Got $2,000? Here Are 2 Beaten-Down Growth Stocks to Buy Right Now

Even if sector-wide trends pushing a stock down change, they may not reflect in the underlying stocks right away, but it’s a good time to take advantage of the discount.

| More on:
falling red arrow and lifting

Image source: Getty Images

Not all growth stocks are worth buying when they are discounted. There is a disconnect here from dividend stocks that become far more attractive when discounted (assuming the payouts are sustainable), since the yield goes up proportionally to the discount tag.

That doesn’t mean growth stocks don’t become attractive when discounted, because the lower price is an asset if the stock recovers and returns on the growth track. However, not all growth stocks do, at least not within a reasonable timeline.

Some growth stocks remain beaten down for years before they get back on track, and unless the growth they offer (including recovery) far outshines their peers, the “time cost” makes the overall returns less attractive.

There are a few Canadian stocks worth considering, even in their beaten-down state, as they may offer promising growth prospects.

A tech stock

After an aggressive correction phase, the tech sector is finally recovering, which is reflected in the growth of heavily discounted stocks (still) like Nuvei (TSX:NVEI). The company is trading 72% below its 2021 peak price, even after the 45% ascend it has experienced since December 2022.  

The fall of Nuvei was uncharacteristically harsh, even for a tech stock, because it has a trigger beyond a falling sector. A short-seller report that highlighted some of the company’s weaknesses eroded a lot of investor confidence. However, it doesn’t change anything about the company’s core strengths.

As an advanced payment solution company, Nuvei has a lot of room to grow in a rapidly growing e-commerce market. The company is also capable of handling crypto-based payments and offers relevant solutions. This capability may not be an asset now, but it can make Nuvei an early bird when crypto payments for goods or services start gaining mainstream adoption.

At its current $50 price, the stock can offer 100% returns by reaching a three-digit price tag, which is a manageable target. The stock is already going up under the influence of a recovering tech sector, and it may be enough for the bullish momentum needed to reach the desired price.

A utility company

Algonquin Power & Utilities (TSX:AQN) stock was already suffering when it announced its decision to cut its dividends by 40%. The company also plans to sell roughly $1 billion worth of assets to improve its financial position. It has to make some radical decisions about its debt management since it’s weighing down the company’s finances.

As a result of the decline, the stock is currently trading at a 55% discount from its 2021 peak, and it’s still heavily overvalued. However, the company’s tough steps to take back control of its financial standing might actually be a good sign. Algonquin isn’t just a dividend stock. It’s also a growth stock, and when the dust settles, it may experience a bull market resurgence and start going up rapidly.

The reason for this optimism is that the company still has the same underlying strengths — i.e., a focus on renewables, diverse operations, and end-to-end electrical utility business.

Foolish takeaway

The two beaten-down growth stocks may not recover at the same time. Nuvei’s growth is already underway, and it may ride the momentum for several months. Algonquin may slump or fluctuate for a while before enough market confidence is restored and it gains traction.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nuvei. The Motley Fool has a disclosure policy.

More on Investing

Tech Stocks

1 Under-the-Radar Beneficiary From the Rise of ChatGPT

ChatGPT will benefit AI-enabled stocks like Docebo (TSX:DCBO).

Read more »

money while you sleep

Worried About Market Volatility? 3 Defensive Stocks for Better Sleep Tonight

Risk-averse investors can sleep better and seek safety in three defensive stocks to counter not only a recession but heightened…

Read more »

Businessman holding AI cloud
Tech Stocks

TFSA: 2 AI Growth Stocks for Your $6,500 Contribution

Here are two of the best AI stocks to buy in Canada in 2023.

Read more »

edit Safety First illustration

Add a Margin of Safety With 3 Consumer Staples Stocks

Are you looking for stocks that could give your portfolio a margin of safety? Buy these three consumer staples stocks!

Read more »

Man data analyze

TFSA Investors: The 4 Very Best TSX Stocks to Own This Decade

TFSA investors should look to snatch up TSX stocks like Enbridge Inc. (TSX:ENB) and goeasy Ltd. (TSX:GSY) in March.

Read more »

retirees and finances
Dividend Stocks

Retirees: 3 Ideal Stocks to Buy in a Bearish Market

Given their low-risk businesses and stable cash flows, these three Canadian stocks are ideal buys for risk-averse retirees.

Read more »

edit Colleagues chat over ketchup chips
Tech Stocks

The Best Stocks to Invest $50,000 in Right Now

You can create a portfolio of undervalued stocks with $50,000 right now. Here are three such stocks you can add…

Read more »

data analyze research
Dividend Stocks

3 Dividend Powerhouses to Buy for Reliable Passive Income

Are you seeking passive income? These three Canadian stocks are reliable investments for generate steady income.

Read more »