2024 Bull Market: Buy 2 Beaten-Down Growth Stocks Down 40% and 60%

The stock market has rebounded in 2024, although company share prices have varied. Share price alone doesn't tell you much about a business other than what investors value it at the moment. A stock may be down because the business is struggling, but there may be more. A company with rising share prices isn't necessarily a good buy.  

You must determine why the stock is moving, whether the company has a long-term competitive edge, its financials, and its growth story. You should also invest in companies you like, understand, and think fit your portfolio and ambitions. On that point, let's examine two equities that the market has drastically discounted yet may be good buys for long-term investors.  

1. Fiverr Fiverr (NYSE: FVRR) is down 40% from a year ago. Investors are unhappy with the company's growth rates, especially its pandemic-level growth, but there's more to discover. Fiverr isn't growing as fast as it did during the epidemic, when demand in buying and selling gig services soared, but that rate of growth wouldn't last forever.  

The gig economy remains a major part of the global labor market and is growing rapidly. Some estimates put the global gig economy at $873 billion by 2027. Fiverr has also grown revenue steadily and been profitable under GAAP. The growth of its transaction rate, AI innovations, and Promoted Gigs, where freelancers can pay to promote their services, have driven revenue growth and profitability.  

Fiverr earned $361 million in 2023, up 7%. In 2020, the company recorded $190 million in revenue, a 90% three-year growth. Fiverr turned a profit of $3.7 million in 2023 after losing $72 million in 2022. Fiverr had 4.1 million active purchasers in 2023, down 5% year-over-year. At the conclusion of the year, buyers spent $278, up 6% from 2022. Fiverr's take rate rose 160 basis points to 31.8% in 2023. AI investments increased platform GMV by 4% in 2023.  

Fiverr has added AI-centric services like experienced freelancers that design custom applications and chatbots for clients and AI matching tools that assist buyers find freelancers. Management also observed that complex services made roughly 32% of GMV last year, growing 29% from 2022.  

This is not a dying business narrative. AI investments, increased take rate, and rising profitability augur well for the company. The company, which has a price-to-sales (P/S) multiple of 2.3, may be worth buying on the downturn.  

2. Chewy Over the past year, Chewy (NYSE: CHWY) shares have fallen 60%. This appears to be due to investors' concerns about the pet care business and pet expenditures in a deteriorating global economy.  

Pet ownership and expenditure increased throughout the pandemic, yet this sector hasn't disappeared. Although spending has decreased and the number of people adopting new pets has slowed from pandemic levels, most people still consider pet purchases necessary.  

This gives enterprises in this field resiliency despite macro problems. That shows in Chewy's finances. Chewy's financials are strong, and the company is profitable despite a tiny reduction in active consumers.

Chewy's Autoship service generates most of its revenue. Autoship sales made for 76% of Chewy's net sales in 2023. Since one-time sales make up a small amount of Chewy's revenue, this suggests that customers continue with its platform. 2023 net sales per active customer were $555, up 12% from 2022.  

Consumables and healthcare accounted for 85% of Chewy's net sales last year. Net sales were $11 billion, up 10% year over year. Although net income fell from last year, the corporation nevertheless posted a $40 million GAAP profit and $296 million adjusted net income. Chewy also generates free cash. The company's free cash flow nearly tripled in 2023, surpassing $340 million. The shares have a P/S below 1. Consider buying this top pet stock on the downturn if you're looking for a reputable business.  

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