3 stocks poised to rebound

IIt looks like we are in a market close to the early 2000s, which saw the tech sector crash after years of speculative frenzy amid geopolitical turbulence.

But for every Pets.com that went bankrupt, there were also long-term survivors such as Amazon.co.uk, which at one point fell 90% during this period. Yet those who held their noses and bought into this accident – and choose wisely – continued to make a fortune.

Amid today’s tech wreckage, here are three high-quality companies that are down from their peaks, but don’t deserve to be. Long-term investors should take note.


Payment company Marqueta (NASDAQ: MQ) was absolutely hammered, possibly due to the fact that this is a new public stock that has had its initial public offering (IPO) in June 2021 at $27 per share. Fast forward to today’s “risky” environment, and stocks are trading below $9, despite trading impressively by all accounts.

Marqeta operates a technology platform that allows card issuers to flexibly change card properties. This is highly relevant for a variety of applications, from grocery delivery start-ups, which give Marqeta-powered cards to drivers to fulfill specific orders, to larger banks, which offer digital cards powered by Marqueta for business. Even cryptocurrency companies use Marqeta to allow their customers to make crypto purchases.

In its recent fourth quarter earnings report, Marqeta far exceeded analysts’ expectations, with revenue up 76% on total payment volume (TPV) growth of 108%. The company even made a surprise profit on a adjusted EBITDA basis (earnings before interest, taxes, depreciation and amortization) as margins widened more than expected.

Marqeta also guided strong growth of 48% to 50% in the next quarter. Although EBITDA is expected to turn negative again, that’s because the company is aggressively expanding its technology and product investments, while looking into new geographies across Southeast Asia. Marqeta has just been certified in Singapore, Thailand and the Philippines, high-potential markets where digital banking is still under-exploited. Marqueta also just landed banking giant Citibank (NYSE:C) to tokenize Citi’s corporate card customers into mobile wallets – a big win for this young company.

According to management, Marqeta has only processed less than 1% of card transaction volume domestically let alone internationally, so its opportunity is vast. Now, with a market cap of just $5.5 billion with $1.7 billion in cash and no debt, Marqeta could be a multi-bagger.

Image source: Getty Images.


It was also a surprise to see Search Lam (NASDAQ: LRCX) sell so much this year, given that we are in a shortage of semiconductors. Lam is one of only three major global manufacturers of etching and deposition equipment needed to make more chips, so demand remains strong.

Still, macro fears have punished Lam, which is down 32% on the year after hitting all-time highs at the end of 2021. In fact, Lam has sold even more than other semi- drivers and trades among the cheapest front-end OEMs at just 15 times their profits.

This could be because supply chain issues seem to be hitting Lam quite hard. Management recorded a sequential decline in equipment sales last quarter and also guided modest revenue growth in the next quarter. Due to temporarily elevated logistics costs, earnings are actually expected to fall slightly mid-term, which investors didn’t like to see.

Yet all of these shortages are due to supply constraints, not end demand. Looking under the hood, and Lam’s deferred revenue, or prepayments for revenue to be recognized in the future, grew a lot, exploding 31.5% just in the prior quarter – not the prior year, the previous quarter.

This seems to prove that the final demand is there and will be satisfied once the supply constraints are resolved. For calendar year 2022, Lam’s management expects the semiconductor front-end equipment industry to grow to more than $100 billion, up from $80 billion last year. That equates to about 20% growth, if Lam can resolve his supply constraints.

Meanwhile, Lam’s very large service business grew strongly last quarter, up 30%, even as machine sales held up. Services revenue, which accounted for 35% of revenue last quarter and is tied to the installed base, is expected to continue growing strongly after two years of meteoric machine growth.

A stock that trades at 15 times earnings, but could very well grow 20% or more this year, is a bargain, which is why Lam Research looks like a rebound candidate.

loan club

It is also a remarkably undeserved downfall for loan club (NYSE:LC)who just can’t get the respect of fintech investors.

LendingClub has been trading as a profitless, multi-multiple fintech stock over the past few months, which means it’s been down a lot. However, following the acquisition of Radius Bank last year, LendingClub is now a digital neo-bank, and is therefore much more profitable than the typical high-growth fintech platform. In fact, at just 11 times this year’s earnings estimates, LendingClub is trading even cheaper than the major banks in the money hub. Bank of America, JPMorgan Chaseand Wells Fargo.

Chart showing that LendingClub's PE ratio beats that of some major banks.

LC PE report (before) given by Y-Charts

This is despite management forecasting revenue growth of around 40% and earnings growth of 650% this year – clearly much more exciting than a traditional large-cap, low-growth bank.

Although there is underwriting risk in personal loans, where LendingClub specializes, LendingClub has been a forerunner and has a data edge dating back to 2006. Additionally, LendingClub has transformed from a high-end lender performance in a primary lender, with borrowers with good FICO scores earning $100,000 or more in income. It is therefore much less risky than before.

LendingClub managed $12.5 billion in personal loans last quarter, held either on its investors’ books or on its own, while the U.S. revolving credit market tops $1 trillion. And LendingClub is just beginning its foray into auto loan refinancing, which is an even bigger $1.4 trillion market.

With less risk than expected and impressive growth ahead of it, LendingClub looks well oversold. It’s another strong candidate for a rebound in 2022.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a board member of The Motley Fool. Bank of America is an advertising partner of The Ascent, a Motley Fool company. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Wells Fargo is an advertising partner of The Ascent, a Motley Fool company. Citigroup is an advertising partner of The Ascent, a Motley Fool company. Billy Duberstein owns Amazon, Bank of America, JPMorgan Chase, Lam Research, LendingClub and Marqeta, Inc. and has the following options: short January 2022 $7.50 put on Marqeta, Inc., short January 2023 $320 put on Lam Research, short July 2022 $10 puts on LendingClub, shorts $10 in March 2022 on Marqeta, Inc., shorts $300 in March 2022 on Lam Research and shorts $60 in March 2022 on LendingClub. Its clients may hold shares in the companies mentioned. The Motley Fool owns and recommends Amazon and Lam Research. The Motley Fool recommends Marqeta, Inc. 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.

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