Depending on where one looks, it’s been a good year for the stock market. And in recent days, that also kinda, sorta includes many growth stocks. But based on the following three price charts, there’s still stocks of this caliber where the price being paid is attractively near the intersection of where growth meets value. Let me explain.
Risk on. Risk off. Welcome to the stock market. And in a market made up of stocks, in 2021 and following massive leadership from growth tech stocks of all stripes and sizes, it’s been more of the latter. Zoom Video (NASDAQ:ZM). Fastly (NYSE:FSLY). Tesla (NASDAQ:TSLA) and the list goes on and on.
Maybe most telling and capturing the market’s ups and downs within the tech stock arena and in particular, companies with outsized growth potential, is last year’s hot-to-trot, market-topping Ark Innovation ETF (NYSEARCA:ARKK) run by the savvy and unafraid Cathie Wood.
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This past week and for the first time in two months, the concentrated and actively managed fund (whose top-weighted positions include TSLA in pole position at 9.57% of the portfolio and ZM at 4.46%) is up on the year. That performance, of course, lags broader indices, which are up double-digits and fueled by blue-chips and lesser amounts of high-octane growth.
- SoFi Technologies (NASDAQ:SOFI)
- Alteryx (NASDAQ:AYX)
- Teladoc (NYSE:TDOC)
So, what’s behind the rekindled interest in many of today’s growth stocks? Is it Jay Powell and Co.? Or President Joe Biden’s infrastructure plans? Have Reddit’s apes received another stimulus check? Your guess is as good, if not better, than mine. But where it matters most to investors, here are three well-positioned choices to buy at sizable discounts and likely to find favor once more.
Growth Stocks to Buy: SoFi Technologies (SOFI)
Source: Charts by TradingView
The first of our growth stocks to buy are shares of SoFi Technologies. This recent SPAC brought to market by well-regarded institutional investor Chamath Palihapitiya’s black-check Social Capital Hedosophia Holdings V is firing on all cylinders.
Off the price chart, the fintech’s diversified digital-first ecosystem delivered a top-notch earnings report this past month spearheaded by solid Street beating, double-digit sales growth and impressive revenue outlook of 58% for 2021.
Technically, a weekly cup-shaped corrective base failed to produce for some growth investors as a handle forming within the pattern broke a critical 50% retracement level. Fortunately, bank accounts were spared any unnecessary harm as a breakout above the handle never triggered.
Today and for a different subset of investors, this growth stock is showing a different sort of value. On the monthly perspective, the handle’s demise has resulted in SOFI stock pulling back toward the high of its hammer bottoming candlestick.
For this growth stock to buy and to ensure this value proposition doesn’t become a more costly position, an August $20/$25 collar combination on SoFi shares looks about right.
Alteryx (AYX)
Source: Charts by TradingView
The next of our growth stocks to buy is data science and analytics outfit Alteryx. Despite participating in the current re-embracing of riskier investments, AYX stock remains down nearly 29% on the year and more than 50% beneath it’s all-time high set last summer. So, what gives?
One major issue or challenge hanging over Alteryx may be an odd accounting convention, but not of the shenanigan variety. The method has apparently helped Wall Street to blink. But per The Motley Fool, under the surface, customer growth and annual recurring revenue reveal stronger, under-appreciated growth.
To be fair, business gains have decelerated for this growth stock. As has Alteryx’s customer base under a new CEO Mark Anderson.
Still, given past success in the tech industry from AYX’s leadership, let’s not play the near-sighted quarterly results game, right? Right! And especially with the long-term forecast on AYX stock’s price chart revealing a well-discounted double-bottom backed by a bullish stochastics indicator.
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Go ahead and buy this still out-of-favor growth stock with less worry using the November $90/$105 collar.
Growth Stocks to Buy:Teladoc (TDOC)
Source: Charts by TradingView
The last of our growth stocks to buy are shares of Teladoc. The comprehensive end-to-end remote healthcare provider suffered as the past year’s lockdowns and restrictions have been lifted. There’s obviously been less need for that type of once-critical communication. But don’t expect TDOC’s services to die a slow and quiet death.
In an increasingly digital world and with or without Covid or some other favorable tailwind, this growth stock is part of an emerging trend. And today, with Wall Street turning its back on TDOC’s intrinsic value, opportunity has come knocking.
Technically, Teladoc’s monthly chart shows a bottoming hammer candlestick formed in May have been confirmed. It also reveals TDOC has pulled inside the candle’s body. That could spell trouble. But I’m upbeat on this growth stock’s chances.
With TDOC stock’s monthly range contained within three layers of Fibonacci support and stochastics signaling a bullish crossover pattern in oversold territory – I’m giving this growth stock to buy a clean bill of health going forward. But I’d prescribe an October $175/$200 collar to hedge that bet for improved odds of long-term success.
On the date of publication, Chris Tyler hold (either directly or indirectly) positions in Ark Innovations ETF (ARKK) and its derivatives. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Chris Tyler is a former floor-based, derivatives market maker on the American and Pacific exchanges. For additional market insights and related musings, follow Chris on Twitter @Options_CATandStockTwits.
The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.
