While the broader market is still in the red for the year, it has performed well over the past three months. S&P 500 It has increased by about 8% during this period. Could this be the start of a new bull market? It’s too early to say. Many companies that have performed better recently may fall again. But it’s important to remember that it’s nearly impossible to time the market and know exactly when it will (or will) bottom out.
Waiting for the best time to invest is a waste of time. Many stocks look set to recover, and whether or not the coming months throw us more curveballs, what matters most is the company’s long-term thesis. Let’s examine two companies that have outperformed the market over the past three months but are still down significantly for the year: Guardian health (GH 4.68%) and Adyen NV (Farewell. Y 5.40%). Are these two stocks worth buying?
GH data by YCharts
1. Protective health
Guardian Health prides itself on improving outcomes for cancer patients thanks to its liquid biopsy platform. The company’s tests help qualified healthcare professionals predict the likelihood of recurrence in early-stage cancer patients or determine the best treatment options for those with late-stage cancer, all from blood.
In addition, pharmaceutical companies use some of Guardian Health’s products to screen and select ideal participants for oncology-related clinical trials. Liquid biopsies are generally faster and substantially less invasive than traditional tissue biopsies, an advantage that benefits all parties involved, especially patients.
Despite these features, Guardian Health is facing problems. One is red ink on the bottom line, which is a big no-no for many investors in these challenging times. Another headwind affecting Guardian Health is slowing revenue growth.
GH Revenue (Quarterly YoY Growth) data by YCharts
However, liquid biopsies are growing, and the company is well positioned for profitability. According to some estimates, the market will be worth $26.2 billion by 2030, registering a compound annual growth rate (CAGR) of 14%.
Guardian Health reported total revenue of $205.2 million in the first half of the year, representing a year-over-year increase of 20.2%. The company’s net loss came in at $352.7 million, worse than the $204.9 million net loss reported in the year-ago period. Guardian Health’s top line can continue to grow at a good clip with the rest of the liquid biopsy market, especially as it develops more products that meet critical needs.
One such product is Guardian Shield, a test that helps doctors catch various cancers as early as possible. Doing so improves survivability, so Guardian Shield can be successful. The test is already available in the US for some patients eligible for colorectal cancer screening.
Guardian Shield is still being tested for its ability to detect other cancers early, and Guardian Health will expand its platform over time. The company may still face near-term financial problems, but in the long run, revenue should increase as it advances in its market, and the company will eventually be profitable.
Despite the current stock market woes, this innovator could be an excellent long-term bet.
2. Adyen NV
Few customers think about the complex maze that allows credit card transactions to happen quickly. Payment gateways, risk management solutions, and transaction processing systems are some of the parts that enable the whole to run like a well-oiled machine.
Netherlands-based fintech specialist Adion offers all three and combines them into a single integrated platform for its clients who, as a result, no longer have to deal with the fragmented mess of multiple providers – which can vary from one geographic region to another. — for each of these solutions.
The result is a more efficient payment solution system. Adyen’s platform arguably benefits from high switching costs—a powerful competitive advantage—because trying to switch to one of the company’s competitors can cause business disruptions. Investors seem to appreciate the benefits; Adyen trades at an expensive price-to-earnings ratio of 83, compared with the S&P 500 average of 23 for the first quarter.
Growth stocks with rich valuation metrics have taken a hit recently, but there are also good reasons to be optimistic. First, Adyen continues to record solid financial results. The company’s revenue in the first half of the year rose 37% year-on-year to 608.5 million euros ($614.1 million). Processed volume rose 60% year-over-year to 345.8 billion euros ($348.8 billion). Net income came in at 282.1 million euros ($284.5 million), up 38% from the prior-year period.
Second, the fintech industry is still in high-growth mode, which will likely continue due to the switch to e-commerce and the growing need for digital forms of payment. Businesses know that they need an online presence for success these days; Companies like Adyen offer payment solutions that must remain in high demand to accommodate both brick-and-mortar and online stores.
Some analysts see the fintech industry climbing at a CAGR of 26.2% by 2030. Adyen is not alone in this competitive market, but thanks to the utility of its services and the competitive edge it has built, it can take this expansion in stride. To help the industry grow its revenues and profits – along with its share price – over the next decade and beyond.