Time to Consider the S&P 500's Biggest 3 Losers in 2022?
Down around 70% last year, I looked at $Match group(MTCH.US$ , $Generac(GNRC.US$ , and $Align Technology(ALGN.US$ briefly to see if they seemed like bargains or value traps.
Here is a quick takeaway for each stock:
- Match Group - Posted 10% sales growth in its most recent quarter (minus FX). Hinge is being rapidly adopted by Gen Z and is set for a product rollout across Europe -- which will be essential to watch. Now trades around 15 times its average free cash flow (FCF) over the last few years (minus a $441M settlement to Tinder's founders). Not a core holding for me, but I could do much worse than buying the FCF-generating, dating industry market leader at a discounted price. Seems worth watching.
- Generac - The company's home standby units, portable generators, and clean energy solutions will only grow more important over time -- but its stock price was massacred in 2022 as it "only" increased sales by 15% in Q3. Now trading with an Enterprise Value to EBITDA ratio of 9 (its lowest of the last decade), Generac looks incredibly interesting, with its ROIC growing from 7% to 19% since 2016. Between EVs providing a tailwind, clean energy's long-term upside, and the often unfortunate necessity of its portable generators, I'll be opening a starter position soon to remember this one.
- Align Technologies - With some of its patents recently expiring, opening up its Invisalign aligners to generic competition, the company saw a 12% sales decline in Q3. While still much cheaper than its ten-year averages, Align trades at 23 times its Operating Cash Flow. This is still a bit hefty, considering the incoming generic competition and ongoing sales decline. I'd rather wait to see if the growth story restarts on this one.
What is your favorite of the trio -- anything that specifically interests you?
- Generac - The company's home standby units, portable generators, and clean energy solutions will only grow more important over time -- but its stock price was massacred in 2022 as it "only" increased sales by 15% in Q3. Now trading with an Enterprise Value to EBITDA ratio of 9 (its lowest of the last decade), Generac looks incredibly interesting, with its ROIC growing from 7% to 19% since 2016. Between EVs providing a tailwind, clean energy's long-term upside, and the often unfortunate necessity of its portable generators, I'll be opening a starter position soon to remember this one.
- Align Technologies - With some of its patents recently expiring, opening up its Invisalign aligners to generic competition, the company saw a 12% sales decline in Q3. While still much cheaper than its ten-year averages, Align trades at 23 times its Operating Cash Flow. This is still a bit hefty, considering the incoming generic competition and ongoing sales decline. I'd rather wait to see if the growth story restarts on this one.
What is your favorite of the trio -- anything that specifically interests you?
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