Over the past year, some of the market’s biggest growth stocks have plummeted. Investors fled from these players due to a general preference for safety. All three major indices slipped into bear territory and rising inflation weighed on households and businesses.
Unfortunately, these economic problems will not go away overnight. But the good news is they won’t be around forever either. This year, some of the stocks hit hardest by the market weakness could stage a comeback. Others have already shown signs of recovery. So if you’re looking for growth in 2023, here’s $5,000 to invest.
A stock that has what it takes to recover
A good way to get the most out of your investment is to diversify. So it’s a smart idea to spread your $5,000 across a few different potential growth areas:
- Stocks that plummeted last year but have the potential to bounce back
- Stocks that have fallen but are recovering
- Stocks that have emerged from the bear market and may continue to rise
I’ll give examples of each, but you don’t have to stick to just those. You will find many other good candidates that fit into these categories.
Let’s start with the first: a stock that has been bottomed but is ripe for gains. An example is Etsy (ETSY 0.86%). The e-commerce platform connects the sellers and buyers of handmade goods. In the early days of the pandemic, Etsy stock soared as people preferred to stay home to shop. Ever since buyers returned to stores, Etsy has faced more competition.
But here’s a big reason to be optimistic about this company: Etsy has kept the profits it made during the pandemic. The marketplace’s gross merchandise sales were $2.6 billion last quarter, compared to $1 billion in the same quarter of 2019. And new buyer growth is 50% faster than before the pandemic.
It’s also important to remember that Etsy isn’t under as much pressure as other retailers from rising inflation and supply chain issues. That’s because Etsy itself isn’t the seller — and its sellers are small businesses.
Etsy stock fell 45% last year. And they’re trading at 28 times forward earnings estimates, which looks cheap given Etsy’s earnings performance during tough times.
A stock that has fallen but is recovering
Now let’s move on to a stock that has fallen but has started to recover. modern (MRNA 3.94%) lost 29% over the past year. But over the past three months, it’s up 38%. Investors initially balked because of concerns about sales of the biotech’s coronavirus vaccine in a post-pandemic world.
Shares rallied as Moderna offered clues about the future vaccine market and investors considered the progress of other programs in its pipeline.
It’s hard to rate Moderna by traditional standards right now. That’s because the vaccine market is in transition mode as the pandemic approaches its later stages. But the vaccine will likely continue to generate blockbuster revenue — and the company could launch two new products in the next few years. That makes the stock a great buy at today’s levels.
A stock that beats the bear market
Finally, let’s look at a stock that has beaten the bear market and has what it takes to keep going higher: Apex Pharma (VRTX 0.81%). Vertex is up 31% over the past year as investors bet on its ability to bring its latest product candidate — one for blood disorders — to market. The company has submitted the nominee to regulators and decisions may be made in the coming months. The data was positive, so there’s reason to be optimistic. Any good news could push the stock further. And Vertex’s multi-billion-dollar cystic fibrosis portfolio is another reason to like this company.
With $5,000 – or even less – you could buy shares in any of these players. And as mentioned above, there are many other stocks that offer similar opportunities.
The stocks I’ve suggested are ripe for a rebound — or, in some cases, more gains — this year. But of course it is impossible to guarantee a raise. So how can you invest with confidence? Be sure to invest at least five years, and in many cases the picture should be rosy.
If these stocks deliver great returns in 2023, that’s wonderful. And if not, they might still put a smile on your face in the long run.
Adria Cimino has positions at Vertex Pharmaceuticals. The Motley Fool has positions in and recommends Etsy and Vertex Pharmaceuticals. The Motley Fool recommends Moderna. The Motley Fool has a disclosure policy.