Despite the fact that these two equities are down 72% and 96% in 2022, things ought to improve in the following year.
Many equities that were trading at double and, in some cases, triple digits at the start of the year have lost popularity.
Don’t allow the single-digit prices of Figs (FIGS 10.61%) and Carvana (CVNA -4.67%), two stocks that have fallen precipitously this year, to deter you from investing in them. Both businesses are revolutionizing their respective markets.
Figs
Figs and Carvana are down 72% and 96%, respectively, in 2022, which has scared away many of the early bulls. In order to secure tax advantages on the deficits for this year, investors who have large paper losses on the two stocks may sell their shares this month.
For investments made in 2023, the outlook is better. Let’s examine why it would be wise to think about purchasing these two cheap stocks that everyone is dumping right now.
Growth investors ought to always search for disruptors. If a company is revolutionizing a staid sector of the economy, there may be a chance to reap generational wealth.
Although it might seem like an unexpected disruptor, Figs has failed this year, much like Carvana. In 2022, sales of scrubs for medical professionals fell by 72%. I need a scalpel and sponge, please. We’re entering to make repairs.
For millennia, safety and utility have been the main selling points for scrubs. Figs showed up dressed to the nines. Its medical attire is fashionable, vibrant, and appealing.
Do you really believe that medical professionals who work long shifts to assist people in recovery don’t give a little thought to how they look?
Because of the company’s extravagant marketing campaigns for its online goods, Figs is arguably the only healthcare and lifestyle brand that people outside of the medical profession are aware of. And it’s effective.
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In the most recent quarter, revenue grew by 25%. Its 2.2 million active customers represent a 24% increase. The average order amount is $112 (up 10% over the previous year), so when they do arrive, they are not little items.
The same causes for growing costs that we’ve seen across the apparel industry have recently put pressure on margins, but Figs is still profitable.
It’s true that if the economy worsens further, its clients might put off purchases, but medical facilities must maintain staffing no matter the state of the economy.
Carvana
It was an era-defining growth spurt. Carvana saw triple-digit revenue growth for 23 straight quarters before the pandemic rendered us confined to our homes in 2020. The purchase of a vehicle, especially a secondhand one, wasn’t a high priority.
The situation has somehow gotten worse now that we are back behind the wheel, as rising gas prices and recessionary worries are preventing us from making significant auto purchases.
Carvana is a victim of its own success, which makes things worse. With its distinctive strategy for selling used cars, it swiftly spread across the nation, and those nine-story glass-enclosed auto vending machines aren’t cheap. Carrying $6.6 billion in debt is a practical and figurative liability when you’re losing money due to rising interest rates.
Although this isn’t exactly a bullish message at this stage, it’s important to note that the stock is down a staggering 96% in 2022. It should obviously be significantly lower; the year has been difficult.
After years of triple-digit top-line growth, it suffered a 3% year-over-year fall in revenue in its most recent quarter. Additionally, Carvana lowered its short-term projection.
It’s a challenging time. Used car costs have decreased since dealerships are once again stocked with fresh inventory, which caused them to rise during supply chain difficulties last year. We’ve gone from extreme to extreme, but now things ought to get better.
The current level of leverage in Carvana makes it an extremely risky investment, yet the ceiling is as high as an open sunroof. If the stock could merely return to its early-year level, it would be a 30-bagger.
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