3 tech stocks to buy now are down 50% or more

The 2022 bear market continues to wreak havoc on high-growth stocks. As the Federal Reserve prepares to continue hiking interest rates in an effort to control inflation, many stocks remain under pressure — especially as they spend more to fuel expansions that have yet to turn a profit or yield less. . Most of these stocks are down more than 50% from their all-time highs.

That doesn’t mean they should forget. In the year While market optimism for 2021 may have been out of control, there are many small businesses emerging now that are trading for a steep discount for their long-term potential. These three Fool.com contributors think Marketa (M.K -4.19%), Magnet (MGNI -6.24%)And Area (DOCS -4.89%) Such companies are.

Marketa’s sale is over.

Billy Duberstein (Marquette): Fintech card-issuing platform Marketa sold off immediately following its recent second-quarter earnings report. But for those with a long-term view, this could be a huge opportunity.

Marketa’s innovative platform Application Programming Interface has revolutionized modern card issuance. It allows a variety of companies – including traditional financial institutions; Buy now, pay later platforms; catering services; Money management companies; and cryptocurrency platforms — to issue cards in a more dynamic and real-time fashion than ever before.

There were two main reasons for the sell-off: First, while Marketa beat revenue and profit expectations in its most recent earnings call, management included some reductions in guidance, forecasting 37% growth, down from a 53% pace in the second. quarter

Second, founder and CEO Jason Gardner announced that he and the board are looking for a new CEO. Although Marketa has fallen sharply from its all-time high and $27 June 2021 initial public offering (IPO) price, Gardner and his team have performed well. The company has never missed revenue expectations in any quarter, and continues to rack up impressive customer wins, including Citigroup (C -4.38%) And it plays like the coming crypto Coinbase (cent -6.49%). So it threw investors into a frenzy to see him step down.

However, the sale seems to be an overreaction. As for third-quarter guidance, with financial conditions rapidly tightening and fintech clients’ stock prices declining, it’s not surprising to see some new clients slow down the pace of marketa-powered new startups. But you shouldn’t let a temporary setback cloud your view of long-term opportunity.

The company powered less than 1 percent of the $6 trillion in U.S. card-based transactions last year and less than $30 trillion globally. And the tough market conditions should only save the fledgling competitors, strengthening the market’s first-mover advantage.

Gardner is retiring but will remain CEO and Marketa’s largest shareholder. While it’s never good to see a founder step down, the payments and banking world could see the appointment of an industry veteran as a positive. Part of Marketa’s opportunity is to get large financial institutions to adopt the platform more widely, and it may be easier to convince these prospective customers if you have an incumbent finance veteran, rather than a founder of a Silicon Valley tech startup.

As high-growth software and payment processing companies go, it looks pretty cheap at 6.6 times sales, but it’s only 4 times sales with $1.7 billion in cash and securities and no debt. Don’t let the low price fool you: Marketa’s overall market opportunity with a smart card is huge.

The magnet can be rotated by these punches.

Anders Bylund (Magnet): It is fair to say so. Magnet It deserves a correction in 2022. It offers auction-style marketplaces to connect ad publishers with ad spots on digital content platforms, and the market has been tough this year.

Web browsers are tightening their privacy features, which can reduce the effectiveness of targeted advertising. Several giant media companies are introducing ad-supported video services. Netflix (NFLX -4.57%) And DisneyS (DIS -2.89%) Disney+, however, has chosen a rival to Mouse House Magnet Business desk (T.T.D -4.26%), and Netflix hasn’t even chosen a strictly established ad manager. Instead, the streaming giant is going with a. Microsoft (MSFT -3.86%) Solution.

As a result, ad revenue has been declining this year, and Magnet’s August second-quarter report fell far short of analysts’ estimates. So in the year I get why the stock is down more than 50% in 2022, down nearly 70% over the past 52 weeks.

At the same time, the stocks are now spring-loaded for a big rebound as digital advertisers turn on their order spigots again. They will be, and Magnite will continue to be the front runner in the buy-side advertising space.

The stock trades at a bargain-bin valuation of 9 times free cash flow and 2.1 times sales. Both of these readings are below the three-year averages of 111 and 6.6 respectively.

And since Magnet missed out on two major shelf contracts, I see no reason to panic. You can’t win them all, and the general presence of Disney+ and Netflix in the video-based ad market should create a lot of interest in that business idea.

So times are tough right now, but Magnite is still generating strong financial returns this fall. This looks like a great time to buy digital advertising stocks in general, and Magnet stock, which has fallen dramatically, in particular.

Proximity continues to grow, but the stock hasn’t generated much — yet

Nicolas Rossolillo (area) Shares of Doximity, a digital platform for medical professionals, are down 70% from their all-time high. In the year The stock is near its all-time low since its IPO in the summer of 2021. This comes despite the company beating its own financial outlook for the first quarter of fiscal 2023 (the three months ended June 30). What does it give?

While Doximity did indeed beat guidance ($90.6 million in revenue, down from $89.6 million in estimates a few months ago), it declined for the full fiscal year 2023. Revenue is now expected to be $424 million to $432 million. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) are expected to be $178 million to $186 million ($192 million to $196 million prior). Management blamed some budget tightening among pharmaceutical companies, one of its biggest revenue generators.

Doximity believes that this slowdown in the cost of its services will be temporary, as the digital platform will help users make better use of data and use their time more efficiently. Management is redoubling efforts to spread the word about the benefits of using the app among big pharma players.

Even with the slowdown, the revised guidance points to revenue growth of nearly 25% year-over-year and a healthy 43% adjusted EBITDA profit margin. Nothing to be too angry about.

In addition, Doxmity has always focused Profitable Development rather than universal expansion. This is paying a big price. First-quarter free cash flow rose 31 percent year-over-year to $42.6 million, and the company ended June with $776 million in cash and investments and zero debt. Considering that Doximity’s market cap sits at around $6.6 billion, 12 percent of this small healthcare software technology’s valuation is made up of liquidity on its balance sheet.

The stock trades for 43 times enterprise value to free cash flow — a premium price, but not unreasonable in my opinion given Doximity’s long-term potential. I am a ruler by these standards.