Stocks to buy

10 Bargain Stocks to Buy After Falling 30% in 2021

If you’re looking for bargain stocks to buy that are down 30% or more in 2021, that’s not an easy task. Yardeni Research’s latest report on the S&P 500’s sector performance in 2021 came out on Dec. 16. The index itself was up 23% on the year, and not one sector was in negative territory. Unsurprisingly, the energy sector had the best performance year-to-date (YTD). It was up 42.8% as of the report’s release. 

In fact, of the 505 stocks in the index, only 90 are down at all YTD, with just six off by 30% or more.  As a result, I’ve decided to broaden my search. According to Finviz.com, there are 229 stocks with a market capitalization of $2 billion or more that are down at least 30% YTD. 

Of those 229, here are 10 selections for bargain stocks to buy that are down 30% or more in 2021:

  • Pan American Silver (NASDAQ:PAAS)
  • Pinterest (NYSE:PINS)
  • Frontdoor (NASDAQ:FTDR)
  • Chegg (NYSE:CHGG)
  • Open Lending (NASDAQ:LPRO)
  • Koninklijke Philips (NYSE:PHG)
  • StoneCo (NASDAQ:STNE)
  • Altice USA (NYSE:ATUS)
  • Crispr Therapeutics (NASDAQ:CRSP)
  • Amedisys (NASDAQ:AMED)

Bargain Stocks: Pan American Silver (PAAS)

Source: Phawat / Shutterstock.com

YTD return: -29.3%

Return since IPO: 67% (cumulative)

While it has just climbed above the 30% losses mark today, PAAS stock still makes the list of bargain stocks. The Vancouver-based company is one of the world’s largest silver producers with 10 mines. It is operating in Peru (42% of revenue), Mexico (28%), Canada (20%), Argentina (6%) and Bolivia (4%).  

In the company’s Q3 2021 report, it reported record revenue of $460.3 million, up 53.2% from Q3 2020. Its adjusted income during the third quarter was $37.78 million, 36% less than a year earlier. Despite higher cash costs per ounce, the company’s cash flow increased by 36.6% over last year.   

With just $45 million in total debt and $315.4 million in cash and short-term investments on its balance sheet, it’s got rock-solid financials.

On Dec. 16, Pan American got another step further with its $1 billion silver mine in Argentina. The Chubut province where the mine is located voted in favor of a new zoning law that would allow mining to take place. It now goes to the Governor to enact the law. It’s taken the company 19 years to get the approval for this mine.

It looks as though patient shareholders will be rewarded.

Pinterest (PINS)

Source: Nopparat Khokthong / Shutterstock.com

YTD return: -44.6%

Return since IPO: 42.6%

Pinterest continues to roll out new features in an effort to make its social media platform more engaging to its users. Apparently, content creators can now respond to comments made on their existing videos with video replies rather than text. Meta Platforms’ (NASDAQ:FB) Instagram is doing the same thing through its Reels Visual Replies. 

I don’t use Pinterest enough to know if this feature will do anything to stem the losses on PINS stock YTD. I suspect not. Not to worry, though — the platform has several other merits to speak of. 

When I last wrote about Pinterest in early November, I thought it was a bargain in the $40s. Now in the mid-$30s, I’m not about to change my opinion despite the falling knife. 

In early November, the median analyst target price was $67. Today, the median is down to $54.50, a 19% decline in just six weeks. On the plus side, only one analyst has dropped their buy rating while only one has a sell call out of 30 analysts. 

I believe the longs will win the day in the long term, but that doesn’t mean buying PINS stock is easy to do. It’s going to take courage and patience. Most people don’t have the latter.  

Bargain Stocks: Frontdoor (FTDR)

Source: MIND AND I / Shutterstock.com

YTD return: -30.9%

Return since IPO: -8%

The largest provider of home service plans in the U.S. didn’t go public through traditional methods. Instead, it was spun off by ServiceMaster Global Holdings on Oct. 1, 2018. 

Each ServiceMaster shareholder got one FTDR share for two shares held in the parent. ServiceMaster subsequently sold its ServiceMaster Brands unit in September 2020 to Roark Capital, an Atlanta-based private equity firm. ServiceMaster was renamed Terminix Global Holdings (NYSE:TMX), which announced on Dec. 14 that it would be acquired by U.K.-based Rentokil for $6.7 billion.

Enough of the history lesson. 

The company, whose brands include American Home Shield and HSA Home Warranty, reported lower than expected quarterly revenue at the end of October. To make matters worse, its guidance was soft as well. Its shares dropped more than 13% on the news. 

However, the top and bottom lines are still growing — revenue and net income for the first nine months of 2021 were both up 10% YTD. Its trailing 12-month (TTM) free cash flow (FCF) is a healthy $170 million, or 10.7% of sales.

Its FCF yield is 5.9%. I consider anything between 4% to 8% to be growth at a reasonable price.  

Chegg (CHGG)

Source: Casimiro PT / Shutterstock.com

YTD return: -67.4%

Return since IPO: 214.4%

Chegg is easily one of the most difficult stocks to understand. In July 2019, I included the company in a list of seven stocks to buy that make a student’s life easier. My rationale for including it had to do with the growth Chegg Services was experiencing. 

At the time, it was trading around $44. Then, in October 2020, I recommended it once more. This time with a group of 10 small-cap stocks. It was trading around $73. 

If you bought on either occasion and sold at its February 2021 high of $115, you’re laughing all the way to the bank. If not, you’re crying in your beer. 

What happened to derail the education stock? InvestorPlace’s Louis Navellier believes he has the answer: a lack of future growth. He recently suggested that the return to physical classrooms has put the kibosh on third-party services offered by firms like Chegg. 

I’ve never seen its business as one that directly competes with in-classroom learning. Most of its services are complementary to an individual’s primary education vehicle. 

Further, Chegg just acquired the European online language learning platform Busuu for $436 million. The move gives it access to more than 120 million learners who might be in need of some of its other services. 

I think the market is totally missing the boat on this one. In three to five years, you’ll make money if you buy at these prices.

Bargain Stocks: Open Lending (LPRO)

Source: shutterstock.com/CC7

YTD return: -35% 

Return since IPO: 119.5%

It’s hard to find special purpose acquisition companies (SPACs) that have delivered for their shareholders. Despite being down 35% YTD, Open Lending is one business that’s managed to meet merger expectations. 

In January 2020, Open Lending announced that it would merge with Nebula Acquisition Corp. The enterprise value of the merged entity was $1.3 billion. The SPAC brought $275 million in cash to the party, and private investment in public equity (PIPE) investors added $200 million. 

The merger was completed on June 10, 2020. Despite the 2021 decline, LPRO stock is up 119% in 19 months. If you bought Nebula units in its early 2018 initial public offering (IPO), your return is 119% over a little less than four years, or 21.7% compounded annually.

The beauty about Open Lending’s automotive finance analytics platform is that its customer isn’t the person taking the loan on a vehicle — it’s the lenders. It has no risk exposure to the loans but its analytics platform delivers approximately $1,160 in revenue per loan.

The best part is it makes money while growing revenue at a brisk pace. Back where it traded in September 2020, this is a very interesting play on the fintech market.  

Koninklijke Philips (PHG)

Source: JPstock / Shutterstock.com

YTD return: -35%

Return since IPO: 1,576.1%

The Dutch conglomerate has been on a downhill slide since April, when it hit an all-time high of $61.23. It’s now back where it traded in the March 2020 correction. 

What’s gone wrong? Business slowed, but not enough to justify a 37% decline in its share price. 

The company reported Q3 2021 results in October that showed revenues declined 7.6% year-over-year (YOY) while income from continuing operations was up 58.4%. In the nine months ended Sep. 30, revenue increased 1.1% while income from continuing operations was down 3.7%. 

Those are certainly choppy numbers. But again, I don’t believe that justifies the drop in 2021.

In the third quarter, it sold its Domestic Appliances business for 2.5 billion Euros ($2.82 billion). That’s the end of the divestments it’s made to become a healthcare solutions company.  

Is it a perfect business? No, it’s not. However, there’s enough meat on the bone for investors to consider making a bet on the company. Yielding almost 3%, you’ll be paid to wait for it to return to $60 in the future.  

Bargain Stocks: StoneCo (STNE)

Source: FOTOGRIN / Shutterstock.com

YTD return:81.4%

Return since IPO: 37.7% 

A total of 15 analysts cover StoneCo stock. Seven rate it a buy, six view it as a hold and two consider it a sell. The median target price is 243 Brazilian Real ($42.34). 

The provider of fintech solutions for small- and medium-sized Brazilian businesses went public at $24 per share in October 2018. Its revenue in 2017 was 766.6 million Real ($133.6 million). It had 200,000 active clients at the time of its IPO. 

Fast forward to today, and its TTM revenue and operating income are 3.75 billion Brazilian Real ($653 million) and 920 million Brazilian Real ($160.3 million), respectively. At the end of September, it had 846,800 active payment clients and another 545,100 micromerchant active accounts. 

I’m a big believer in Latin American investments, so the fact STNE stock has struggled to maintain its share price from earlier this year (when it traded close to $100) is disheartening. 

I have to believe that investors have decided — wrongly, in my opinion — that the Brazilian economy is not a place to be at the moment. Case in point, the iShares MSCI Brazil ETF (NYSEARCA:EWZ) is down 23.7% YTD.     

If you’re risk tolerant, STNE is too good to pass up at these prices if you’re looking for bargain stocks.

Altice USA (ATUS)

Source: Shutterstock

YTD return: 58.5%

Return since IPO: -54.3%

Analysts sometimes get attached to certain stocks — bullish and bearish. When their opinions diametrically change, the stocks are often hit hard. That seems to be the case with Altice USA, a provider of television, internet and phone services for people living in New York City and several U.S. states from coast to coast. 

On Dec. 9, JPMorgan analyst Philip Cusick, a long-time Altice bull, downgraded the stock to “neutral” from “overweight” after two and a half years. He also cut his target price by 20% to $20. 

“While Altice management is rightly stepping-up network and service investments, the guide down in broadband subscriber growth underscores what may be a multi-quarter lag before investments yield improving subscriber [key performance indicators],” MarketWatch reported of Cusick’s comments to clients. 

At the moment, Altice has an FCF margin of 17.6% and an FCF yield of 24.8%. It doesn’t pay a dividend but it does repurchase its shares. Through the first nine months ended Sept. 30, it bought back 23.6 million shares at an average price of $34.12, well above its current share price under $16. 

Let’s hope the company is buying by the boatload here in the fourth quarter.    

Bargain Stocks: Crispr Therapeutics (CRSP)

Source: rafapress / Shutterstock.com

YTD return:46%

Return since IPO: 498.2%

In mid-November, Barron’s reported on four undervalued biotech stocks. Crispr was one of the four. At the time, it pointed out that the SPDR S&P Biotech ETF (NYSEARCA:XBI) was down 12.2% in 2021. As I write this, it’s down even further. 

So, it’s not surprising that the gene-editing specialty biotech, which has had a good run in recent years, is leaking some oil.    

Barron’s pointed out that the average target price for Crispr stock was $157. It’s currently $154.63, with 15 out of 23 analysts giving it a Buy rating. That’s 90% upside should the analysts be correct. 

I’m not a biotech expert by any means. But the fact that it’s got several gene-based therapies for serious ailments, such as sickle cell disease, entering the clinical trial pipeline suggests its shares are worth much more than their current price. 

I wouldn’t bet too much on CRSP, though. It still loses money. 

Amedisys (AMED)

Source: Shutterstock

YTD Total Return: -47.5%

3-Year Total Return: 2,893.7%

For those unfamiliar, Amedisys provides home healthcare, hospice and personal care services to people across the U.S. As a result of an aging population, I included the Louisiana-based company on an April 2020 list of 10 stocks to buy to meet this trend. 

In the past five years, Amedisys has seen its revenues grow by 55% to $1.9 billion, while its net income grew from a $3 million loss in 2015 to a profit of $126.8 million in 2019. So, it’s not hard to understand why it’s got an annualized total return of 48.1% over the past five years,” I wrote in 2020.

“Next to Teladoc, I think AMED stock could be the biggest no-brainer stock to buy on this list.”

Due to its significant correction that started in February after hitting an all-time high of $325.12, it’s now nearly $40 below where it was trading when I recommended it 20 months ago. 

The weird thing is, the company’s business continues to strengthen despite Covid-19, yet it’s down almost 50% on the year. For the entire 2021, it expects revenues and adjusted EBITDA of $2.2 billion and $297 million, respectively, at the midpoint of its full-year guidance. Those are both up from 2020 results.  

Sure, 2021’s growth wasn’t as good as 2020, but it’s steady and that’s all that matters in the healthcare business. I stand by my April 202o assessment of Amedisys. It’s a great long-term pick and addition to your list of bargain stocks to buy. 

On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia.