The broader market may still look overbought and feel overvalued. But a handful of stocks have lost some ground lately, even if they didn’t deserve it.
With that as a backdrop, here’s a roundup of three of them that are worth buying while you can still get them at a discount.
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It has been a difficult last few months for Tough(NYSE: CHWY) shareholders. Every time it looked like the stock had bottomed, it found a way to move even lower. In fact, after recently hitting another new 52-week low, shares of the online pet supply store and pharmacy are now priced at less than half of their June high.
To be clear, there is still no guarantee that this is a fund worth trading. However, this is more likely to be the case than not, given the recent performance of the underlying company. Revenue last quarter increased a little more than 8% year over year, extending a pace of growth that has been in place for years. And the company continues to grow its revenue after posting a small but sustained profit in 2022.
CHWY Revenue Data (Quarterly) by YCharts
However, the crux of the bullish argument for owning CHWY here is not what it has done, but rather: as has already done it.
Look, of its fiscal third-quarter total revenue of $3.1 billion, nearly 84% of them were sales made to customers signed up for a recurring subscription to pet food, medications, or even treats and toys. This is up from 80% the previous year and notably better than the comparison of just under 71% five years ago.
It matters simply because consumers who sign up for these types of subscriptions often have a “set it and forget it” mentality and, as such, are cheaper and easier to retain as paying customers. Chewy is normalizing this e-commerce business model and ultimately enjoying increasing profit margins.
Yeah, Uber Technologies(NYSE: UBER) Shares fell earlier this month after reporting fourth-quarter earnings that missed expectations, adding to a sell-off that has been underway since November. In total, UBER stock is down nearly 30% from that peak and is knocking on the door of a new 52-week low.
However, traders are largely misinterpreting the situation. Despite missing most fourth-quarter earnings per share estimates with its reported profit of just $0.71 per share, that bottom line was still up 27% year over year with a 22% improvement in total travel as well as a 20% year-over-year increase in revenue. The ride-sharing company is also looking for comparable revenue growth for the quarter currently underway and, perhaps more importantly, expects profit margins that were pressured last quarter to widen again, with earnings per share projected to improve 37% year over year. Meanwhile, analysts are calling for comparable growth for at least the next two years.
Image source: Getty Images.
This perspective, of course, only reflects the much broader dynamics to which Uber Technologies is connected. It’s about consumers’ growing disinterest in driving themselves or even owning a car. Blame it mainly on unaffordability. It is now cheaper to outsource personal transportation. There is no end in sight to this dynamic either.
Lastly, add Service now(NYSE: NOW) to your list of growth stocks to buy while they’re on sale. This is down almost 50% from its July peak.
It’s not too difficult to figure out why. ServiceNow is an artificial intelligence stock, and AI stocks have sold off on concerns about the real value of the technology compared to its cost.
However, this broad concern ignores important company-specific nuances, such as the fact that it is the generative AI and AI hardware companies that have the most to prove. ServiceNow offers workplace automation solutions that deliver clear, marketable value. These offerings include no-code app development, automated customer service, and digital security, just to name a few.
This practicality allows ServiceNow to make steady and ever-increasing profits. Last quarter, it turned nearly $3.6 billion in revenue into net income of just over $400 million, capping an annual bottom line of more than $1.7 billion on $13.3 billion in sales. Both were up more than 20% year over year. Analysts expect comparable growth this year and also next, despite the apparent slowdown that other AI companies appear to be facing.
Most investors seem to have lost sight of how well positioned this company is to continue to thrive for the foreseeable future, even if other names in the AI ​​business do not. However, the analyst community has not done so. In addition to most of them still rating NOW as a Strong Buy, their consensus price target remains strong at $187.69, up 78% from the current stock price. Once investors are reminded that the nature of ServiceNow’s business protects it from broader headwinds, don’t be surprised to see this stock begin to pull back toward that goal.
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James Brumley has no position in any of the stocks mentioned. The Motley Fool has posts on and recommends Chewy, ServiceNow, and Uber Technologies. The Motley Fool has a disclosure policy.
Do you have $1,000? Three stocks to buy now while they’re on sale. was originally published by The Motley Fool
