When midnight strikes and we shift from 2023 to 2024, this year's cheap stocks won't automatically become expensive. So, you may be wondering why I say you should buy certain players hand over fist before the end of the year. That's because these stocks happen to be trading for very interesting prices right now, and their bright, long-term outlooks mean they could take off at any time.
That means it's a good idea to get in on these players as soon as possible, such as now, when you may be making some adjustments to your portfolio before the new year. So, which stocks should you scoop up? Three have missed out on this year's rally but have what it takes to win in the future. Let's check them out.
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1. Ginkgo Bioworks
Ginkgo Bioworks (DNA 4.09%) specializes in something that could help pharmaceutical and biotech companies discover the next blockbuster drug. This specialty assists companies in other industries too, from materials to food. Ginkgo engineers organisms that help in the design and production of these companies' products.
This organism specialist has signed partnerships with many pharma companies, including heavyweight Pfizer, and has seen an increase in active programs -- both in the pharmaceutical industry and overall. Total active programs climbed 36% in the most recent quarter year over year, and pharma programs increased 50%.
NYSE: DNA
Key Data Points
Ginkgo also has a biosecurity unit that aims to prevent the spread of pathogens, and Ginkgo is working to turn it into a recurrent revenue business. Meanwhile, the cell-engineering unit's revenue has advanced more than 50% in the most recent quarter. And the company has more than $1 billion in cash, which it says should support it along the path to profitability.
In the early chapters of Ginkgo's growth story and for less than $2 a share, it's worth taking a chance on this innovative player.
2. Moderna
Moderna's (MRNA 3.31%) COVID-19 vaccine boosted the stock earlier in the pandemic. But in recent times, the vaccine has done just the opposite. With vaccination demand on the decline as we head toward a post-pandemic world, investors have fled the stock. But there's reason for you to go against the crowd and pick up shares of this biotech stock.
Today, Moderna depends on the coronavirus vaccine for all of its product revenue, but that probably won't be the case for long. The company has many late-stage candidates in development and aims to launch as many as 15 new products in the coming five years. These products could generate as much as $30 billion in revenue a few years post-launch, Moderna predicts.
NASDAQ: MRNA
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Even if Moderna only reaches part of its product-release goal, we could be looking at significant revenue growth over time. Meanwhile, the coronavirus vaccine may not bring in as much in revenue as it did earlier in the pandemic, but it still could remain an important product, generating recurrent revenue each vaccination season.
All of this means Moderna looks like a steal today, trading at only 8.5 times forward-earnings estimates.
3. Etsy
Today's economic environment, weighing on the consumer's wallet, hasn't favored discretionary spending. And that's hurt Etsy's (ETSY 1.31%) earnings and share performance in recent times. Etsy's e-commerce platform connects sellers of handmade items with buyers.
But Etsy has managed the difficult times well, keeping all of the revenue growth it gained in the early stages of the pandemic when people favored shopping online. And Etsy has offered us some positive signs in its recent earnings reports. For example, in the third quarter, the company reported a profit and an increase in gross merchandise sales, and active customers reached a record high. Etsy also maintains a high level of cash, closing out the quarter with about $1.1 billion.
NYSE: ETSY
Key Data Points
Finally, one key element to like about Etsy is its capital-light business structure. This means that, to grow, Etsy doesn't need to make huge capital investments. This is a major advantage as it maximizes the company's ability to generate free cash flow: In the most recent quarter, Etsy transformed about 90% of adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) into free cash flow.
All of this makes Etsy a bargain at about 18 times forward-earnings estimates and a stock you'll want to buy hand over fist as you wrap up your 2023 investment year.
