Over the last twelve months, growth stocks in particular have declined in price significantly. Many of these beaten-down stocks offer buying opportunities, especially among long-term investors.
Formally known as Square Inc., Block Inc. is an American financial service and digital payments company. First founded in 2009, Block Inc. (NASDAQ: SQ) went public just six years later, pricing its IPO at $9 per share. By the end of Q1 2022, SQ stock had increased more than 769% over the past five years, reaching a high of $289.23 per share in 2021.
Like many growth stocks, SQ took a significant hit over the past several months, reaching a low of $82.72 per share, despite strong financial performance in 2021. For example, gross profit increased by 62% to $4.4 billion, and the company’s free cash flow hit $714 million.
Unlike other traditional businesses that accept payment cards, Block Inc. is a self-service suite of software, hardware, and services. From payroll software and point-of-sale (POS) systems to banking products, like loans and deposit accounts, Block’s seller ecosystem is thriving. The company has also launched Block’s Cash App ecosystem.
The Cash App aims to redefine the world’s relationship with money by making it more relatable, instantly available, and universally accessible. The response has been positive, with monthly active users jumping by 22% to 44 million in 2021. From TIDAL (a global platform for musicians and their fans) to Spiral (a bitcoin-focused entity), Block Inc. is a highly diversified payments company.
Block Inc. is currently expanding globally, completing its full launch in Spain earlier this year. With several healthy uptrends happening for the company, now may be the time to add shares to your portfolio.
Here are some of SQ’s financial highlights for 2021:
- In Q4 of 2021, SQ generated a gross profit of $1.8 billion, up 47% year over year. For the full year, the company reported a gross profit of $4.42 billion (up 62%).
- Cash App generated a gross profit of $518 million, up 37% year over year.
- Adoption of Block’s services is increasing, with 38% of gross profit coming from sellers using four or more products (compared to just 10% in 2016).
The Joint Corp.
In September 2021, the stock price of The Joint Corp. (NASDAQ: JYNT) hit an all-time high of $107.30. Since then, its shares have sunk by more than 65%. At this price, long-term investors should watch this nationwide franchisor of chiropractic clinics. Within a few years, there’s a good chance you could double your money.
So, why is a chiropractic business worth your attention?
Unlike traditional chiropractic offices, The Joint Corp. offers differentiated care. Patients can seek a basic spinal adjustment performed by a licensed chiropractor without needing an appointment and can be in and out within as little as five minutes. Although The Joint Corp. costs an average of $33 per visit, less than half of the standard industry cost, by not handling complex back issues, they can see more than triple as many patients per month as regular offices.
Based on the current business model and lower operating costs, franchisees can expect an outstanding return in just three and a half years. So, it’s no surprise that JYNT is continuing to grow.
Here are some of JYNT’s financial highlights for 2021:
- System-wide sales increased by 39% to $361.1 million compared to 2020.
- Revenue grew by 38% to $81.2 million compared to 2020.
- The number of patient visits grew to 7.7 million in 2019, 8.3 million in 2020, and 10.9 million in 2021.
- Sold 156 franchise licenses, compared to 121 in 2020 and 126 in 2019.
Is Now the Time to Buy?
After significant price compression over the past few months, both Block and The Joint Corp, provide significant margins of safety for longer term investors.
Both stocks have demonstrated significant price volatility, so they’re not appropriate for investors with nervous nelly tendencies. But for those who can stomach larger swings, both offer the potential to produce significant returns over the next few years.