The stock market has been very volatile the last few months. Amid geopolitical tensions, investors look for stocks that can safeguard their portfolios. Choosing fundamentally strong companies that have high growth prospects could provide fruitful returns over the long term. Diversifying one's portfolio with growth stocks from different sectors is always a safe option.
My choices right now are healthcare company Teladoc Health (TDOC 0.68%), visual-based social media company Pinterest (PINS +0.90%), and e-commerce platform Etsy (NASDAQ: ETSY).
Despite being excellent growth stocks, these three have been hammered down to more than 50% from their 52-week highs due to rising market volatility. If you have set aside some money for investing, these three could be your best bet now. Let's take a look at why these are great to buy and hold for the long term, despite their recent stock performance.
Image source: Getty Images.
1. Teladoc Health
Teladoc Health offers virtual healthcare services in the United States and internationally, including primary and specialty care along with chronic care.
Its stock price soared from $83 at the start of 2020 to around $300 in mid-2021, driven by a rise in demand for telehealth services. Investors' concerns that customers might no longer need telehealth services now that lockdowns have eased are taking a toll on Teladoc's stock price. However, its long-term prospects make it a solid buy now.
Teladoc's total revenue jumped 86% year over year to $2 billion in 2021. Visits on its platform surged 38% to 15.4 million last year. It also managed to reduce its net loss per share from $5.36 in 2020 to $2.73 in 2021. The company's cash flow from operations also came in at $193 million compared to -$53 million in 2020.
Teladoc is set to report its Q1 2022 results on April 27. According to its guidance, it expects total visits on the platform to be around 4.3 million to 4.5 million in the quarter, with revenue in the range of $565 million to $571 million. We will know more about its 2022 plans after the results.
Analysts' expectations are in line with company guidance. The Street expects total revenue to be $569 million, with a loss of $0.57 per share in the quarter. Analysts have high hopes for the stock, expecting it to jump 63% in the next 12 months.
NYSE: TDOC
Key Data Points
2. Pinterest
Another company that took advantage of the pandemic is the visual-based social media company Pinterest. People used this image-browsing platform during the lockdown. But now that lockdowns have eased, investors question if Pinterest can survive.
Its strong quarterly results can alleviate some investors' concerns. Even though Pinterest's number of global monthly active users (MAUs) declined in the fourth quarter, it managed to grow its revenue and profits. MAUs in the U.S. took a major hit of 12%, while globally the number was down 6% from the year-ago quarter. Its global average revenue per user (ARPU) surged both in the U.S. and internationally, seeing total growth of 36% year over year to $1.93 per user. Total revenue came in at $2.6 billion for the full year, representing 52% year-over-year growth.
The company spent around $780 million in research and development while investing $641 million in sales and marketing in 2021. This shows it is heavily investing in its technology to revive user engagement in 2022 and draw in more advertisers. It also launched 150 new features in 2021. Management specified in the earnings call that to enhance Pinners' experiences, the company is also introducing new formats like the short-form video. Pinterest's strength lies in the fact that it is a good advertising platform, offering choices in a range of categories, compared to other social media platforms.
We will know more about its plans for the future when it reports its first-quarter results on April 27. Analysts expect an 18% year-over-year growth in revenue to $573 million and a profit of $0.02 per share.
The company is also cheaply valued now, making it the right time to buy. Analysts see upsides of 76% for the stock in the next 12 months.
NYSE: PINS
Key Data Points
3. Etsy
This New York-based internet retail company acts as a two-sided online marketplace that brings buyers and sellers together globally. It operates in the U.S., U.K., Germany, Canada, Australia, France, and India.
The market is revaluing all stocks that got a boost amid the pandemic, which is why Etsy's stock is down 64% from its 52-week high of $307.75. But this is a profitable business. Gross merchandise sales (GMS) jumped 31.2% to $13.5 billion, bringing in revenue of $2.3 billion, a 35% year-over-year increase. It generated $493 million in net income for the year, a 41% increase over the prior year. In addition, 2021 was a strong year for the company. The marketplace acquired 10 million new buyers in Q4, according to management.
Etsy also increased its seller transaction fee from 5% to 6.5% which could help bring in more revenue. It plans to spend this incremental revenue earned from these fees on marketing and seller tools.
NYSE: ETSY
Key Data Points
Looking forward to 2022, Etsy expects GMS to be in the range of $3.2 billion to $3.4 billion, with revenue between $565 million to $590 million. It is set to release its Q1 2022 results on May 4.
In its upcoming results, the numbers to keep an eye on are its GMS and active buyers. I believe Etsy is an excellent buy now on the dip, but investors might want to wait to see if the company is maintaining the important metrics specified above and heading in the right direction.
