3 battered tech stocks to buy on the downside

The main stock market indices are experiencing their biggest correction in more than a year. Many tech stocks that were market darlings in 2020 and early 2021 have been particularly hard hit.

Stock market corrections are life-changing, but it is important to remember that they are always temporary. Not all stocks will rebound right away, but these three have a very good chance. Their underlying businesses are all growing by leaps and bounds and it will take more than weak stock prices to slow them down.

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PubMatic

PubMatic (NASDAQ: PUBM) has one of the fastest growing bid-side advertising platforms on the internet. You wouldn’t know that by looking at its stock price. Shares of PubMatic have fallen about 70% from their peak last March.

Now that you can buy PubMatic for a low price of just 5.9x sales, it sounds like a total bargain. Third-quarter revenue jumped 54% year-over-year and may continue to climb at this breathtaking rate for the foreseeable future. Third quarter revenue of $58.1 million is just the tip of the iceberg for this company’s total addressable market.

Consumers with new Internet-connected TVs are spending far more time online than they realize. That’s why market research firm eMarketer expects global digital ad spending to reach more than $526 billion per year in 2024.

Publishers have many platforms to choose from on the supply side, but demand is consolidating on fewer platforms. PubMatic has seen annual revenue growth of at least 50% for four consecutive quarters, which is much faster than overall digital advertising in the market.

PubMatic clearly outperforms a lot of competitors and hasn’t had to cut prices to keep its customers coming back for more. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) increased more than 30% year over year for four consecutive quarters.

DocuSign

DocuSign (NASDAQ: DOCU) pioneer of the digital chord industry and it is still the undisputed leader. Despite its enviable position in the market, shares have fallen about 64% since July.

DocuSign shares fell sharply in December as third-quarter billings came in at $565 million. This was 28% higher than the prior year period, but about $30 million lower than the prior quarter.

At its recently depressed price, you can buy shares of DocuSign at just 11 times ending sales. Even if the company’s growth rate is cut in half, investors who hold on for the long haul will come out way ahead.

Agreements are the foundation of virtually every business and the shift from physical documents to digital agreement services is still in its infancy. DocuSign believes the market for preparing, managing, and signing digital deals is worth more than $50 billion a year.

Duolingo

Gamify language learning Duolingo (NASDAQ: DUOL) the most popular language learning platform in the world. The company had a record 9.8 million daily active users during the third quarter.

Paid registrations are also on the rise. Duolingo reported third-quarter bookings that climbed 57% year-over-year to $73 million.

Despite many successes, the stock has fallen around 61% since last September. You can now pick up the shares for only 12.4 times the trailing sales.

Patient investors who buy Duolingo have a good chance of outperforming. The company’s popular smartphone app isn’t just popular, it looks very effective.

A recent study showed that learners who completed five units of French or Spanish instruction with Duolingo performed just as well on listening and reading tests as students who completed four semesters of these languages ​​at a university. Additionally, self-guided Duolingo learners achieved proficiency levels similar to college students in less than half the time.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end advice service Motley Fool. We are heterogeneous! Challenging 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 wealthier.

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