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When you think that a company is going to gain in value over the long term, getting it at a discount is a thrilling proposition. Buying the dip requires a bit of mental fortitude to go against popular sentiment, but when you get it right, your portfolio reaps the benefits.
On that note, let’s look at a pair of enticing opportunities for aspiring dip-buyers. Both of these companies have solid prospects ahead that should beneift investors, so let’s dive in.
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1. CRISPR Therapeutics
While its shares are down about 12% over the last 12 months amid a punishing bear market, CRISPR Therapeutics (NASDAQ: CRSP) has a solid chance of starting a bull run, and soon.
With the help of its partner, Vertex Pharmaceuticals, CRISPR’s gene therapy known as exa-cel is awaiting the green light from regulators at the U.S. Food and Drug Administration (FDA), who are evaluating its merit as a treatment for both beta thalassemia and sickle cell disease, a pair of rare hereditary blood disorders.
If the FDA grants the company’s request for a priority review, CRISPR could hear back in roughly eight months from now, which could position it for exa-cel’s launch in early 2024. Given that it doesn’t have any medicines on the market or any recurring revenue to speak of at the moment, getting exa-cel out the door would be a massive win, and it would likely send the stock flying.
But CRISPR is worth buying on the dip today, even if regulators say no to exa-cel. Aside from its trio of mid-stage immuno-oncology programs and its pair of programs aiming to treat type 1 diabetes, all of which could be quite lucrative if they make it to the market, it also has more than $1.8 billion in cash and equivalents on hand.
Its total expenses in 2022 were only $673 million, and its debt load of $244 million isn’t very intimidating. $228 million of it is in the form of long-term capital lease obligations, rather than in other types of liabilities like loans that would require interest payments in the future.
In other words, this biotech has plenty of money for at least the next two years, and it can afford to borrow more if it needs cash to keep the lights on after that — assuming it isn’t profitable thanks to launching exa-cel by then.
Be aware that as a biotech, CRISPR is a bit of a risky purchase even if it won’t be going out of business anytime soon. Whiffing its attempt at getting regulatory approval would be bad for shareholders, even those who buy it at its current price.
2. NextEra Energy
Down by 5.7% this year so far compared to the market’s gain of 8.6%, NextEra Energy (NYSE: NEE) is ripe for buying on the dip because it’s almost certainly going to continue being one of the U.S.’s most important and most effective renewable energy businesses in the coming decades. And if its track record of growing its annual net income by an average of 12.7% per year over the past decade — reaching $4.1 billion in 2022 — is any indication, it’s going to continue being a great stock to own too.
NextEra’s ever-increasing value stems from its portfolio of green (and also a few not-so-green) energy generation assets, which range from solar panels to wind turbines as well as a few nuclear power plants and a smattering of gas and coal generation plants.
In total, it owns the rights to electricity generation assets that produce 65 gigawatts of power. And in the coming years, it’ll likely be leading the charge to decarbonize the economy by packing on even more renewable energy capacity, taking advantage of new subsidies in the Inflation Reduction Act (IRA) in the process.
By 2030, it anticipates roughly 250 gigawatts of domestic demand for green energy, and it’s planning to grow its capacity by as much as 42 gigawatts by 2026 to serve that demand. Through 2026, management is expecting its annual earnings per share (EPS) to rise by as much as 8% per year, and its operating cash flow could grow at an even faster pace. Beyond that, there’s no guarantee of a slowdown. So why wait to buy it until the future, when its shares will probably just be more expensive than they are right now?
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*Stock Advisor returns as of April 10, 2023
Alex Carchidi has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends CRISPR Therapeutics, NextEra Energy, and Vertex Pharmaceuticals. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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