent losses. That said, there aren't any guarantees that uncontrollable economic conditions won't push them down again. If you want to buy any of these stocks in hopes of a recovery, make sure you add them to a well-diversified portfolio.
