Down more than 70%, 3 growth stocks with the fortress balance scales to weather the storm of the bear market

Bear markets can indeed present great opportunities to buy growing stocks – provided you choose the right stocks. It’s down nearly 22% from its peak last year Nasdaq Composite The index is already in bearish territory, and investors may want to consider weak growth names that look strong over the long term and are worth a pounce.

With that in mind, a panel of Motley Fool shareholders has identified three growing stocks with massive balance sheets and falling more than 70% from their highs. Read on to find out why they think so Shopify (store -3.71%)And Pinterest (pins -3.21%)And Zoom video communication (ZM -2.92%) Sounds like smart purchases.

Image source: Getty Images.

E-commerce play fell from grace

Daniel Foelber (@Shopify): Selling Shopify stock was fast and brutal. Like other growth stocks, Shopify’s valuation was largely based on a thriving economy with low interest rates. In today’s climate of high inflation and the Federal Reserve’s decision to raise interest rates to offset inflation, business growth is likely to slow. Higher interest rates have little direct effect on Shopify because it is not dependent on debt. But the price hike is affecting Shopify customers, many of whom depend on funding to grow.

It’s down 75% from its all-time high about six months ago, and there’s reason to believe Shopify stock has a lot of upside from here. As mentioned, the company does not rely on debt to run its business and in fact has a net cash position.

Debt to Capital Shopping Scheme (Quarterly)

Market debt-to-equity data (Quarterly) by YCharts

Shopify’s debt-to-equity ratio of 7.6% indicates that debt is not an essential part of the capital structure. Shopify is also a positive free cash flow, which is a sign that their business is running efficiently. Shopify may not grow at the equivalent levels we saw in 2020. But it’s still a leader in ecommerce. Investors who feel they have missed out on the Shopify opportunity can now buy the stock at a much lower price. However, it’s important to remember that the short-term outlook for even big companies like Shopify is choppy and can get more volatile from here.

Cute and cute type of social media

James Bromley (Pinterest): I know $2.5 billion isn’t a lot of money for some companies. But when you only spend about $2.2 billion a year on operating expenses and you’re already making a profit anyway, that number can keep you afloat even if a rough year pushes you into the red.

The company in question: Pinterest. It is one of the smaller social media platforms, and arguably is pushing the boundaries of what can be considered a name for social media. But as consumers grow weary of the hassle and toxicity of once-favorite social networking sites, platforms that are more topic-focused and personalized will benefit. Pinterest is one such name.

We’re definitely seeing evidence of increased interest, too. Last year’s top line of $2.6 billion was more than a 50% increase in revenue for 2020, pushing the company out of the red and into the black market. Fostering this growth is a more concerted effort to monetize all of the traffic that Pinterest has generated since its launch in 2010. For example, it dramatically turned the heat up in the past year when it allowed content creators to monetize the traffic requested by Pinterest pages. .

The stock is down nearly 80% from its record highs in February of last year, and most of those losses likely reflect user losses it incurred in the meantime. Now that it’s been over a year since the attrition and revitalization efforts, though, I suspect user companies will start to look better from here.

Don’t count on this communications leader

Keith Noonan (Zoom Video Communications): At the height of social distancing and shelter-in-place conditions, Zoom was on top of the world. The company’s video conferencing services have become central to daily business operations and communications, and investors have been pitching stock quotes to dizzying levels.

With pandemic conditions now easing in most countries and macroeconomic risk factors affecting the market, Zoom stock has fallen sharply from its highs. The company’s stock price is now down about 83% from its peak in October 2020, and it would be a mistake to miss the stock at current levels.

While the catalyst for pandemic growth has subsided significantly, video conferencing services will continue to facilitate work-from-home and hybrid work settings. Zoom is also branching out into new service categories that will create new growth opportunities and strengthen businesses in general, and have the resources to make some big moves.

The company ended the reported fourth quarter with a cash position of approximately $1.06 billion against zero debt, and also held marketable securities of approximately $4.36 billion. This gives the company a great financial position to fund its own internal growth initiatives and carry out acquisitions capable of opening up new areas of growth. If bear market conditions drive business valuations lower, Zoom is in a good position to identify and act on worthy acquisition opportunities.

With a market capitalization of nearly $29 billion, and the company estimated at 6.4 times expected sales for this year and 27 times expected earnings for this year, Zoom’s stock looks attractive. The video conferencing leader has a big budget, and his growth story is likely just beginning despite what the current narrative surrounding the stock might suggest.

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