Regardless of whether this most recent correction has reached its trough or is continuing to search for the bottom, we have witnessed a lot of great businesses fall significantly from their all-time highs. Traders willing to use time as their ally might find that the following two discounted stocks could make them insanely rich by retirement.
The last two months have been difficult for any company that has been involved in financial tech (fintech). That includes the lending platform known as Upstart Holdings, whose shares have quadrupled in price, then promptly fell 80%, all within just half a year. However, this is a potential great buying opportunity for long-term traders to jump on a fintech innovator.
What helps make Upstart really interesting is its vetting process the platform utilizes to make fast loan denial/approval decisions for its lenders. In particular, it has leaned on machine-learning and AI to help speed up the process of loan-vetting. This helps lenders save money, and it is much more convenient for the consumer searching for a loan.
To build on this point, over 90% of Upstart’s revenue comes from service revenue or banking fees, with zero credit exposure, as of Q3. This means recessions and even higher lending rates will be a lot less likely to have a direct impact on Upstart’s growth profitability and potential, relative to some other financial stocks.
But the best lure for Upstart may just be its opportunity in mortgage loan and auto loan originations. Upstart acquired Prodigy Software in 2021, giving it an AI-driven service platform in the auto loan industry. The auto loan origination market is about eight times the size of what personal loans are, which is where the company has put most of its focus on till now. Pushing into bigger loan origination pools might help the company secure large double-digit growth for the long term.
Another great growth trend with a lot of potential is the entrance of electric vehicles (EVs). That is why the large pullback in Nio is such an amazing opportunity for longer-term investors.
Nio’s execution, even with supply shortages of the semiconductor chip, has been amazing. Though deliveries have taken a modest step backwards in Jan. (9,652 electric vehicles), as they topped around 10,000 in Nov. and Dec. The expectation is for NIO to ramp its yearly production rate from about 120,000 to 130,000 electric vehicles to around 600,000 electric vehicles by the end of the year. This growth will probably stem from its existing electric vehicles.
In addition to speeding up production, the company is based in the top auto market, China.
Furthermore, traders should not overlook the company’s innovation. Aside from developing new EVs and bringing them to market, in the summer of 2020, Nio introduced a battery-as-a-service program. Enrollment in this program allows electric vehicle buyers to swap, upgrade or charge their batteries, and it decreases the initial buying price of an electric vehicle. In return, the company keeps its buyers loyal to its brand.