When the stock market becomes ill, small-cap stocks often get the sickest of all. That’s what’s happened since the market swooned over worries about the impact of the COVID-19 pandemic. The iShares Russell 2000 ETF, weighted toward smaller stocks, is down 25% since the beginning of the year, compared with a 14% decline in the S&P 500.
But that decline spells opportunity for patient investors who are willing to wait out the current concerns, believing that the economy will return to normal in the long term. The volatility of small-cap stocks can cause the share prices to snap back in recovery, as long as the underlying businesses have the financial strength to withstand the downturn.
Here are three stocks with depressed prices that should come out the other end of a business slowdown just fine, and they represent three different approaches to profiting from an economic recovery. Invitae (NYSE:NVTA) is a business that’s not strongly linked to the overall economy; shares of Zuora (NYSE:ZUO) were cheap even before the downturn and are now cheaper; and YETI Holdings (NYSE:YETI) has been delivering high growth that should return when broader consumer demand picks back up.
Invitae specializes in genetic testing and is focused on a long-term vision of bringing down the cost of obtaining comprehensive genetic information so it becomes part of routine healthcare, even for healthy people. The realization of that vision is quite a bit down the road, but in the near term, the company is growing revenue rapidly by offering diagnostic and screening testing across a variety of disease areas.
Test volume increased by 60% in 2019, and the number of customer accounts grew 71%, resulting in revenue growth of 47% to $217 million. The company eventually wants to sell to mainstream clinicians and have brand recognition among patients.
For now, it’s… Continue reading at The Motley Fool