Since the early 1950s, the benchmark S&P 500 it has endured 39 separate double-digit percentage declines. Investors may not enjoy the fact that stocks can go down, but it happens more often than you think.
It’s been an especially tough year for growth-focused companies Nasdaq Composite (^ IXIC 0.52%). The index that has been largely responsible for lifting the broader market to new heights has plunged as much as 38% from its all-time high in November 2021. That firmly entrenches the Nasdaq in a bear market.
On the plus side, history has repeatedly shown that buying the big market dips is a smart move. Innovative companies that offer industry-changing potential can make big profits when the next bull market inevitably hits.
What follows are three notable growth stocks that are down more than 90% from their respective all-time highs that may double your money by 2025.
the first great growth stocks that has the tools and intangibles necessary to generate triple-digit returns for investors over the next three years is the telemedicine giant Teladoc Health (TDOC -0.28%).
Since it peaked in February 2021, Teladoc shares have plunged 91%. Although valuation has certainly played a role, Teladoc has been hit mostly after overpaying for applied health signal company Livongo Health. The $18.5 billion deal has largely been cancelled, which is why Teladoc’s net loss to date is so ugly.
But there seems to be light at the end of the tunnel for what has been a nightmare for shareholders. Most of the one-time expenses related to the Livongo deal have been booked, which should clear the way for a much cleaner income statement from Teladoc going forward.
More importantly, Teladoc has macro and company-specific factors working in your favor. In terms of the former, we cannot control when we get sick or what ailments we may develop. There will always be a demand for virtual tour services, no matter how well or poorly the US economy or stock market is doing.
On a company-specific basis, Teladoc Health is completely changing the way care is delivered. Skeptics might refer to telemedicine as a fad helped by the COVID-19 pandemic. However, Teladoc increased sales by an average of 74% per year in the six years leading up to the pandemic.
Teladoc is helping the entire treatment chain by making physician access more convenient for patients, as well as allowing physicians to more closely monitor patients with chronic diseases. The end result should be better outcomes for patients, which means less out-of-pocket costs for insurance companies.
With losses expected to taper off in 2023, don’t be surprised if Teladoc Health rebounds in a big way, eventually doubling by 2025.
A second notable growth stock that has been beaten to a pulp by the Nasdaq bear market, but is on the brink of recovery, is biotechnological action novavax (NVAX -6.94%). The company’s shares have plunged 94% since peaking in February 2021.
Novavax was one of the few drugmakers to skyrocket due to the COVID-19 pandemic. Unfortunately for Novavax, its emergency use authorization submission was delayed multiple times in the US, and the company struggled to ramp up production of its vaccine. In short, it missed out on potentially billions of dollars in sales of primary series vaccines, especially in developed markets.
While Novavax’s woes cannot be overlooked, the company has clearly defined catalysts working in its favor. For starters, Novavax brings differentiation to the table. The company’s vaccine, NVX-CoV2373, is a protein-based vaccine designed to teach a person’s immune system how to fight COVID-19. People who have not wanted to take a mRNA-based vaccine now have an alternative with the Novavax vaccine.
Additionally, NVX-CoV2373 is one of only three COVID-19 vaccines for reach the elusive 90% vaccine efficacy level. This should make it a popular choice for initial vaccinations and future booster shots.
However, most exciting for Novavax is the realize that your drug development platform works. Having successfully developed a vaccine for COVID-19, the company can turn its attention to variant-specific COVID-19 vaccines or combination vaccines, such as influenza/COVID-19. Getting that first approved/authorized treatment for emergency use out of the way is a major hurdle overcome.
Finally, Novavax ended September with $1.28 billion in cash and cash equivalents. This should be more than enough to promote its clinical programs and provide a relatively solid floor below its current share price. With many opportunities ahead for Novavax, look to this biotech innovator to double your money by 2025.
A third notable growth stock that has been thrown away during the Nasdaq bear market, but has the potential to double your money by 2025, is cloud-based lending platform. upstart holdings (UPST) 1.02%). Upstart shares have plunged an almost unfathomable 95% in 13 months.
The obvious problem for Upstart is the hawkish monetary policy change from the Federal Reserve. With the Federal Reserve having no choice but to aggressively raise interest rates to reduce the prevailing rate of inflation, the demand for loans has plummeted. To add fuel to the fire, loan delinquencies and charge-offs are at greater risk of rising when the US economy weakens. Yet even with these headwinds, Upstart’s innovation has industry-disruptive potential.
For decades, loans have been scrutinized using heavy metrics like credit scores. Upstart is exposing this process by relying on artificial intelligence (AI) and machine learning. The company’s automated software is getting smarter and more efficient at processing and approving loans over time. During the third quarter, 75% of all the loans it processed were fully automated. That helps save time and money for its 83 member banks and credit unions.
Plus, Upstart’s loan screening process is helping to break down financial barriers for potential borrowers. Even though Upstart’s approvals have lower average credit scores than the traditional screening process, loan delinquency rates between Upstart’s AI-powered platform and the traditional process have been similar.
There’s also plenty of room for expansion. Through 2021, Upstart was predominantly focused on personal loans, a $146 billion loan origination market. But starting this year, he expanded his horizons to include auto loan originations and small business loans. Auto and small business loans combine nearly 10 times the origination potential of personal loans.
Although it could be a bumpy couple of months before interest rates and bond yields peak, Upstart has the technology to double its money by mid-decade.