Investing when stocks are down can be mentally and emotionally taxing. During a downturn, many investors simply decide to pack up and stop investing. However, investing during a correction — when stocks have fallen sharply and are now trading at a discount — can be the time to find the best long-term investments.
of Nasdaq Composite The index is down 18% year-to-date, while these three tech stocks are down between 10% and 64% over the same period. At these prices, here’s why you should consider buying. Free market (Melly 4.71%), year (year 3.92%)And Veeva Systems (VEEV 0.32%) while at a discount.
1. Free market
Mercado Libre has been called several times. Amazon (AMZN 2.07%) Latin America, but Mercado Libre has seen great success in a category Amazon lacks: fintech.
Yes, Mercado Libre has a thriving e-commerce platform that sold 275 million items in Q2 in Latin America, but what’s most exciting is its digital payments platform. Mercado Pago processed more than $30 billion in total payment volume in Q2, representing an 84% year-over-year increase. With over 38 million active users, Pago is becoming one of the top dogs in the fintech space in Latin America.
This high-growth segment, along with the company’s steady e-commerce success, helped total revenue grow 56 percent year-over-year to $2.6 billion in Q2, which is impressive for a company by this measure. However, there is more room for Mercado Libre to flourish. The company has 84 million active users across its entire ecosystem, while Latin America has more than 650 million citizens.
With this high potential to expand its user base and drive high engagement, MercadoLibre could be a big winner in the long run. At 5.9 times sales, you can also find Mercado Libre at a historically low valuation. Dominating a profitable, untapped market, you won’t want to miss out on this bargain growth stock with shares falling.
Roku is also trading at historically low valuations. The streaming platform trades at 3.7 times sales — its lowest price since 2017. However, that’s because the company is facing some difficult short-term headwinds.
Roku makes most of its revenue from advertising on its streaming platform. However, Roku is left in a tough spot as a recession looks more likely and businesses start to cut back on ad spending. In Q2, the company posted revenue growth of just 18 percent year-over-year to $764 million, and for Q3 2022 management expects only a 3 percent jump compared to last year.
The short-term may be rocky for Roku, but if it can emerge from this tough economic environment, the company could see a smooth sailing in the long run. The administration announced that as the economy recovers, advertisers will begin to recoup spending on platforms with a higher return on investment.
Considering Roku is a streaming platform with more than 63 million active accounts in North America and nearly 21 billion hours streamed in Q2, it could be a great value for TV ad advertisers. Therefore, Roku can see a sharp comeback.
If Roku can maintain its leadership and increase its presence in this economic environment, this top dog could see a healthy recovery, making shares a bargain right now.
3. Veva Systems
While making risky investments like Roku can certainly be profitable, you should balance it out with stable investments like Veva Systems.
Veva is a market-leading cloud provider for life sciences companies, helping pharmaceutical businesses from drug testing to marketing. The services are critical to the customers: once you move to a digital cloud platform like Veva, it becomes difficult to go back to manual processes to manage data and information, especially when it comes to compliance with regulatory regulations.
As a result, Veva generated more than $505 million in revenue in its first fiscal quarter (which ends April 30, 2022). That represents a 16 percent increase over last year — but what Veva lacks in growth, it makes up for in profitability. On a trailing-12-month basis, the company has a 21% net income margin and a 40% free cash flow margin.
Because Veva’s products are mission-critical and unlikely to see demand soften during an economic downturn, this company can thrive in the short term. Veva also has plenty of money to invest in its market leadership to take advantage of the $13 billion opportunity in front of it, making the long haul attractive as well. Veva looks like a smart stock to buy during this tech stock correction with this amazing combination of stability and potential.
John McKee, CEO of Whole Foods Market, a subsidiary of Amazon, is a member of the Motley Fool’s board of directors. Jamie Lucco has held positions at Amazon, Mercado Libre, Roku, and Veva Systems. He has spots in the Motley Fool and recommends Amazon, MercadoLibre, Roku and Veeva Systems. The Motley Fool has a disclosure policy.