January was a reminder that stock market crashes and corrections are an integral part of the investment cycle. While rapid stock declines can sometimes be disconcerting, these periods of heightened volatility represent the price of entry to one of the world’s greatest long-term wealth creators.
Whether this latest correction has bottomed out or is still looking for a bottom, we have seen a number of large companies pull back significantly from their all-time highs. Investors eager to buy some time as allies may find that the following five discount stocks can make them extremely wealthy in retirement.
The past two months have been brutal for any business involved in financial technology (fintech). This includes the cloud-based lending platform Assets received (NASDAQ: UPST), whose shares quadrupled in value, then quickly lost 80%, all in the space of six months. However, this discount represents the perfect opportunity for long-term investors to pounce on a fintech innovator.
What makes Upstart so interesting is the verification process its platform uses to make quick loan approval/denial decisions for lenders. In particular, it relies on artificial intelligence (AI) and machine learning to speed up the loan verification process. This saves lenders money and is much more convenient for consumers looking for a loan.
To capitalize on this point, more than 90% of the company’s revenue comes from bank fees or service revenue, with no credit exposure, in the third quarter. This means that higher lending rates and recessions will be less likely to have a direct impact on Upstart’s growth potential and profitability, relative to other financial stocks.
But the real draw for Upstart may well be its opportunity in auto loan and mortgage loan originations. The company acquired Prodigy Software last year, giving it an AI-powered car loan service platform. The auto loan market is more than eight times the size of personal loans, where Upstart has focused most of its attention so far. Pushing towards larger loan origination pools could guarantee high double-digit growth for a long time.
Biotech Action Novavax (NASDAQ: NVAX) is another discounted growth stock with all the tools needed to make patient investors extremely wealthy in retirement.
Novavax is one of the few drug developers to have commercialized a coronavirus disease 2019 (COVID-19) vaccine globally through an emergency use authorization (EUA). The company’s vaccine, NVX-CoV2373, produced a vaccine efficacy (VE) of 89.7% in a large-scale study in the UK last March, and a similar VE of 90.4% in a US trial. /Mexican published in June. It is one of the few select vaccine developers to achieve the 90% VE barrier, which could make it one of the most popular COVID-19 vaccines in the world over time.
The mutability of the SARS-CoV-2 virus that causes COVID-19 is also long-term positive for Novavax. With COVID-19 likely becoming an endemic disease similar to influenza, it is entirely possible that variant-specific booster shots or inoculations will be required in the future. In other words, what initially looked like a big one-time revenue opportunity for drugmakers could be a recurring sales opportunity for COVID-19 vaccine developers.
The other thing to consider is how quickly Novavax developed a successful COVID-19 vaccine. This same technology can be used to develop combination vaccines or to target other airborne viruses. Novavax seems inexpensive given the potential scope of its drug development platform.
Another growth trend with several decades is the deployment of electric vehicles (EV). This is why the significant decline in Nio (NYSE: NIO) is an incredible opportunity for long-term investors.
Nio’s execution, even in the wake of semiconductor chip supply shortages, has been nothing short of phenomenal. Although deliveries fell slightly in January (9,652 electric vehicles), they exceeded 10,000 in November and December. The company expects the company to increase its annual production from around 120,000 to 130,000 EVs to 600,000 EVs by the end of the year. This growth is expected to come from its existing electric vehicles, as well as the introduction of three new vehicles.
In addition to rapidly increasing production, Nio is based in the world’s largest automotive market, China. Although China is not its only opportunity, it is a market where a significant share of the electric vehicle market is up for grabs.
Additionally, investors should not overlook Nio’s innovation. In addition to bringing new EVs to market, the company launched its Battery-as-a-Service (BaaS) program in the summer of 2020. Enrolling in BaaS allows EV buyers to charge, trade in, or upgrade upgrade their batteries in the future, and it lowers the initial purchase price of an EV. In return, Nio builds buyer loyalty to the brand and trades low-margin short-term sales for high-margin paid revenue generated from BaaS listings.
Nio looks like a company that will be extremely profitable within a few years.
Some marijuana stocks also have the ability to make long-term investors richer beyond their wildest retirement dreams. Following a decline of more than 60%, multi-state operator (MSO) Trulieve Cannabis (OTC: TCNNF) is ripe for picking.
The modus operandi for most MSOs is to plant their proverbial flags in as many legalized markets in the United States as possible. Trulieve didn’t go that route. Rather, he has focused most of his attention on the legal medical marijuana market in Florida. Currently, 112 of the company’s 160 operating dispensaries are located in the Sunshine State.
Why Florida? Besides the fact that the state generates some of the highest cannabis sales in the country, Trulieve was able to saturate the Sunshine State while keeping its marketing budget relatively low. The result was a push to recurring profitability that was years ahead of its competitors. The company has roughly half of the state’s dried cannabis flower and oil market share, meaning it will be well positioned if Florida legalizes weed for adult use in 2024.
But make no mistake, Trulieve has a plan to grow her business beyond Florida. In October, he completed the largest acquisition of American pots in history. The takeover of MSO Harvest Health & Recreation expanded its presence in 11 states and gave it a leadership position in Arizona (Harvest Health’s home market), which legalized weed for adult use in November 2020.
On a nominal basis, there is simply no more profitable pot stock than Trulieve Cannabis.
A fifth low-cost growth stock that can make you super rich in retirement is a tech-focused real estate company red fin (NASDAQ: RDFN). Shares of Redfin have fallen nearly three-quarters since hitting an all-time high.
Redfin’s big concern appears to be the Federal Reserve’s new hawkish stance. The prospect of higher interest rates almost certainly means that mortgage rates will rise. This could lead to a short-term knee-jerk reaction that reduces home buying and selling activity, hurting real estate business.
However, Redfin brings two key competitive advantages to the table, compared to traditional real estate companies. First of all, it saves its customers a lot of money. While most real estate companies charge listing fees/commissions between 2.5% and 3%, Redfin’s fee is 1% or 1.5%, depending on the number of previous deals with the company. company. Based on a median selling price of $358,000 for existing homes in December, according to the National Association of Realtors, sellers could save more than $7,100 by choosing Redfin over a traditional real estate company.
Redfin also offers a level of customization that most traditional real estate companies cannot match. It offers a variety of services, from helping with staging and improvements to maximize a home’s sale value, to its iBuying program, which buys homes with cash and removes haggling and the hassle associated with selling a home.
Look for Redfin’s share of US existing home sales to continue to grow over time.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end consulting service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.