Big Tech Tumbles, But These 3 Growth Stocks Are On Sale Now – Motley Fool

Rising concerns about higher inflation and interest rates are on investors' minds lately, and many are wondering howthiswill affect some of thebiggest technology stocksgoing forward. These companies have been huge winners over the years and benefited greatly from a pandemic-fueled boost in 2020, so investors could very well be taking some profits off the table.

There are some smaller, high-qualitybusinesses, however, that have been beaten down over the past few months for various reasons, but still have solid long-term outlooks. Here are threegrowth stocksthat are on sale right now and are worth taking a look at.

Image source: Getty Images.

With astock price that has fallen 31% since March 1, Etsy(NASDAQ:ETSY), the leading online marketplace for handcrafted and special goods, should be on every investor's watch list.

Thecompany's 4.7 million active sellers and 90.7 million active buyers accounted for $3.1billion of gross merchandise sales in the most recent quarter, an increase of 132% from the prior-year period. Revenue (up 142%) and net income (up 1,048%) have also increased significantly, demonstrating just how valuable the e-commerce platform is.

Management's comments regarding a deceleration of growththisquarter, on the backs of a record-breaking 2020,certainly pressured the stock. A slowdown is to be expected after last year, but Etsy will continue riding the secular shift to online shopping for many years to come.

Etsy empowers and supports local entrepreneurs looking to showcase their products, and it provides consumers access to goods no one else sells. In a 2020 survey, 88%of Etsy buyers agreed that the site had items they can't find anywhere else.

Thebusinesscurrentlyoperatesin the U.S., U.K., Canada, Germany, Australia, France, and India, and its sellersoffereverything from home furnishings and jewelry to craft supplies and beauty products. There is still a massive untapped market opportunity in front of Etsy, supporting growth for a long time.

Peloton Interactive(NASDAQ:PTON) has become somewhat of a household name, but its stock, which has dropped 40% since mid-January, hasfallen out of favorwith Wall Street.

The connected fitness company's business surged during the pandemic (sales soared more than 100% in each of the past four quarters) as people stuck at home searched for ways to work out. But persistent supply chain issues leading to long wait times and delayed deliveries have resulted in irritated consumers.

Further adding to the list of problems is the recent recallof its Tread+ and Tread treadmills. This was after Peloton initially resisted a warning by the Consumer Product Safety Commission that cited numerous injuries and one child death. Not a good public relations showing.

But let's face it. Customers don't just use Peloton's equipment and digital app. They rave about them. The company has a cult-like following primarily due to its easy-to-use software and social connectivity. Peloton makes working out fun, while adding a powerful interactive element to the mix.

Memberchurnin Q3 was an impressive 0.31%, andthe average number of monthly workouts (a measure of engagement) was 26 in the quarter, a record for the company.

Peloton's flagship product, the Peloton bike, is back to pre-pandemicdelivery wait times. The company has already released asoftwareupdatefor its recalled treadmills and is working on a hardware fix to enhance safety. This should ease any shareholder anxiety.

Peloton still has the potential to be a global-scale fitness company. These recent stumbles are just an opportunity to fix mistakes and bolster its competitive positioning.

The streaming wars are in full swing, and no company sits more perfectly in the middle of it all than Roku(NASDAQ:ROKU). The streaming player and platformbusinesscontinues to register solid gains, with revenue and gross profit up 79% and 132%, respectively, in the most recent quarter. Thecompanynow has 53.6millionactive accounts that watched 18.3 billion hours of content in the three-month period.

The stock price has diverged fromthese strong fundamentals. Since Feb. 16, Roku is down 30%, which could be a result of the gradual reopening of the economy that will leave consumers spending less time at home. This is certainly warranted, but management is expecting another blowout quarter coming up, a sign that momentum hasn't slowed yet.

What separates Roku from the streaming service companies you're probably more familiar with is that it actually creates the platform for these content companies to reach viewers, while at the same time providing an avenue for corporations to advertise their products and services on a streaming ecosystem.

Roku is quite literally building the TV operating system of the future. Its platform segment, which is where advertising and subscription revenue is accounted for, sports a rapidly expanding gross margin of nearly 67%.Thisbusinessis on its way to producing profits at scale.

Over time, as more people stop paying for traditional cable-TV subscriptions and move to streaming, Roku stands to benefit immensely. It isestimated that 27% of U.S. households will cut the cord in 2021, providing a powerful and durable tailwind for Roku.

This article represents the opinion of the writer, who may disagree with the official recommendation position of a Motley Fool premium advisory service. Were motley! Questioning 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 richer.

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Big Tech Tumbles, But These 3 Growth Stocks Are On Sale Now - Motley Fool