Buying a stock on the decline can be a great way to hold on to a lower price for an investment, especially if the underlying business is still solid. This can increase the chances that you will earn a good profit from the stock. However, you may need to act quickly – declines may not last long if the sale is not due to real struggles in the company.
While the S&P 500 increased by more than 2% last month, Teladoc Health (NYSE: TDOC), Barrick Gold (NYSE: GOLD), en Beyond Meat (NASDAQ: BYND) all crashed 16% or more. And despite the sharp declines, these businesses remain in good shape and their stocks can provide solid long-term investments.
Image Source: Getty Images.
1. Teladoc
Teladoc is facing a difficult month; its shares fell more than 16% in February. There was no screaming reason to dump the stock, as the company only announced its latest earnings by the end of the month. And when the earnings report appeared on February 24, the numbers were by no means bad. For the period ended December 31, 2020, Teladoc’s revenue in the fourth quarter increased by $ 383.3 million by 145% from the previous year. And the number of telecommunications visits was more than 3 million, an increase of 139% year-on-year. The numbers are forecast to rise higher next quarter, with revenue reaching $ 455 million and visits reaching a range of 2.9 million to 3.1 million.
The company is still not profitable, but given the growth it is generating and the growing popularity of telecom health (although vaccinations are increasing nationwide and the pandemic is being brought under control), the healthcare supply still looks for more profit. in the future. Teladoc only completed its merger with Livongo Health on October 30, 2020, and the long-term profit from the partnership alone could make it an attractive investment to hold on to for years to come. As Teladoc reaches more patients – Livongo focuses mainly on chronic care and diabetes management – it may just scratch the surface in terms of its overall potential.
2. Barrick Gold
Barrick Gold is another example of a company that is doing well, but whose stock does not follow suit. On February 18, the gold mining company announced its results in the fourth quarter. Sales of $ 3.3 billion for the period ended December 31, 2020, grew by 13.7% compared to the same period last year. The company benefited from a higher realized price per pound of gold ($ 1,871 versus $ 1,483), which increased its free cash flow from $ 429 million a year ago to $ 1.1 billion last quarter.
The company has so much cash that it proposes to return some capital to the shareholders, valued at $ 0.42 per share. This is in addition to its $ 0.09 quarterly dividend, which currently yields 1.6%. It is a business that is swimming in so much cash that it can actually afford to hand out such a large payout to its investors. Although the price of gold has fallen in recent months amid growing optimism for the pandemic that is ending now that several vaccines are available, it is still more than $ 1,700 per ounce and higher than a year ago. And if there is a major collapse in the markets, it could shoot back quickly.
Barrick is a solid long-term investment and the suspension of its shares could be a good way to hedge if the markets get a little shaky. Like Teladoc, its shares also fell more than 16% last month.
3. Beyond Meat
The worst decline on this list of underperforming stocks belongs to Beyond Meat. The manufacturer of plant meat products fell by more than 18% in February. The company also announced its quarterly results for the last three months of 2020. But its numbers were not nearly as impressive when on February 25 Beyond reported that its net revenue of $ 101.9 million rose by just 3.5% annually than it felt the impact of COVID-19 and ‘ a decrease in demand from the food service channel. The uncertainty surrounding the way forward is a major reason why the company is not giving any guidance for 2021.
But it’s not all bad and bad things for the company – Beyond Meat recently announced a deal McDonald’s. Beyond will be the ‘preferred provider’ of a new citizen named McPlant under a three-year deal. Although many eateries may be closed or restricted during COVID-19, fast food chains like McDonald’s can easily serve customers via drive-thrus. So, even if you are concerned about the long-term impact of the pandemic, there is still a way for Beyond to grow beyond just the retail segment – which was up 76.3% in the US in the fourth quarter and 139.2% grew internationally.
The best case scenario for the stock involves a complete recovery of the economy this year, which is not so unlikely now that vaccines are on the way. Although it is a difficult quarter, Beyond could still produce strong growth figures for years to come, and it could be a good move to buy the stock now.
This article represents the opinion of the author, who may not be in agreement with the ‘official’ recommendation position of a Motley Fool premium advisory service. We are furry! Questioning an investment thesis – even one of our own – helps us all to think critically about investing and to make decisions that help us become smarter, happier and richer.