A bear market can occur rapidly. One day, the stock market reaches record peaks, and before you realize it, your investment portfolio has dropped by 20%. This appears to have been the case over the past several weeks. Nasdaq-100 Index , experiencing a significant decline of 13.2%, where numerous stocks have dropped by 20%, 30%, or even higher percentages.
The unpredictability of current markets implies that you must be ready. in advance For purchasing stocks during times when investor confidence wanes, bear markets present ideal opportunities to acquire hypergrowth equities. These assets often come at discounted prices despite their usual high valuations.
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Here are two cheap hypergrowth stocks to buy during this stock market correction.
1. Remitly: A formidable contender for market share in money transfers
First up is Remitly (NASDAQ: RELY) , a Nasdaq stock with a 27% drawdown. The company is disrupting the remittance market with its easy-to-use mobile application and lower fees than stodgy legacy players like Western Union .
In the previous quarter, Remitly saw its revenue increase by 33%, reaching $352 million. This surge can be attributed to a rise of 32% in their number of active clients to 7.8 million and an uptick of 39% in transfer volumes amounting to $15.4 billion. Despite lacking profitability as a whole, the firm boasts strong economic margins per unit. When excluding costs associated with transactions, Remitly achieved a gross profit margin of 66%. The income after subtracting these expenses also climbed by 33% compared to the same period from the prior year.
It appears that growth won’t be slowing down anytime soon. With just about a 3% stake in the global remittance market, Remitly is experiencing rapid expansion into new international markets worldwide. From 2019 onwards, their earnings from regions excluding the U.S. and Canada have surged at an annual pace of 100%, hitting $297.1 million in 2024, which constitutes 23.5% of their overall income.
Long-term, I anticipate Remitly's robust unit economics will result in impressive profit margins. While this won’t occur immediately due to their significant marketing investments, current investors should not be worried since the firm is seeing substantial gains from these expenditures.
Today, Remitly has a market cap Of $3.9 billion. In 2024, it produced revenues totaling $1.26 billion. Should this figure increase to $2.5 billion by 2027 — an estimate that appears modest considering the firm’s rapid expansion at present — and achieve a net profit margin of 20%, Remitly could see net earnings reach $500 million in 2027. This projection suggests a potential price-to-earnings (P/E) ratio under 8 relative to its current market capitalization, positioning it as a potentially undervalued long-term holding option for investors over the coming ten years.
2. Coupang: A lesser-known tech powerhouse in South Korea
If you're not from South Korea, you've likely never had an interaction like this. Coupang (NYSE: CPNG) As a customer, though, for South Korean online buyers, this serves as an indispensable platform much like Amazon In North America, Coupang managed to establish itself by developing its own warehouses and delivery systems. This strategic move allowed the company to provide fast shipping times and affordable rates for millions of products. Consequently, this approach helped Coupang capture a significant portion of the retail spending market in South Korea.
In 2024, Coupang reported revenues totaling $30 billion, marking a rise of 29% when adjusted for exchange rate fluctuations. While there remains significant potential for expansion in its primary South Korean e-commerce segment, the company shows no signs of complacency.
The new ventures encompass food delivery through Coupang Eats, expanding operations internationally to Taiwan, launching video streaming via Coupang Play, and venturing into high-end fashion retail by acquiring Farfetch. Given that South Korea leads in expenditure on luxury goods, this purchase aligns ideally with Coupang’s strategic goals.
If Coupang can keep up this impressive growth, which I think it will, the company will be generating $50 billion in annual revenue within the next few years. Even assuming a low profit margin of 10% for an e-commerce offering, the company will have the potential to generate $5 billion in annual net income. Today, Coupang has a market cap below $40 billion.
Like Remitly, Coupang appears as an affordable investment when viewed from a long-term perspective and with endurance. Purchase and retain shares of both these companies, and observe your assets grow substantially within the coming ten years for your investment portfolio.
Is it wise to invest $1,000 in Remitly Global at this moment?
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John Mackey, who previously served as CEO of Whole Foods Market—an entity now owned by Amazon—is part of The Motley Fool's board of directors. Brett Schafer holds stakes in Amazon, Coupang, and Remitly Global. The Motley Fool owns shares of and advocates for investing in Amazon. Additionally, The Motley Fool endorses buying stocks in Coupang. They also have an interest in Remitly Global. The Motley Fool has a disclosure policy .
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