A good method to search for investment ideas is to look at the list of stocks hitting their 52-week lows.
Some stocks may be justifiably sold down as their business is under pressure.
But for others, it may be because investors are throwing out the baby along with the bathwater.
Growth stocks have taken a hit in recent months as the US Federal Reserve raises interest rates and the US suffers from the highest inflation in four decades.
Investors need to sift out the wheat from the chaff as numerous stocks have been sold down due to the bearish sentiment.
Here are five growth stocks that have skidded to their year low and may qualify to be on your buy watchlist.
Sea Limited is a technology company with three arms – gaming (under Garena), e-commerce (under Shopee), and digital financial services (SeaMoney).
The company’s share price hit a one-year low of US$52.40 recently as investors grow worried about its growth prospects.
For its fiscal 2022’s second quarter (2Q2022) earnings, Sea reported a 29% year on year jump in revenue to US$2.9 billion.
However, net loss more than doubled year on year from US$433.7 million to US$931.2 million.
Shopee enjoyed a 42% year on year increase in gross orders but the unit recently reported two rounds of layoffs as it anticipates a slowdown.
At the same time, Garena is seeing attrition for its quarterly paying users.
This metric fell by 39% year on year for 2Q2022 to 56.1 million, making it the third consecutive quarter on quarter decline for the company.
Adobe is a software company that provides a range of tools and services to help customers design, create and automate workflow.
Adobe’s share price has more than halved in the past year to hit a low of US$274.70.
The company reported a record-high revenue of US$4.4 billion for its fiscal 2022’s third quarter (3Q2022), up 12.7% year on year.
Net profit, however, dipped by 6.3% year on year to US$1.1 billion.
At the same time, Adobe also announced the acquisition of Figma, a web-based collaborative design platform, for an estimated US$20 billion.
Figma is projected to have a total addressable market of US$16.5 billion by 2025, enjoys gross margins of around 90%, and generates positive operating cash flows.
Microsoft is a computer hardware and software company that also provides cloud services for its customers.
The Redmond-based company has seen its share price skid to a one-year low of US$234.4 recently.
For its fiscal 2022 (FY2022) earnings ending 30 June 2022, Microsoft reported an 18% year on year jump in revenue to US$198.3 billion.
Net profit climbed by 18.7% year on year to US$72.7 billion.
In particular, its cloud business under Azure showed good promise, registering a 40% year on year jump in revenue for the fourth quarter of FY2022.
Alphabet is the parent company of search giant Google, and the company also offers cloud services (Google Cloud) and owns the video-sharing website YouTube.
The technology company’s share price has skidded 27% in the last year to hit a low of US$96.
For 2Q2022, revenue increased by 13% year on year to US$69.7 billion.
However, operating profit remained flat year on year at US$19.4 billion while net profit declined by 13.6% year on year to US$16 billion.
Google Cloud continued to do well, posting a 35.6% year on year rise in revenue to US$6.3 billion.
YouTube advertising revenue also inched up 4.8% year on year to US$7.3 billion.
Alphabet continued to generate a healthy free cash flow of US$27.9 billion for the first half of 2022 (1H2022).
Shopify is an e-commerce platform that allows entrepreneurs and small business owners to start, grow, and manage a business.
The company’s shares have been on a steady decline, hitting a 52-week low of US$26.50 recently.
Shopify posted decent growth for 2Q2022, chalking up a 16% year on year increase in revenue to US$1.3 billion.
Gross merchandise volume (GMV) increased by 11% year on year to US$4.7 billion, backed by solid growth in gross payments volume which grew to US$24.9 billion and making up 53% of GMV processed during 2Q2022.
In late July, however, the e-commerce company decided to reduce its workforce by 10% as it foresees slower growth.