The Capitalist Investor - Episode 117 What does fantasy football and stocks have in common? Constant managing, risk assessment and always scouting out other teams and players. This week, the guys are scouring the market for beaten down stocks that have a chance to be redeemed. Salvageable stocks won’t pop overnight though, and it takes a willing investor and someone who is patient enough to dive in and wait it through. In Episode #117 of “The Capitalist Investor,” Mark, Derek, and Luke consolidate a collection of beaten down stocks that could eventually turn around and recoup their performance.Outline of this Episode:[1:20] Remember: risk management[3:35] Naming the stocks[5:40] Invest in what you know: Roku[12:05] Paypal and fundamentals[15:55] Worthwhile Meta discount[20:50] Penn National’s value from online customers[23:55] Purely valuation: Vroom[24:55] Commonalities: growth names[27:35] Doctor visits have changed: Teladoc[32:25] Signing off… on DocusignBeaten down stocks can still take a hit but it’s all about enduranceWe’re not paying attention to beaten down stocks because we think they are going to climb overnight. Salvaging means to be patient and play the long game. You have to be willing to put some money down at these lower levels and be confident that there will be a day where a good return is generated.Say you dip into these stocks and they just drop another 20 or 30 percent –– it could happen and you have to be prepared. Don’t put a lot at stake and your money into fallen stocks –– there’s a reason they are beaten down. Be patient, anticipate, and keep up with their momentum.Trends want to change –– growth stocks might have their inflection pointMany of the stocks in our dumpster diving list are growth names –– stocks that are expected to outperform the overall market overtime because of their long-term potential.Clearly, growth stocks are not the area to invest in right now and that’s why they’re on our beaten down list. We’re in a period where value stocks are more favored.But trends can change. Over the last decade, we have been economically slower, and our growth has slowed down. And when the GDP starts inching closer and closer to zero, investors are willing to pay a premium for growth stocks again.The pandemic has undoubtedly led us to favor value stocks but if you’re paying close attention, growth names are beginning to bottom out. Maybe it’s time for growth stocks to outperform again. They say one person’s dumpster trash is another’s treasure. Growth stocks over time can turn into an investor’s treasure.Who are we willing to dumpster dive for?Diving into beaten down stocks means returning to our fundamental principles. It’s wise to invest in what you know, what everyone uses and likes, and what people trust.Beaten down stocks are stocks whose shares have fallen in price by more than 50 percent. But it doesn’t mean they can’t climb back up.Many of our beaten down choices are based on their potential to grow, evolve, and innovate new ideas. Many of them like Roku, PayPal, and Teladoc have the first-mover advantage in their respective industries, and the highest advantage of evolving over time ahead of their competitors.Facebook (or Meta) has the ability to generate steady cash flow. It’s also an innovating platform that is always thinking ahead and creating ideas that are beyond the times in which we live now.And some other beaten down stocks like DocuSign are just great bargains for a company that is doing work that will be used for years and years.They’re beaten down, yes. But they’re innovative, dynamic, and simply existing in a period that doesn’t completely favor them. If you take the plunge to invest in damaged stocks –– you have to be patient for the period, they climb again.Connect With Mark TepperTwitter: @MarkTepperSWPFollow Mark on LinkedInSend Mark a message hereThe SWP Connect YouTube ChannelConnect with Derek GabrielsenTwitter: @DerekGabrielsenFollow Derek on LinkedInSend Derek a message hereCheck out Derek’s YouTube channel!Connect With Luke LloydTwitter: @LloydBoyLukeFollow Luke on LinkedInSend Luke a message hereThe SWP Connect YouTube ChannelSend your questions and comments to us at info@SWPConnect.comSubscribe to The Capitalist Investor
