Many growth stocks have had their valuations fall in recent years due to economic worries and rising interest rates. However, investors who have a long-term view are more focused on the future than what is happening now.
Tesla (NASDAQ: TSLA), PTC (NASDAQ: PTC)And Velo3D (NYSE: VLD) These three stocks could offer a wide range of growth opportunities that are worth taking a closer look.
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Tesla’s multi-decade potential is untapped
Daniel Foelber (Tesla): Ark Invest’s top holding, Tesla, is already in a parabolic phase for 2023. The electric vehicle (EV), stock has doubled from its 52 week low and is up a remarkable 67.1% year-to-date.
Stocks that have experienced a rapid rise can be tempted to sell in order to lock up the gains. Tesla is a case in point. It’s important that you zoom out to see that Tesla stock is still substantially lower than it was one year ago. In fact, Tesla lost 65% of its value by 2022.
Tesla stock has been volatile and can do almost anything in the short-term. However, the company has proven itself to be the undisputed global leader in electric vehicles (EVs) when it comes to profitability and balancing production volumes. Tesla’s financial metrics are unmatched: high margins and sustained top-and bottom-line growth, high net cash position and high free cash flow.
YCharts data for TSLA Revenue (Annual).
Tesla was once considered a highly speculative investment. However, the company has made the transition between its vision and reality. Today’s question is not whether Tesla is a good business or not but what price is reasonable for Tesla stock?
Tesla is now significantly cheaper than it once was, according to its price/to-sales and forward price/earnings ratios. The stock price’s recent increase makes it less appealing to be a buy.
We learned something from 2022: Value and position sizing are important. You don’t have to anticipate the market. A better approach is to Tesla. Take a step back, determine your desired role in your portfolio and decide what a reasonable price is for the stock. You have a few options to build your position.
It wouldn’t surprise if Tesla stock doubled in value or fell in half by 2023. However, it wouldn’t be unexpected if Tesla sold 20 million cars per year 10 years later and was the largest company in the entire world. It makes sense to own a small amount of Tesla stock even after its 2023 rise.
PTC, a company that develops industrial software, offers earnings resilience
Lee Samaha (PTC): PTC software company sees signs of a slowdown as reflected in softer bookings. But that shouldn’t diminish its resilience in 2023 and its long-term growth potential.
PTC is a company that offers computer-aided design software and product lifecycle management (PLM), which allows customers to digitally design and manage physical products. Service lifecycle management is integrated with PLM, allowing users to create and manage better service products. The Internet of Things connects both the physical and the digital worlds. Augmented reality, on the other hand, uses the digital realm to enhance the physical world’s functioning. PTC refers to the growing use of digital technology within the industrial world.
It is a solid secular trend and likely to continue growing in the face of any recession. PTC’s earnings resilience is evident with $1.6 billion in annual rate (ARR) at its disposal. This refers to the annualized value of PTC’s active subscription software, cloud, SaaS and support contracts as of the reporting period. PTC’s ARR grew at a rate of mid-teens in the first quarter. Management is now forecasting a 22%-25% increase in ARR for the entire year, including 11% from acquisitions.
Additionally, the company’s earnings will drop more into FCF. Management forecasts $575 million in FCF in 2023, compared with an adjusted FCF of $468 millions in 2022.
This all adds up in a business that has a lot long-term growth potential and can ride out any recession to emerge stronger.
Investors could earn profits from Velo3D
Scott Levine (Velo3D): Cathie Wood is a bullish investor in 3D printing stocks. Ark Invest actually has a passively-managed fund exclusively for them. The 3D Printing ETF. Velo3D is a 3D printing stock that she is particularly excited about. In January, Velo3D was launched. Ark Autonomous Technology & Robotics ETF Two weeks later, a buying spree started that ended.
Velo3D specializes in metal 3D printers and meets the needs of customers looking for 3D printing services to print complex parts, such as turbopumps, microturbines, and tanks. However, the company recently expanded into other sectors.
Velo3D has partnered with two European original equipment manufacturers (OEMs), and an American automotive OEM in the third quarter 2022. This proves that the company’s 3D printing capabilities are valued by a wide range of customers. Its growth in its backlog is another sign of the company’s bright future. Velo3D was able to identify $55 million in backlog by the end Q2 2022. However, it had $66 million at the close of Q3 2022.
While Velo3D shares are down over 55% from last year’s, this doesn’t mean that the 3D printing stock has fallen forever. Investors may begin to notice the company’s ability to continue to recognize backlog gains as it did in Q3 2022 and grow revenue. These are three things that should be within its reach.