IIf investing in your future is one of your New Year’s resolutions, it might be a good idea to act now instead of waiting for the calendar to move to the next page. There are run down tech stocks with trades mostly performing above expectations.
We can thank the Federal Reserve and its recent warning to expect up to three interest rate hikes in 2022 for the poor performance. These stocks are down, in part because higher interest rates are bad news for stocks in general. High growth stocks get extra hard treatment as it is easier to start a new business with easy access to cheap capital.
These three high growth stocks have what it takes to weather rate hikes that may or may not happen in 2022. Here’s why they could outperform no matter what the Fed throws at us next year.
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SoFi Technologies (NASDAQ: SOFI) stocks have fallen about 34% in the past month. The latest drop brings volatile fintech stock down to around 41% from the all-time high it reached in January.
SoFi stock has taken a rough ride over the past month because its early investors pulled some of their money off the table. On November 15, the company announced to investors that 50 million shares, or roughly 6% of all existing SoFi shares, would be sold as part of a non-dilutive secondary offer. A few days later, Chamath Palihapitiya sold 15% of his stake in SoFi in order to free up capital for other companies.
This is a great opportunity to buy a leading fintech stock at a relative discount. The stock has fallen, but the business is stronger than ever. SoFi boasted of having 2.9 million members as of September 30, 2021, which is a 96% year-over-year gain.
Optionality is what makes this stock so attractive to long-term growth investors. SoFi got its start in 2011 helping debt-indebted college graduates refinance their student loans. It’s still a big part of the business, but new checking accounts and credit cards generated 79% of the growth in new members in the third quarter.
By the end of September, only about 13% of the company’s 2.9 million members had refinanced student loans with SoFi. It’s hard to imagine accelerating the growth of a bank whose membership is already growing so rapidly, but it could happen in 2022. A new banking charter is expected any day and could open many more doors to this already prosperous fintech.
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StoneCo (NASDAQ: STNE) stocks have fallen about 46% over the past month. Today, the stock is more than 82% below the all-time high it set this spring.
Shares of this Brazilian fintech were hit hard in response to a disappointing third quarter earnings report that beat expectations. Low underwriting and over-reliance on a flawed national registry system used to secure loans resulted in heavy losses.
StoneCo’s mission is to serve Brazilian entrepreneurs who are disadvantaged due to their size and geography. The recent underwriting errors aside, the success is incredible. Excluding temporary coronavoucher payments, the total volume of payments processed in the first nine months of 2021 is up 50.5% from the previous year period.
When adjusted for non-cash items, like giant write-downs for bad loans, the company reported 238 million reais ($ 41.9 million) of free cash flow during the third quarter. As the leading payment processor for small and medium-sized businesses in Brazil, StoneCo will most likely return to profitability in 2022. It won’t happen overnight, but patient investors will likely see stock prices return to their former glory. .
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Amyris (NASDAQ: AMRS) stocks were severely beaten following a disappointing third quarter earnings report. Since the beginning of November, the synthetic biology company has lost around 65% of its value.
Amyris produces high value ingredients for health and beauty products in giant fermentation tanks using proprietary microorganisms. Unfortunately, revenue from producing ingredients for other companies is very unpredictable and fell 30% year over year in the third quarter.
The company blamed supply chain issues and the sharp increase in expenses associated with new product launches to an operating loss that fell from $ 55 million in the second quarter to $ 87 million in the third quarter. Investors can expect Amyris’ bottom line to enter positive territory soon. A new ingredients plant in Brazil is expected to start production early next year, and a new consumer goods production plant in Reno, Nevada, is expected to come on stream by mid-2022.
Much like his peers in synthetic biology, Amyris breeds specialized microbes that transform simple raw materials like sugar cane into high-value ingredients. Instead of relying on fickle third-party demand, Amyris is rapidly becoming a leading health and beauty company with its own brands. Biossance is already a popular line of Amyris skin moisturizers, and more and more lines are growing rapidly.
During the third quarter, Amyris launched a new cosmetics brand called Rose, in partnership with Rosie Huntington-Whitely, and JVN Hair, in partnership with Jonathan Van Ness. Sales of mainstream brands in the week following Thanksgiving topped $ 10 million, more than double the company’s performance a year earlier.
With lower internal spending and growing demand for its sustainably sourced products, the company’s shares could deliver huge returns for patient investors in 2022 and beyond.
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Cory Renauer owns Amyris, SoFi Technologies, Inc. and Stoneco LTD. The Motley Fool owns and recommends SoFi Technologies, Inc. and Stoneco LTD. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.