The bear market has been tough for investors. But it's offering us one very significant element, or gift, that's positive: It can help us build future wealth. Today, many top stocks are trading at a discount. And this translates into buying opportunities.
Some of these players suffered after reporting earnings disappointments or slowdowns. In other cases, investors avoided the stocks because of a sensitivity to COVID-19 disruptions or sensitivity to the economy. Many of these companies still make excellent long-term bets. Let's check out five struggling stocks to buy right now.
1. Teladoc Health
Investors fled Teladoc Health (TDOC 4.55%) shares last year after the company reported two non-cash goodwill-impairment charges. These were linked to its purchase of Livongo at a time when valuations were soaring.
But it's important to keep in mind that Livongo should add value to the telemedicine giant over time. Livongo offers strengths in the management of chronic conditions -- a key growth area, considering 60% of American adults suffer from at least one.
In the most recent earnings report, Teladoc offered investors some good news. The company's net loss narrowed. Teladoc also continued to grow visits and revenue in the double digits. And U.S. members and revenue per member have increased from quarter to quarter over the past year. All of these elements are reasons to be optimistic about this growth stock.
As for price, Teladoc is trading at its lowest ever in relation to sales. This looks dirt cheap considering the above points and the telemedicine market's double-digit growth.
TDOC PS Ratio data by YCharts.
2. Etsy
Etsy (ETSY 7.18%) shares soared during the early stages of the pandemic when consumers favored online shopping. But investors stepped away from Etsy as physical stores returned to normal operations.
Here's why I'm still optimistic about Etsy, though. The e-commerce platform for handmade goods kept the gains it made in those early stages of the crisis. Etsy marketplace gross merchandise sales (GMS) in the most recent quarter totaled $2.6 billion. That's compared to $1 billion in the same quarter of 2019. Etsy's attracting more new buyers than in pre-coronavirus days too.
The company has also managed to grow in spite of headwinds. For example, if we exclude currency exchange impact, Etsy marketplace GMS rose in the quarter. All of this means Etsy's shoppers are sticking around, and that's key to future growth.
The stock today is trading for 29 times forward-earnings estimates. That's compared to more than 60 a little over a year ago -- a great price considering Etsy's ability to grow even during tough times.
NYSE: ETSY
Key Data Points
3. Target
Rising inflation is hurting Target (TGT 5.44%) in two ways: It weighs on the retailer's costs and on the wallets of its shoppers. Investors have been disappointed by the company's weakened operating margin in recent quarters.
But here's the good news: Shoppers continue to return to Target, favor its owned brands, and drive sales gains. The third quarter represented Target's 22nd straight quarter of comparable-sales growth. The company also saw market-share gains in all five of its merchandise categories.
Target's now taking the opportunity to make itself stronger, and this should pay off well into the future. The retailer has launched an effort to maximize efficiency. Target expects the plan to save $2 billion to $3 billion over the coming three years. At the same time, Target continues to invest in new stores and remodels to attract customers and boost order fulfillment.
Target shares are trading for 28 times forward-earnings estimates. That's down from more than 40 less than a year ago. This looks dirt cheap considering Target's track record and ability to grow over time.
NYSE: TGT
Key Data Points
4. Intuitive Surgical
Intuitive Surgical (ISRG 6.65%) suffered during certain stages of the pandemic. When hospitals postponed surgeries, that meant less revenue for the maker of surgical robots. Intuitive generates revenue from sales of the systems and the disposable accessories needed to perform each procedure.
The good news is these surgical postponements are temporary. And the worst of the economic slowdown may be behind us. It's important to remember Intuitive is the worldwide leader by far. It holds nearly 80% of the robotic surgery market, and that probably won't change. Surgical robots are million-dollar devices. So hospitals aren't likely to switch to another provider if they're happy with the current one.
I also like the fact that Intuitive generates revenue from sales of the robots and sales of instruments. That's because instrument sales offer it recurrent revenue. And sales of instruments and accessories actually surpass sales of the robots themselves.
Intuitive shares trade for 49 times forward-earnings estimates. That's compared to more than 72 a year ago. At the same time, revenue is on the rise. So Intuitive looks like a bargain buy right now.
5. Tesla
Tesla (TSLA +3.87%) shares sank 65% last year. But instead of being scared off, investors can see this as a buying opportunity. Here's why: In spite of headwinds like rising materials costs and unfavorable foreign exchange rates, Tesla has managed to grow.
NASDAQ: TSLA
Key Data Points
The company reported record revenue, operating profit, and free cash flow in Q3. Tesla also maintained an operating margin of more than 17%, which is among the highest in the auto industry. The electric vehicle (EV) giant also offered us a clue about the full year recently. Vehicle deliveries climbed 40% to more than 1.3 million last year, Tesla said.
All of this makes me optimistic about Tesla's ability to grow in an easier market environment and reach its goals over time. Tesla aims to reach 50% average annual growth in vehicle deliveries. Some investors worry about market share as rivals increase their EV offerings. But Tesla's leadership and brand strength should keep it in the driver's seat.
Tesla stock is trading at 21 times forward-earnings estimates. That's compared to more than 150 a year ago. Investors who buy at this price could win big on this EV giant over time.
