The S&P 500 has plunged 22% so far this year. Inflation fears have gripped the market. Excellent growth stocks are getting hammered. But that shouldn't motivate investors to abandon the stock market altogether. What if I told you this was in fact the right time to invest? Market downturns pull down the stock prices of strong companies without any faults of their own.
This is when investors should grab stocks of companies with great long-term prospects that are trading way below their highs. Let's take a look at why you shouldn't hesitate to buy these two monster stocks in the cannabis and robotic surgery space.
Image source: Getty Images.
1. Intuitive Surgical
The coronavirus pandemic might be weighing on Intuitive Surgical's (ISRG 0.98%) performance now, since its sole revenue is dependent on robotic surgeries. These are minimally evasive operations that are mostly elective medical procedures. Sales of disposable instruments and accessories used during these surgeries also add to Intuitive's top-line.
This dip is a temporary issue. When the pandemic wanes (which it will one day), elective procedures will be back on the table, driving Intuitive's revenue and profits. Robotic surgery is the future of surgery, and Intuitive is dominating this market with its state-of-the-art da Vinci systems. Its recent first-quarter results are proof of that trend.
A 19% surge in the number of procedures performed worldwide drove its revenue to $1.5 billion, up from $1.3 billion in the year-ago period. It also installed an additional 311 da Vinci surgical systems in the quarter.
Intuitive also trains surgeons to use its da Vinci systems, which comes at a price for hospitals. So it is doubtful hospitals will switch quickly to any new systems even if they are cheaper, thus safeguarding Intuitive's revenue for years to come.
For now, the company has a stable balance sheet with $8.4 billion in cash, cash equivalents, and investments. With analysts seeing a possible upside of 67% over the next 12 months, this healthcare stock is an excellent buy on the dip now.
2. Trulieve Cannabis
Florida-based Trulieve Cannabis (TCNNF 1.18%) operates 165 marijuana retail dispensaries in 11 states while dominating its home state with 114 stores.
It doesn't come as a surprise to me to see Wall Street analysts expecting a potential upside of 244% for Trulieve's stock over the next 12 months. With $1 billion in revenue over the trailing 12 months, Trulieve is not too far behind Curaleaf Holdings, which has been leading with the highest trailing 12-month revenue of $1.6 billion. And in Q1, Trulieve managed to outperform Curaleaf with $318 million in revenue -- $5 million more than its competitor's result.
Revenue also surged 64% year-over-year for Trulieve. However, it recorded a net loss of $32 million, compared to net income of $30 million in the year-ago quarter. Much of that is associated with its purchase of Harvest Health & Recreation last year. The company ended the quarter with $267 million in cash and cash equivalents.
Trulieve reiterated 2022 guidance and sees it as another year of solid growth. It expects revenue to land in the range of $1.3 billion to $1.4 billion, and adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) to be in the range of $450 million to $500 million. That compares to revenue of $938.4 million and adjusted EBITDA of $384.6 million last year.
Once the Harvest Health acquisition comes to fruition, Trulieve will probably see green in its bottom line. Cannabis stocks might not be the flavor of the month now in a distressed market, but they shouldn't be underestimated. Any positive movement toward cannabis reforms will boost Trulieve's stock price sky-high. Federal legalization or not, the U.S. cannabis market is poised to grow at a compound annual rate of 15% by 2030.
The same goes for Intuitive Surgical, which is just starting in the robotic surgery segment. According to BIS Research, the robotic surgery market could grow to be valued at $15 billion by 2029, and Intuitive holds around 70% of that market. This landscape is yet to be fully explored, which is why I believe Intuitive has thrilling prospects over the next decade.
Hovering around 50% below their 52-week highs, both growth stocks present excellent buying opportunities now.
