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With many growth stocks hit by a final sell-off in the final weeks of 2021, deals now abound. Tech companies are doing more than well in the second year of the pandemic and are poised to continue expanding their reach into the global economy in the new year and beyond.
For example, three Fool.com contributors made stock purchases as the new year approached. The shopping list? Marvell Technology Group (NASDAQ: MRVL), Global Coinbase (NASDAQ: COIN), and Loan Club (NYSE: LC).
Image source: Getty Images.
A chip business transforms for the next generation of computing needs
Nicolas rossolillo (Marvell Technology Group): Not to be confused with Disney‘s (NYSE: DIS) superhero franchise with a similar name (Marvel, not Mar-VELL), this suddenly emerging semiconductor designer has been popping up on all kinds of Wall Street analyst radars lately. And for good reason. After a series of acquisitions over the past few years, Marvell has grown into a leader in data center hardware solutions capable of handling increasingly complex workloads like artificial intelligence (AI).
It doesn’t stop at data centers, however. On the last quarterly earnings conference call, Marvell discussed its opportunity in the auto industry, given that the modern car is like a mini-supercomputer on wheels. Technology swallows up a share of the cost of producing a vehicle, and Marvell’s diverse mix of computer chips and network equipment places it in a privileged position to benefit from increasingly advanced automotive technology. Currently, the company’s automotive segment generates annualized sales of around $ 140 million, but is expected to grow to several hundred million dollars annually in the coming years.
At the moment, Marvell’s finances seem a bit messy due to all the acquisition activity. Third-quarter revenue increased 61% year-over-year to $ 1.21 billion; net losses were $ 61 million; but free cash flow was positive at $ 185 million. However, over the next year or so, some of these confusing profitability signals will start to converge. And along the way, Marvell has indicated that he plans to stay in a double-digit sales growth mode as data center upgrades support new cloud services and the growth of the industry. auto industry continue.
At this point, the cat is out of the bag. Marvell is no longer a quiet bet for the semiconductor industry. Stocks trade 20 times the value of sales to the company over 12 months and 166 times the free cash flow over 12 months relative to the enterprise value. Free cash flow was in negative territory for a quarter earlier this year. However, the high price will moderate as the company digests its recent purchases and gains a greater share of the data center and automotive tech market. Given the strong momentum Marvell is riding on right now, I recently bought more before the start of 2022.
The closest thing to a cryptocurrency index fund
Anders Bylund (Coinbase): I started a position in cryptocurrency trading specialist Coinbase Global a week ago. As the digital currency industry recovers from the recent downturn, Coinbase strikes me as the surest way to increase my exposure to this industry – without selecting a particular cryptocurrency.
I own a basket of handpicked crypto tickers and will surely add to this portfolio over time. Including a solid stake in Coinbase is a more fundamental investment, much like building your retirement portfolio around an index fund.
Say all of the major cryptocurrencies in the market today are about to be obsolete by brand new projects that do the same things much better. i would miss my Ethereum (CRYPTO: ETH) and Bitcoin (CRYPTO: BTC) in the beginning, of course, but the investment in Coinbase would just continue to increase.
In fact, Coinbase also works as a hedge against sudden cryptocurrency upheavals. When everyone sells their digital coins the old-fashioned way to embrace the Next Big Thing, this company will be happy to help you out while pocketing a transaction fee for every Bitcoin sale. Trading platform operators love volatility, especially in the cryptocurrency market where brokers haven’t given up on trading fees like brokerages did in 2019.
And of course, Coinbase always benefits if the current leaders stay on top for the long haul. I consider this stock to be a large investment in the cryptocurrency market with a few bonuses as noted above. I see great things to come for this ticker regardless of how the cryptocurrency industry evolves over the long term.
This fintech, which beats the market, has just sold more than 50% on no relevant news
Billy Duberstein (LendingClub): Haven’t bought much lately, but have added to a few favorites including LendingClub which were particularly beaten amid the omicron sell-off / rate hike.
At the beginning of November, everything was going well for LendingClub. The company released a strong earnings report that beat expectations, and the stock rose from the low range of $ 30 to over $ 49 per share in no time.
Yet even with no company-specific news since then, LendingClub has sold over 50% at around $ 24.30 a share. This is a massive sale for a company that has been doing so well since its last public disclosure. It appears that omicron fears along with fears of higher rates have prompted investors to rethink LendingClub’s business, which focuses on unsecured personal loans.
But that doesn’t seem particularly rational to me. After all, management has revealed that its Q4 2019 vintage, or loans made on the eve of the pandemic, has outperformed the industry as a whole and is expected to achieve a total net return of 6%. Recent jobs and growth figures have remained strong even amid the omicron push. Inflation is a concern, but I don’t think anything that could cause a recession could materially affect the charges. As interest rates put pressure on LendingClub’s cost of funds, the company now has access to low-cost deposits through its acquisition of Radius Bank in February. The acquisition of Radius also allows LendingClub to hold more of its loans on its balance sheet, allowing the company to reap more profits from each loan it makes.
After the sale, LendingClub is actually trading for a market valuation of 14 times 2022 profit estimates. And with the company just thriving with this new model and the growth of new products such as auto loan refinancing, LendingClub is expected to continue growing at a strong pace in 2022, making it a well-priced growth stock for next year.
This article represents the opinion of the author, who may disagree with the “official†recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.
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