These stocks are all down by 50% or more from their highs and could be great long-term investments.
There are literally hundreds, if not thousands, of stocks that have been beaten down in the recent market declines, but that doesn't mean they're all worth buying. But there are some compelling bargains for patient long-term investors willing to deal with a roller-coaster ride in the short term.
In no particular order, here are 10 of my highest-conviction stocks that have been beaten down by 50% or more from their highs:
1. Boston Omaha Corporation
Boston Omaha Corporation (BOC) is an up-and-coming conglomerate with subsidiary businesses in billboard advertising, insurance, and fiber broadband services. It also has an asset management business and holds minority investments in some promising companies.
Management uses an ultra-long-term value-creation strategy. With shares down by 50% from their 52-week high, now could be a smart time to take a look at this business that is often compared to an earlier-stage Berkshire Hathaway.
A true banking disruptor, SoFi (SOFI) has grown impressively and continues to do so. The company recently received approval for a bank charter of its own, which gives it a major competitive advantage over much of its fintech competition.
Its highly successful lending business gives it a big customer base to cross-sell other services in its ecosystem. SoFi is 76% below its 52-week high, but the business is firing on all cylinders.
3. Howard Hughes Corporation
Despite having its best year ever in 2021, Howard Hughes Corporation (HHC) trades for more than 50% below its pre-pandemic 2020 high. The short version is that Howard Hughes is a land developer that acquires large tracts of land and sells buildable lots to homebuilders.
With rising mortgage rates and soaring home prices, there's fear that land sales may grind to a halt in the near term. While this is certainly possible, Howard Hughes has a winning long-term value-creation model and is worth a closer look at these levels.
Like most high-growth technology stocks, Pinterest (PINS) has taken a hit in the recent downturn, with shares down by 77% over the past year. And to be fair, there are some legitimate concerns.
For one thing, Pinterest's active user base has declined by 9% over the past year as people are spending less time online as pandemic restrictions ease. However, the company has excellent momentum when it comes to monetizing its user base and plenty of room to grow revenue.
MercadoLibre (MELI) operates a leading e-commerce platform in several key Latin American markets and has a payments platform (Mercado Pago) that processes more than $100 billion in annualized volume. It also has a logistics platform, a lending platform, and several other promising growth areas. With shares down 65% over the past year, now is a great time to take a closer look.
If you had told me Disney (DIS) was set to fall by 50% a year ago, I wouldn't have believed you — but here we are. Not only are Disney's theme parks doing as well as ever in 2022, but Disney+ and the company's other streaming services also have added a massive recurring revenue stream that didn't exist before. With shares trading for less than they were five years ago, now looks like a great opportunity to add this powerhouse business to a long-term portfolio.
The most beaten-down stock on this list, Upstart (UPST), is a staggering 90% below its 52-week high. The company aims to democratize access to credit for deserving individuals.
To make a long story short, investors see a lot more risk in the model with inflation, rising rates, and expectations of a recession. However, if Upstart can continue to grow and prove that its credit-determination model is effective, this could be an absolute bargain for patient investors.
Shopify (SHOP) was one of the best-performing stocks in the market in recent years, but with shares 80% off their high, it's come back to Earth. Investors have been worrying about a slowdown in retail sales and tough times for small businesses ahead. However, with fewer than 15% of retail sales taking place through e-commerce, this is a leader in a market with an unstoppable long-term trend.
9. General Motors
General Motors (GM) is one of the most promising companies in the electric-vehicle (EV) and autonomous-vehicle space. It's already seen overwhelming demand for the Hummer and Silverado EVs and recently began the first paid autonomous rides in the U.S. through its majority-owned Cruise subsidiary. Shares are off 50% from the highs due to a combination of lingering supply chain issues and recession fears, but this business has tons of potential in the EV and autonomous spaces that the market seems to be overlooking.
Last but not least, PayPal (PYPL) is down by 76% over the past year, mainly due to slowing user growth and a pivot to maximizing the value of the current user base. The company was disappointed once it realized that a target of 750 million active users was a bit ambitious, but this powerhouse business is generating over $1 billion in free cash flow every quarter.
Patient long-term investors should take a closer look
To be perfectly clear, I have absolutely no idea what any of these stocks will do over the next few weeks or months. But for investors who measure their returns in decades, now looks like an incredibly attractive entry point in these great businesses. In fact, I own all 10 of these in my personal stock portfolio and have bought shares of all of them in the recent market downturn, with the intention of holding for the long haul.
Originally published on Fool.com