Investors looking to capitalize on the current market downturn and recession fears may want to consider two beaten-down growth stocks: SoFi Technologies and Doximity.
Runaway inflation, rising interest rates, and recessionary fears have led to a sharp decline in the Nasdaq Composite, which is down 28% from its all-time high. This has also led to two outstanding growth stocks, SoFi and Doximity, falling between 70% and 79% from their previous peaks.
Despite the drop, both companies have underlying businesses that are growing at a blazing pace and offer attractive long-term investment opportunities for savvy investors.
SoFi Technologies
SoFi Technologies is an all-digital bank that has grown rapidly but has fallen around 79% from its former peak after going public. The bank used to rely heavily on student loan refinancing, but this business quickly dried up due to COVID-related student loan moratorium and rapidly rising interest rates.
In early 2022, SoFi obtained a national banking charter that allows it to fund lending products with customer deposits, and it uses machine learning algorithms to determine individual credit risk. SoFi can fund new loans with customer deposits and has seen dramatic success, reporting personal loan originations that rose 50% over the same time frame that a competitor saw loan origination volume shrink by 62%.
SoFi owns its own technology platform that it also hires out to other businesses, enabling 131 million accounts at the end of 2022, 31% more than a year earlier. SoFi’s leading personal loan program and technology platform make it an attractive investment, especially given its current low valuation due to recession fears.
Investors who buy shares ahead of the next bull rally have a great chance to realize market-beating gains over the long run.
Doximity
Doximity runs a specialized social media platform for U.S. healthcare providers, with around 80% of all U.S. physicians signed up as members. Despite soaring following its stock market debut in 2021, the stock has tumbled around 70% from its former highwater mark due to a looming recession.
Unlike most social media businesses that rely on advertising, Doximity’s revenue rose 18% year over year in the fourth quarter of 2022. Doximity makes its platform stickier with productivity tools that doctors appreciate, such as telehealth tools that were used by 375,000 unique providers during the last three months of 2022.
Doximity’s valuation is steep at around 28 times management’s expectation for adjusted EBITDA during the fiscal year that ends March 31, 2024, but the company is growing fast enough to provide market-beating gains. Investors could significantly boost their portfolio’s performance by purchasing shares now, prior to the next potential bull rally that could propel them to new heights.
Investment Opportunity
Both SoFi and Doximity offer compelling long-term investment opportunities for investors looking to capitalize on the current market downturn and recessionary fears. While their stocks have taken a beating in the short term, their underlying businesses are growing rapidly and have the potential to provide market-beating gains over the long run.
Investors who believe in the growth potential of these companies may want to consider buying shares on the dip before the next bull rally takes hold. With recessionary fears weighing on the market, these stocks offer an attractive opportunity for savvy investors who are willing to take a long-term view.
