The past few months have been an awful time to be a growth stock investor who regularly looks at their portfolio's performance. Prices are falling out of the sky so frequently that most of the retail investors who drove growth stocks through the roof last year have lost all their enthusiasm.
At times like these, shares of great businesses can fall just as easily as the lousy ones. Now, for the price of a couple of concert tickets, you can own pieces of three well-performing companies with very bright futures ahead of them.
Image source: Getty Images.
If you have just $300 ready to invest, and you don't need it to cover unforeseen emergencies or pay bills, you could buy shares of Roblox (RBLX 0.10%), Shockwave Medical (SWAV +0.00%), and Pubmatic (PUBM +0.20%). These quality businesses are performing extremely well even if their stock prices have fallen hard. Here's why they look like excellent places to put your extra cash right now.
Roblox
Shares of this metaverse stock jumped last fall, but the good times didn't last long. The stock has tumbled around 77% from the peak it reached last November.
If you're not already familiar, Roblox is a platform that allows its users to create and even monetize their own virtual experiences. Purchases of the in-game currency, Robux, shot higher during the heat of COVID-19-related lockdowns -- along with the stock price.
NYSE: RBLX
Key Data Points
Now that fewer people are stuck at home all day, though, revenue contracted slightly in the first quarter. Roblox had been growing so quickly that quarter-to-quarter revenue contraction from the fourth quarter of 2021 to the first quarter of 2022 caught investors off guard. The ensuing panic pushed the stock sharply lower, and now you can scoop it up for just 35 times trailing free cash flow.
Hours of engagement per user are down significantly from the fourth quarter of 2021, now that those users have more entertainment options. Investors should note that the number of daily active users engaging with the Roblox platform climbed from 49.5 million at the end of 2021 to 53.1 million at the end of this April. This company might not be growing at the same pace it was a year ago, but it's still growing fast enough to deliver market-beating gains over the long run.
Shockwave Medical
This healthcare stock was a big climber in 2021, but it's down around 35% from the high water mark it set last November. As its name implies, Shockwave Medical uses sonic pressure waves to break up calcified plaques so they don't jam up a patient's cardiovascular system.
NASDAQ: SWAV
Key Data Points
Surgeons feel comfortable with Shockwave catheters because they resemble standard angioplasty balloons. Clinical data that proves Shockwave's catheters do a better job than angioplasty is encouraging the medical community to adopt Shockwave's devices at a stunning pace. First-quarter sales jumped 194% year over year to $93.6 million.
Investors have a couple of reasons to expect further sales growth ahead. In the first quarter, Shockwave Medical launched a new device for clearing out peripheral artery blockages. Japanese regulators also approved the use of the company's coronary artery device. This is a bigger deal than it seems because patients with arterial blockages in Japan nearly always receive intravascular imaging that tells physicians if a Shockwave catheter is a better option than old-fashioned techniques. In the U.S., where Shockwave currently records 84% of total revenue, the rate of intravascular imaging is less than 10%.
As Shockwave becomes more established, tripling revenue year after year isn't a reasonable expectation. With the only intravascular calcified-plaque busting devices on the market, though, this stock has a very good chance to grow past its currently depressed valuation.
Pubmatic
Shares of this digital advertising specialist surged following its market debut in late 2020. Unfortunately, it's fallen around 68% from the peak it reached last spring. Now you can scoop up shares of Pubmatic for just 23 times free cash flow, which is a bargain price for a company growing by leaps and bounds. First-quarter revenue soared 25% year over year to $54.6 million. It was the seventh consecutive quarter with more than 20% year-over-year growth on the top line.
NASDAQ: PUBM
Key Data Points
If you're a publisher, Pubmatic can connect you to advertisers who bid in real time for your ad inventory. This company is a fraction of the size of its biggest competitors, Alphabet and Meta Platforms (Facebook), but it has an important advantage. Publishers and ad buyers aren't competing with Pubmatic for the attention of potential customers.
Three of the five largest connected television (CTV) manufacturers recently signed deals with Pubmatic, and the company is already monetizing inventory from 176 CTV publishers. With a strong lead in the growing market for ad-supported video on demand, Pubmatic has what it needs to deliver market-beating gains for years to come.
