Buying a stock in the fall can be a great way to lock in a lower price for an investment, especially if the underlying business is still solid. This can increase the chances of you making a good profit from the stock. However, you may need to act quickly – the declines may not last long if the liquidation is not due to the company’s real difficulties.
While the S&P 500 increased by more than 2% last month, Teladoc Health (NYSE: TDOC), Barrick Gold (NYSE: GOLD), and Beyond meat (NASDAQ: BYND) all crashed 16% or more. And despite these sharp declines, these businesses are still in great shape and their actions can represent solid long-term investments.
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1. Teladoc
Teladoc is coming out of a difficult month; its shares plunged more than 16% in February. There was no glaring reason to divest the shares, as the company did not even release its latest earnings results until the end of the month. And when the earnings report was published on February 24, the numbers were not bad at all. For the period ended December 31, 2020, Teladoc’s fourth quarter revenue of $ 383.3 million was 145% higher than the prior year period. And the number of telehealth visits has exceeded 3 million, representing an increase of 139% year on year. These numbers are projected to increase even more in the next quarter, with revenue potentially reaching US $ 455 million and visits reaching a range of 2.9 million to 3.1 million.
The company is not yet profitable, but given the growth it is generating and the increasing popularity of telehealth (even with the increase in vaccinations across the country and the controlled pandemic), the health stock still seems ready for further gains in health. future. Teladoc only completed its merger with Livongo Health on October 30, 2020, and the long-term gains from this partnership alone could make this an attractive investment to keep for many years to come. As Teladoc reaches more patients – Livongo focuses on chronic care and diabetes control, in particular – it may just be scratching the surface in terms of its overall potential.
2. Barrick Gold
Barrick Gold is another example of a company that is doing well, but whose shares are not following suit. On February 18, the gold miner released its fourth quarter results. Sales of $ 3.3 billion in the period ended December 31, 2020, grew 13.7% over the same period last year. The company benefited from a higher realized price per pound of gold ($ 1,871 against $ 1,483), which boosted its free cash flow from $ 429 million a year ago to $ 1.1 billion in the last quarter.
The company has so much cash that it proposes to return part of the capital to the shareholders, in the amount of US $ 0.42 per share. This is in addition to its $ 0.09 quarterly dividend, which currently earns 1.6%. This is a business swimming in so much money that it can actually distribute such a large payment back to its investors. Although the price of gold has plummeted in recent months amid increased optimism about the pandemic that ended now that several vaccines are available, it is still above $ 1,700 an ounce and higher than a year ago. And if there is a major crash in the markets, it can fire quickly.
Barrick is a solid long-term investment, and bundling your shares can be a good way to hedge if markets are a little unstable. Like Teladoc, its shares also fell more than 16% last month.
3. Beyond meat
The worst drop in this list of underperforming stocks belongs to Beyond Meat. The manufacturer of products derived from vegetable meat saw its shares fall more than 18% in February. The company also released its quarterly results for the last three months of 2020. But its numbers were not as impressive when on February 25, Beyond reported that its net revenue of $ 101.9 million increased just 3.5% year on year, as felt the impact of COVID-19 and a drop in demand from its foodservice channel. The uncertainty surrounding the road ahead is one of the main reasons why the company is not providing any guidance for 2021.
But not everything is disgrace and sadness for the company – Beyond Meat recently announced an agreement with McDonalds. Beyond will be the “preferred supplier” of a new vegetable burger called McPlant, under a three-year deal. While many restaurants may be closed or restricted during COVID-19, fast-food chains like McDonald’s can easily serve customers via drive-thrus. So even if you are concerned about the long-term impact of the pandemic, there is still a way for Beyond to grow beyond the retail segment – which in the fourth quarter grew at a rate of 76.3% in the US and 139.2% internationally.
The best scenario for the stock would involve a full recovery of the economy this year, which is not so unlikely now that vaccines are on the way. Although it is coming out of a difficult quarter, Beyond can still generate some strong growth numbers for many years, and buying shares now can be a big move.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Questioning an investment thesis – even our own – helps all of us to think critically about investing and making decisions that help us become smarter, happier and wealthier.