Entering August, the bear market looks destined to continue, especially with inflation remaining high and the U.S. economy contracting for a second straight quarter. That likely means the bearishness in stocks isn't going away just yet. But if you're a long-term investor, that also means you have more time to find some deals out there.
Three stocks that look particularly appealing right now are Maravai LifeSciences Holdings (MRVI -1.92%), Meta Platforms (META -1.52%), and Mattel (MAT -0.83%). Here's why you should consider adding them to your portfolio today.
1. Maravai LifeSciences
Maravai helps companies with the development of vaccines and drugs. The company's CleanCap technology, which is at the heart of its business, is used to help stabilize and streamline the manufacturing of mRNA. Maravai notes that 85% of its customers are businesses that are involved in the development of therapeutics and vaccines.
The company has been performing incredibly well (its profit margins are normally 25% of revenue or better), but investors have likely been writing it off as nothing but a pandemic stock. And there is some truth to that, given that its top two customers are Pfizer and BioNTech, which together have developed the largely successful COVID-19 vaccine, Comirnaty.
Shares of Maravai have fallen 40% this year, which is steep in comparison to the S&P 500, which is down 13%. At a forward price-to-earnings multiple of 14, Maravai is trading lower than the average stock in the Health Care Select Sector SPDR Fund, which averages a multiple of 16. It's not a huge discount, but it does suggest that investors aren't willing to pay a premium for Maravai.
And with Pfizer and BioNTech recently securing an order for another 105 million doses of their vaccine for the U.S. government (with the potential for that to get to 300 million), there could still be strong demand for Maravai's CleanCap capping technology, which the vaccine utilizes -- capping helps protect mRNA from degradation.
In the meantime, Maravai is working on expanding its pipeline. It is collaborating on mRNA programs with many of the top companies (in terms of R&D spend) in the healthcare industry. Although the company has an uncertain future, its strong partnerships with key players in the industry shouldn't be overlooked and make this a safer stock than it looks to be at first glance.
2. Meta Platforms
Meta Platforms, the company behind social media site Facebook, surprised investors last month when it reported its first decline in quarterly sales in its history. Companies have been cutting back on their ad budgets this year and the social media company has felt the impact. Inflation and concerns of recession are forcing many companies to tighten up their financials and spend less.
However, this is a short-term trend that shouldn't distract investors from the bigger picture, which is that Meta is a money-making machine which still generated more than $12 billion in operating cash flow and a profit of $6.7 billion for the period ended June 30.
When advertisers begin spending again, Facebook will likely remain a key target for them. The social media company's monthly active users totaled 2.93 billion as of the end of June, which was a slight 1% increase year over year. That's still a huge chunk of the global population, which totals just under 8 billion people.
While Meta's business may have slowed down of late, I wouldn't count on that lasting for long. The tech stock is down more than 50% this year and could be a steal of a deal.
The only stock on this list that hasn't been crashing this year is toy maker Mattel. Its 8% gains look mighty impressive on the markets today. What I like about the business is the strong brands Mattel owns, including Hot Wheels and Barbie. Those are toys that have been popular for decades and that the company can continue expanding indefinitely.
Mattel is coming off a strong quarter with net sales of $1.2 billion for the period ended June 30, rising by 20% year over year. Gross billings (which include invoiced amounts) for Hot Wheels led the way with year-over-year growth of 26%. Barbie, surprisingly, generated growth of just 3% and was the company's slowest-growing segment. But even in an inflationary environment, Mattel's relatively low-priced toys are proving to be resilient and could make this a safe stock to be holding. And next year, a Barbie movie is coming out, which will likely help spark sales in that segment.
Overall, Mattel looks poised to continue doing well not only this year, but in 2023 and beyond. Buying the stock now may be a good move as it could only be a matter of time before it picks up steam.