Buying and holding quality growth stocks can be a surefire way to significantly increase your portfolio's value over the years. And many of them are on sale right now, with the markets looking a bit fragile to start the year as theS&P 500is down 9% thus far in 2022.
Two growth stocks that show lots of promise and are down more than 60% from their 52-week highs are BioNTech SE (BNTX 0.20%) andMatterport(MTTR). Here's why they have been struggling, and why they may still be good buys.
Image source: Getty Images.
1. BioNTech
Healthcare company BioNTech finished last week at less than $157 per share -- down more than 66% from the $464 it peaked at last Aug. 10, which was just after the release of its second-quarter results. In that quarter (ended June 30), the company's revenue of 5.3 billion euros was mammoth in comparison to the 41.7 million euros it reported in the prior-year period.
The following quarter, the top line would jump even higher to just under 6.1 billion euros. The sharp increases in revenue have come by and large from the COVID-19 vaccine that it has developed with Pfizer.
However, with the economy's focus shifting in the latter part of last year toward more of a recovery and governments now looking at how to live with the virus, investors haven't been nearly as bullish on COVID-19 stocks like BioNTech anymore.
But that doesn't mean it is a bad buy. The pandemic still isn't over, and there could continue to be strong demand for vaccines. Plus, the company announced a new collaboration with Pfizer in January, this time on an mRNA-based shingles vaccine.
Today, BioNTech's stock trades at a forward price-to-earnings multiple of just over four. That's incredibly low in comparison to Pfizer and healthcare giantJohnson & Johnson, which trade at multiples of seven and 15, respectively. BioNTech could prove to be a bargain buy right now.
2. Matterport
Tech company Matterport is another example of a stock that's lost a lot of hype of late. It hit a peak price of $37.60 on Dec. 1 of last year. Now, it's trading at around one-fifth of that price, down more than 80% as it closed at just $6.83 last week, hitting a new all-time low after posting its latest earnings report.
The business centers around making "digital twins" and allowing users to easily create replicas of real-world places in the digital world, even on their smartphones. It has been a popular stock to own -- particularly if you're bullish on the metaverse. Matterport makes its money primarily from users accessing and subscribing to its spatial data platform, where they can create these images.
In its fourth-quarter earnings numbers from last week, Matterport's revenue of $27.1 million rose 15% year over year for the period ended Dec. 31. Its total number of subscribers also totaled 503,000 and rose 98% from a year ago. While that's decent growth on the subscriber side of things, investors may be looking for stronger revenue numbers. In 2022, the company expects sales to range between $125 million and $135 million. At the low end of that guidance, its revenue may only grow by 12.4%.
Not only is a lack of revenue growth a problem, but Matterport also isn't profitable and doesn't expect to be this year. That's likely a key reason its shares have been crashing sharply since November as investors have been pivoting toward safer stocks amid fears of rising interest rates and the effect they may have on bottom lines. But if you're betting on the success of the metaverse, there could be plentiful opportunities ahead for Matterport as the company may play a significant role in mapping out real estate in the digital world.
At a price-to-sales multiple of 16, Matterport's stock isn't cheap (the average holding in theTechnology Select Sector SPDR Fund trades at less than seven times revenue). However, in the long haul as the metaverse develops and Matterport's subscriptions continue to increase, that multiple will likely come down. And at a modest market cap of less than $2 billion, I can't help but wonder if Matterport might also be a potentially attractive acquisition target for bigger tech companies looking to be key players in the metaverse. Buying and holding the stock for the long term could be a great move for investors.
David Jagielski has no position in any of the stocks mentioned. The Motley Fool owns and recommends Matterport, Inc. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.
