Investing in stock at a time when it's in the midst of a free fall can be incredibly dangerous. But, if you're a long-term investor, it can be a move that pays off and that could potentially lead to some significant returns later on. Two examples of stocks that are intriguing in their long-term prospects include cannabis producer Jushi Holdings (JUSHF 5.46%) and fintech company PayPal Holdings (PYPL +0.48%).
While the S&P 500 has been having a rough year, down more than 20% in 2022, these stocks have already lost more than half of their values. However, here's why they could offer plenty of upside for investors in the long run and may be worth adding to your portfolio today.
OTC: JUSHF
Key Data Points
1. Jushi Holdings
The cannabis industry is a tumultuous and confusing one to invest in. Even though marijuana is legal in some states for recreational use, it's still banned federally. And while some executives may have believed that federal legalization was imminent, the reality is that there's no certainty of when it might happen. But the potential is certainly there: Fortune Business Insights projects that the global marijuana industry will grow at a compound annual growth rate (CAGR) of more than 32% between now and the end of 2028 when it will be worth $198 billion. You'll be hard-pressed to find many more attractive growth industries in their early stages.
Jushi Holdings is a stock that is poised to benefit from that opportunity. The company is already growing at a solid pace, reporting 48.5% year-over-year revenue growth in its most recent quarter. Sales of $61.9 million for the first three months of 2022 grew as a result of the company's expansion, which included opening more stores and entering new markets. Despite having an unprofitable quarter, the company generated positive cash from its operating activities and reported an adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) profit of more than $1 million.
Shares of Jushi are down 55% this year as investors have become wary of risky, unprofitable businesses. But Jushi is not as risky as other pot stocks, many of which are burning through tons of cash and diluting their shareholders along the way. Jushi could be a promising buy as it has 18 locations in Pennsylvania, a state that hasn't yet legalized marijuana for recreational use. As a top cannabis company in that state for wholesale and medical use, Jushi could thrive if the recreational market opens up. And with nearby New York and New Jersey recently legalizing adult-use marijuana, it may not be too long before Pennsylvania follows suit.
Although there could still be some near-term pain with Jushi's stock, the future for the cannabis company looks bright.
2. PayPal
PayPal has performed even worse than Jushi, falling more than 60% year to date. But the sell-off could be overdone, as the business' fundamentals remain strong. On revenue of $25.8 billion over the trailing 12 months, the company netted a profit of $3.6 billion, for a net margin of 14%. Free cash flow over that time has come in at just under $5 billion. And the company has been paying down debt and repurchasing shares with all that solid cash flow.
NASDAQ: PYPL
Key Data Points
Although PayPal isn't in a market growing as fast as cannabis, analysts from Research and Markets still project a CAGR of over 20% from the global digital payments industry through 2030. PayPal's strong position in the industry, with over 420 million active accounts and more than $1.2 trillion in payment volumes on its platform last year, is going to ensure it remains a key player in this sector for a long time.
Shares of the fintech stock are trading at a forward price-to-earnings multiple of just under 19, which looks dirt cheap compared to Block and its multiple of 71.
