How do you look for stocks to buy in September? My favorite method involves looking for shares that have been beaten down despite strong recent performances.
SoFi Technologies (SOFI -5.16%), Duolingo (DUOL 0.20%), and PubMatic (PUBM -0.43%) presented exceptional results in early August that the stock market has already forgotten about. Here's why scooping up shares of these beaten-down growth stocks now could do wonders for your portfolio over the long run.
This unique banking stock popped in early August in response to a stellar second-quarter report. SoFi Technologies shares briefly rallied after the company told investors it generated second-quarter revenue that soared 57% year over year to $362.5 million. Investors were also impressed with adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) that soared 81% year over year to reach $20.3 million.
Unfortunately, the market has already forgotten about SoFi's stellar performance. The stock has tumbled around 28% since its post-earnings bump in early August. This is surprising because there are at least a few good reasons to buy this banking stock.
SoFi started out refinancing student loans but it's grown into a full-service bank that also offers mortgages, credit cards, and retirement accounts. Unlike many fintech businesses, SoFi has a national bank charter. This allows it to use low-interest checking and savings account deposits to fuel its lending programs.
In addition to a consumer banking business that already boasts 4.3 million members, the company owns a technology platform called Galileo. For businesses that want to make it easier for customers to pay them, and disruptive fintech businesses like Robinhood, Galileo is the platform they rely on. SoFi's tech platform enabled a whopping 117 million accounts at the end of June, which was 48% more than a year earlier.
This is an education stock that jumped in early August after reporting second-quarter subscription bookings that rose 51% year over year to $74 million. Since delivering a glowing earnings report in early August, Duolingo's stock price has taken a 10% tumble.
Duolingo operates the highest-grossing education application on Apple's App Store and Alphabet's Google Play Store. The language-learning application isn't just popular, it's retaining old subscribers and converting new ones at a mind-blowing pace. There were 3.3 million paid subscribers at the end of June, 71% more than a year earlier.
Duolingo likes to tell anyone who will listen that subscriptions are up because the company relentlessly tests out new learning modules and marketing tactics. It's obviously working because 6.7% of monthly active users were paid subscribers at the end of June, compared to just 5% one year earlier.
North Americans brushing up on a foreign language before a planned visit to a new country are a fickle group. Duolingo's a good stock to buy now because it's increasingly popular among non-native English speakers eager to improve career opportunities for themselves and their children. Second-quarter sales of the Duolingo English proficiency test soared 66% year over year to $8 million.
This is a small but growing player in a rapidly growing digital advertising niche. Pubmatic operates a sell-side platform that gives creators a way to let advertisers bid on their available inventory in real time. Advertisers place around 1.4 trillion bids per day on Pubmatic's partners' inventory. In turn, Pubmatic helps its partners serve over 400 billion daily ad impressions.
The second quarter of 2022 was generally a tough one for digital advertising comparisons because the pandemic kept many of us at home during the previous year's period. Despite the challenge, Pubmatic reported second-quarter revenue that rose 27% year over year to $63 million.
Right now, Pubmatic estimates its share of the market for programmatic advertising at between 3% and 4% of a total that is rising quickly. PubMatic is investing in its future but the well-run business still generated net income that worked out to 12% of total revenue in the second quarter. With plenty of room to grow and a leading platform, buying this stock in September and holding it for the long run could do wonders for your portfolio.