The stock market has been brutal this year. Among the 503 tickers in the S&P 500 index, a whopping 225 currently trade more than 20% below their yearly highs. The devastation would have been even worse if the Federal Reserve hadn't shown some signs of lighter interest rate policies in recent weeks.
But there's a silver lining to the inflation-tinged storm cloud over Wall Street. Some of the strongest businesses on the market were swept up in the market's discount mania, opening up tremendous buying windows for long-term investors.
So don your nerves of steel and follow me down. I'll show you some incredible long-term buys in today's distressed stock market. All of them are down 50% or more from all-time highs that were set in 2021 -- and they are poised to recover in grand style over the next couple of years.
Here are three reasons to add each of these top-notch stocks to your watch list of fresh investment candidates.
NASDAQ: ROKU
Key Data Points
Three reasons to consider Roku
- Media-streaming technology expert Roku (ROKU +3.86%) trades a hair-raising 89% below the highs of July 2021.
- Inflation and other macroeconomic challenges led to a slowdown in the digital advertising market this year, and Roku's management expects these difficult trends to persist through the end of the year. That's why Roku's stock price is so low in December.
- Roku's user list is 65.4 million names long, highly engaged in daily media viewing, and growing over time. So it is only a matter of time before the economy stabilizes again, allowing Roku's robust user base to power sharp recoveries in business growth and investor returns.
NYSE: DIS
Key Data Points
Three reasons to examine Walt Disney
- Shares of entertainment powerhouse Walt Disney (DIS +2.30%) are down 53% from record levels reached in March 2021.
- The House of Mouse is working under the legendary management skills of Bob Iger again, closing the controversial and disappointing Bob Chapek chapter in the company's centennial history. Iger is busy putting the house in order, prioritizing inspiring customer experiences more than Chapek's cost-cutting efforts.
- Iger's return is precisely the shot of creative adrenaline Disney needs right now. This is the way.
NASDAQ: DUOL
Key Data Points
Three reasons to ponder Duolingo
- Duolingo's (DUOL 2.81%) stock price has fallen 68% since peaking in September of 2021.
- The company provides language-learning services based on the research of co-founder and "genius grant" recipient Luis Von Ahn. In the long run, Von Ahn's educational approach should apply to fields beyond language learning, which will greatly expand Duolingo's target market.
- The company's bottom line is printed in red ink so far, but that's an accounting metric that rarely tells the whole story. Duolingo generates plenty of cash profits, converting 9.5% of its incoming revenues into free cash flows in the last four quarters. And even amid the macroeconomic headwinds in recent months, Duolingo's third-quarter sales rose by 51% year over year. Skyrocketing revenues times healthy cash profit equals a powerful financial platform for continued growth.
Disney, Roku, and Duolingo are three tremendous companies with decades of wealth-building growth ahead of them. They are also deeply discounted stocks right now, setting you up for stellar long-term profits if you dare to buy great companies while many investors are busy selling them.
