The stock market has collapsed in 2022. Heavy technology Nasdaq Composite The index is down 28% year-to-date, even after the largely positive trading week of July 20-24.
This drop has sent the shares of a few companies down to very attractive levels. apple (AAPL 2.45%)And the Kupang (CPNG 3.61%)And the Airbnb (ABNB 8.14%) They’ve all fallen to the point where stocks are begging to buy, and with these three stocks, investors should consider doing just that.
Apple may not excite many investors due to its $2.25 trillion market capitalization, especially given its saturation in the smartphone space. Some estimates put Apple’s share of the smartphone market for the first quarter of 2022 in North America at 51%, leaving little room for growth.
However, Apple’s potential has not been exploited. The wearables division has the opportunity to increase the value of its watches to consumers, which could significantly increase demand and revenue. One way Apple does this is by incorporating health features into the watch. The tech giant already has heart rate, blood oxygen, and fall monitors in its current watches, but it could offer non-invasive blood glucose and sleep tracking features in the future.
Given that Apple’s wearables division accounted for just 9% of total revenue in the second fiscal quarter, which ended March 26, 2022, there’s plenty of room to grow the segment if these features can improve the value and demand for its wearables.
That alone might be attractive, but you’re also buying one of the most powerful companies in history. The company generated $102 billion in net income and $106 billion in free cash flow over the subsequent 12 months. This impressive profitability has fueled continued leadership in the smartphone and PC industries while funding growth opportunities, and there is enough profit left to repurchase shares.
With 22.5 times earnings, Apple is trading at its lowest valuation since early 2020. At this price point, you might regret not buying this dominant giant.
Coupang is the number one e-commerce dog in South Korea, and with over 18.1 million active customers in the first quarter, nearly 35% of the South Korean population uses Coupang. This has led to huge e-commerce success: it generated more than $5.1 billion in revenue in the first quarter.
However, shares have fallen nearly 75% since Coupang’s IPO in early 2021, bringing the price-to-sales ratio down to 1.1 deals. This staggering decline is likely because the company is struggling for profitability and cash flow. In the first quarter, for example, Coupang reported a loss of $209.3 million and a free cash flow burn of $294 million. This is partly due to the low-margin business of first-party e-commerce sales. In the first quarter, the company’s gross margin was 20%, but it’s improving steadily.
However, this sale may have been overstated. Coupang has roughly $3.7 billion in cash on the balance sheet to fund these losses, and South Korea’s e-commerce space remains a big pond to fish in. Forecasts put the country’s total e-commerce spending in 2025 at $291 billion, leaving room for Coupang to thrive. In this multiplier, the company can be a great investment if it can maintain its dominance as the space expands.
Like Coupang, Airbnb trades at an interesting multiple of just 22 times free cash flow. Traditional hospitality shares like Marriott International And the Hilton Worldwide Trade relatively more than 32 times your free cash flow.
One might expect Airbnb to falter given this cheap valuation, but its financial performance is near an all-time high. In the first quarter of 2022, Airbnb announced reservations for 102 million record nights and experiences, which are up 59% year over year. This boosted the company’s cash flow: In the same period, Airbnb generated $1.2 billion in free cash flow and lost just $19 million.
One possible reason for the stock’s drop of more than 42% year-to-date is the fear of inflation and a possible recession affecting travel in the back half of 2022. According to a report by the American Travel Association, 59% of Americans said gas prices are affecting their Their vacation plans, however, are spending on travel exceeding 2019 levels for the first time since the start of the pandemic. So, while demand may drop a bit if gas prices continue to rise, travel spending is likely to remain very high this summer.
As one of the leading platforms for booking unique accommodations for your vacation, Airbnb is likely to benefit from this. It also has over 6 million active listings, so the chances of Airbnb dropping in offer are slim as well. With stocks trading so low today and the company having a great chance in the future – both in the short and long term – it is worth buying the shares for the long term.
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