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It’s been a volatile year for the major market averages, and the S&P-500 (SPY) has now corrected over 27% from its highs, suggesting we’ve seen the majority of the downside short-term.
This is based on the average recessionary bear market coming in at 34% and the S&P-500 now satisfying 80% of the average decline’s magnitude.
One of the most beaten-up areas of the market has been growth stocks, and with elevated pessimism finally increasing the likelihood of a short-term market bottom, this is the ideal time to be hunting for new ideas.
Unfortunately, not all stocks are created equal. While many growth stocks might be oversold, those still posting net losses per share and carrying high debt levels are extremely risky in a rising-rate environment.

However, for investors willing to dig through the rubble, two names stand out as extremely attractive, trading at significant discounts to fair value despite boasting strong earnings trends. In this update, we’ll look at two stocks that are solid buy-the-dip candidates:
Boot Barn (BOOT)
Boot Barn (BOOT) is a small-cap growth stock in the Retail/Apparel industry group that has enjoyed near triple-digit sales growth, increasing revenue from $180MM in fiscal Q1 2020 to $299MM in fiscal Q1 2023.
This has been accomplished by industry-leading same-store sales growth rates and continued unit growth (73 new stores opened), which is supported by the company’s continuously improving unit economics. For example, the company’s average sales per square foot have improved from a prior target of $170/square foot to over $400/square foot, increasing its payback period from three years to one year for new stores.
At the same time as sales have continued to increase at double-digit levels and it’s grown its store count to 330, the company has enjoyed growth in exclusive brand penetration, providing a significant boost to annual earnings per share.
This is because its private-label brands carry much higher margins, allowing BOOT to nearly quadruple annual EPS from FY2020 to FY2022 ($6.18 vs. $1.55). These are phenomenal growth rates, and with plans to grow its store count by over 12% this year, this growth story is still in its early innings.
Unfortunately, the stock has been crushed year-to-date (down 56%) due to the negative sentiment for the Retail Sector (XRT) and the company’s lukewarm comments in fiscal Q2 2023 guidance.
However, it’s important to note that while Boot Barn’s inventory levels were up and same-store sales decelerated, it has less of a discretionary tilt to its business than its peers. This is because many of its categories are functional and include work boots, work apparel, and men’s Western apparel).
So, while Boot Barn’s sales will be impacted by shrinking discretionary budgets among consumers, I expect it to be more insulated than some of its more discretionary peers.
The good news for investors who were patient to stay on the sidelines is that even if fiscal Q2 2023 results do show deceleration, considerable negativity is already priced into BOOT’s stock. This is because it is now trading at ~9.1x FY2023 earnings estimates ($5.95) and less than 8x FY2024 annual EPS estimates ($6.56).
The result is that Boot Barn is the definition of growth at a very reasonable price and the case of a proverbial baby being thrown out with the bathwater. So, with the stock pulling back below $55.00 to test technical support with a fair value above $90.00, I see this as a buying opportunity.
DocGo (DCGO)
DocGo (DCGO) is a $1.1BB company in the Medical Services industry group. It is a leading provider of last-mile mobile health services and integrated medical mobility solutions, and it was founded in 2015.
When it comes to the largest stock market winners over the past half-century, they have two key attributes, and DocGo also boasts these two characteristics. The first is high double-digit sales and earnings growth, and the second is a product or service that changes how we live or disrupts an industry.
In terms of disruption, the company’s mobile health segment up-trains lower-cost medical professionals to provide care in the homes or offices of patients, filling a gap that telehealth cannot.
Meanwhile, its medical transportation segment provides non-emergency ambulance transportation for hospital systems. The result is that healthcare is more efficient, and patients don’t slip through the cracks, given that those who cannot get to hospitals easily can receive the care they need. Those that must get to hospitals for care are provided a way to get through without delay through non-emergency ambulance transportation.
Although the story is exciting from an investment standpoint, the financials are the most important. Fortunately, DocGo excels in this category. The company reported 78% revenue growth in its most recent, and quarterly earnings per share increased 83%, helped by higher margins.
This is a clear differentiator in a market where we’re seeing margin compression for most small-cap companies. In fact, DocGo’s H1 2022 results were so strong that the company raised its FY2022 sales guidance to $430MM and is now looking to take advantage of market weakness to buy back its stock, with it sitting on over $200MM in cash.
Based on a fair earnings multiple of 50 for a high-margin company boasting these growth rates, I see over 72% upside for DCGO, with a fair value of $19.00 (50x FY2023 annual EPS estimates of $0.38).
Longer-term, though, I see an upside to more than $25.00 per share, with the company having a massive TAM where it’s barely scratched the surface and continuing to see strong growth in new contracts.

So, with DCGO being one of the few small-cap names in uptrends with high double-digit revenue growth, I would view any pullbacks below $10.00 as buying opportunities.
With the general market under pressure and stocks continuing to plumb new lows, it’s understandable that many investors are shying away from putting new capital to work.
However, it is a market of stocks, not a stock market. BOOT and DCGO are two examples of growth at a very reasonable price that could increase by 80% over the next 24 months. This is due to being heavily mispriced due to the increased downside volatility we’ve experienced in the market, where investors are selling indiscriminately to raise cash.
So, while position sizing is key in small-cap names, I see both as attractive below $54.00 (BOOT) and $10.00 (DCGO), respectively.
Taylor DartINO.com Contributor
Disclaimer: This article is the opinion of the contributor themselves. Taylor Dart is not a Registered Investment Advisor or Financial Planner. This writing is for informational purposes only. It does not constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction. The information contained in this writing should not be construed as financial or investment advice on any subject matter. Taylor Dart expressly disclaims all liability in respect to actions taken based on any or all of the information in this writing.

The latest inflation data has further aggravated recession worries. With inflation still hovering near its multi-decade high, the odds of the Fed proceeding with its fourth consecutive 75-bps interest rate hike are pretty high. The consequent increase in recession fears has dampened the market sentiment significantly.
However, healthcare companies enjoy demand and margins resistant to inflation and recession. The inelastic demand for healthcare products helps these companies generate stable revenues regardless of inflationary pressures and consumers’ spending cuts amid a recession.
Moreover, the demand for healthcare products and services could rise further due to the increased need to serve aging Baby Boomers and the increasing frequency and severity of chronic conditions.

According to a report published by Health Affairs, national health spending is expected to reach $6.8 trillion by 2030.
Hence, given ongoing macroeconomic turbulence and uncertain outlook, one could make the most of the strong uptrend in healthcare stocks Eli Lilly and Company (LLY), Merck & Co., Inc. (MRK), and Biogen Inc. (BIIB) by investing in them.
Eli Lilly and Company (LLY)
LLY discovers, develops, and markets human pharmaceuticals worldwide. With a market capitalization of $314.88 billion, the company provides diabetes, oncology, neuroscience, and other products.
Over the last three years, LLY has grown its revenue at a 10.3% CAGR, while the company’s EBITDA has grown at a 13.3% CAGR.
For the second quarter of the fiscal year 2022 ended June 30, 2022, LLY’s worldwide revenue stood at $6.49 billion. Excluding revenue from Alimta, the sale of the company’s rights to Cialis in China in Q2 2021, and COVID-19 antibodies, the company’s revenue grew 6% year-over-year. LLY’s operating income and net income came in at $1.21 billion and $952.50 million, respectively. Its non-GAAP EPS came in at $1.25.
The consensus revenue estimate of $30.30 billion for fiscal 2023, ending September 2023, represents a 5.2% improvement year-over-year. Also, Street expects LLY’s EPS to grow 16.3% year-over-year to $9.28 during the same period.
LLY’s stock is trading at a premium, indicating high expectations regarding the company’s performance in the upcoming quarters. Regarding forward P/E, LLY is trading at 41.69x, 122.7% higher than the industry average of 18.7x. Also, it is trading at a forward Price/Sales multiple of 10.98 compares to the industry average of 4.25.
The stock is currently trading above its 50-Day and 200-Day moving averages of $315.46 and $293.68, respectively, indicating a bullish trend. It has gained 10.7% over the past month to close the last trading session at $332.76.
MarketClub’s Trade Triangles show that LLY has been trending UP for all the three-time horizons. The long-term trend for LLY has been UP since March 17, 2022, while its intermediate-term and short-term trends have been UP since September 28 and October 14, 2022, respectively.
The Trade Triangles are our proprietary indicators, comprised of weighted factors that include (but are not necessarily limited to) price change, percentage change, moving averages, and new highs/lows. The Trade Triangles point in the direction of short-term, intermediate, and long-term trends, looking for periods of alignment and, therefore, intense swings in price.
In terms of the Chart Analysis Score, another MarketClub proprietary tool, LLY scored +100 on a scale from -100 (strong downtrend) to +100 (strong uptrend), indicating that the uptrend is likely to continue. However, traders should protect gains.The Chart Analysis Score measures trend strength and direction based on five different timing thresholds. This tool considers intraday price action; new daily, weekly, and monthly highs and lows; and moving averages.
Click here to see the latest Score and Signals for LLY.
Merck & Co., Inc. (MRK)
With a market capitalization of $233.52 billion, MRK is a global healthcare company offering prescription medicines, vaccines, biological therapies, and animal health products. The company operates through Pharmaceuticals and Animal Health segments.
MRK’s revenue, EBITDA, and EPS increased at CAGRs of 8.8%, 10.1%, and 22.3% over the last three years, respectively.
In the fiscal 2022 second quarter ended June 30, 2022, MRK’s sales increased 28% year-over-year to $14.59 billion. The company’s non-GAAP net income grew 204.2% from the year-ago quarter to $4.74 billion. During the same period, its non-GAAP EPS amounted to $1.87, up 206.6% year-over-year.
Analysts expect MRK’s revenue for the current fiscal year (ending December 31, 2022) to come in at $58.54 billion, indicating an increase of 20.2% year-over-year. The company’s EPS is expected to increase 22.3% year-over-year to $7.36. Furthermore, MRK has topped the consensus EPS estimates in each of the trailing four quarters.
The stock is currently trading at a discount to its peers. In terms of forward P/E, MRK is presently trading at 12.53x, 31.3% lower than the industry average of 18.19x. Also, its forward Price/Sales multiple of 3.99 compares with the industry average of 4.22.
MRK is currently trading above its 50-Day and 200-Day moving averages of $88.48 and $85.82, respectively, indicating a bullish trend. It has gained 9.3% over the past month to close the last trading session at $94.12.
According to the Trade Triangles, MRK has been trending UP for all three time periods. The long-term trend for MRK has been UP since October 1, 2021, while its intermediate-term and short-term trends have been UP since October 10 and October 14, 2022, respectively.
In terms of the Chart Analysis Score, MRK scored +90, indicating that the stock is in a strong uptrend that is likely to continue. While MRK shows intraday weakness, it remains in the confines of a bullish trend. Traders should use caution and utilize a stop order.
Click here to see the latest Score and Signals for MRK.
Biogen Inc. (BIIB)
BIIB develops, manufactures, and delivers therapies for treating neurological and neurodegenerative diseases. With a market capitalization of $38.40 billion, BIIB has a leading portfolio of medicines to treat multiple sclerosis, introduced the first approved treatment for spinal muscular atrophy, and developed the first and only approved treatment to address a defining pathology of Alzheimer’s disease.
During the fiscal 2022 second quarter ended June 30, 2022, BIIB’s total revenue came in at $2.59 billion, registering a slight year-over-year decline due in part to generic and biosimilar competition for TECFIDERA and RITUXAN. Total cost and expenses declined 39.8% year-over-year to $1.32 billion.
As a result, BIIB’s net income increased 135.9% from the year-ago value to $1.06 billion, while its EPS grew 142.1% from the prior-year quarter to $7.24.
Analysts expect BIIB’s EPS for the fourth quarter of the current fiscal year (ending December 31, 2022) to increase by 3.2% year-over-year to $3.50. The company has surpassed the consensus EPS estimates in three of the trailing four quarters.
The stock is currently trading at a discount to its peers. In terms of forward P/E, BIIB is currently trading at 16.3x, 12.8% lower than the industry average of 18.72x. Also, its forward Price/Sales multiple of 3.91 compares favorably with the industry average of 4.33.
The stock is trading above its 50-day and 200-day moving averages of $222.59 and $214.35, respectively, indicating a bullish trend. It has gained 30.9% over the past month to close the last trading session at $269.55.
BIIB has been trending UP for all three time periods, according to Trade Triangles. The long-term trend for BIIB has been UP since August 8, 2022, while its intermediate-term and short-term trends have been UP since September 12 and October 13, 2022, respectively.

In terms of the Chart Analysis Score, BIIB scored +90, indicating that it is in a strong uptrend that is likely to continue. While BIIB shows intraday weakness, it remains in the confines of a bullish trend. Traders should use caution and utilize a stop order.
Click here to see the latest Score and Signals for BIIB.
What’s Next for these Health Care Stocks?
Remember, the markets move fast and things may quickly change for these stocks. Our MarketClub members have access to entry and exit signals so they’ll know when these trends start to reverse.
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Stubborn inflation, rising interest rates, and consequent market volatility have kept many investors on edge. Inflation shows no signs of slowing, despite the Fed’s aggressive monetary policy tightening.
The consumer price index increased 0.4% sequentially in September, beating the Dow Jones estimate. The headline inflation was up 8.2% on a 12-month basis, hovering near the highest levels in decades.
The surging inflation and hot employment data for September strengthen the case for the Fed announcing a fourth 75-basis-point interest rate hike in next month’s meeting. Given these circumstances, the Conference Board sees a 96% chance of a recession in the United States over the coming 12 months, which might begin before the end of 2022. Moreover, the board projects 2022 real GDP to grow 1.5% year-over-year and 2023 growth to zero percent.

Since the economic headwinds are expected to keep the stock market under pressure, overly traded stock Pfizer Inc. (PFE) and Snap Inc. (SNAP) could be best avoided now, with their intermediate and long-term trends being down.
Pfizer Inc. (PFE)
Popular drugmaker PFE discovers, develops, manufactures, and distributes biopharmaceutical products worldwide. The pandemic made PFE one of the world’s most watched stocks, thanks to its COVID-19 drugs and vaccines. The stock has a market capitalization of $240.55 billion.
Although the company has recently announced some promising deals, acquisitions, and FDA approvals, the stock has declined 27.4% year-to-date, underperforming the S&P 500’s 23% decline. The stock has been underperforming the broader market, with investors pricing in the expected sales decline that the company might experience due to an anticipated slowdown in Covid vaccinations in the near term.
For the fiscal second quarter that ended June 30, 2022, PFE’s revenues increased 46.8% year-over-year to $27.74 billion. However, the company’s revenues largely leaned on sales of its Covid-19 vaccine Comirnaty and its antiviral treatment Paxlovid. The Covid-19 vaccine brought in $8.80 billion in revenue in the second quarter, while sales of Paxlovid totaled $8.10 billion.
Adjusted net income attributable to PFE common shareholders rose 93.5% from the year-ago value to $11.66 billion, while adjusted EPS grew 92.5% year-over-year to $2.04.
Wall Street analysts expect PFE’s revenues to decline in the about-to-be-reported quarter, which ended September 2022. The consensus revenue estimate of $21.33 billion for the fiscal third quarter indicates an 11.5% year-over-year decline.
Its EPS is expected to come in at $1.43, indicating a 7% increase from the prior-year quarter. However, revenue and EPS are expected to decrease 22.3% and 20.2% year-over-year for the next year, respectively.
The stock is currently trading at a discount to its peers. In terms of its forward P/E, PFE is trading at 7.57x, 65.6% lower than the industry average of 21.98x. Its forward Price/Sales multiple of 2.41 is 42.2% lower than the industry average of 4.16.
PFE is trading below its 50-day and 200-day moving averages of $46.08 and $50.17, respectively, indicating a bearish sentiment. It closed the last trading session at $42.86.
According to MarketClub’s Trade Triangles, the long-term trend for PFE has been DOWN since August 29, 2022, and its intermediate-term trend has been DOWN since Jul 21, 2022.
The Trade Triangles are our proprietary indicators, comprised of weighted factors that include (but are not necessarily limited to) price change, percentage change, moving averages, and new highs/lows. The Trade Triangles point in the direction of short-term, intermediate, and long-term trends, looking for periods of alignment and, therefore, intense swings in price.
In terms of the Chart Analysis Score, another MarketClub proprietary tool, PFE scored -55 on a scale from -100 (strong downtrend) to +100 (strong uptrend), indicating that the stock is moving in a sideways pattern and is unable to gain momentum in either direction. So, until a more robust trend is identified, it could be wise to avoid the stock.
The Chart Analysis Score measures trend strength and direction based on five different timing thresholds. This tool considers intraday price action, new daily, weekly, and monthly highs and lows, and moving averages.
Click here to see the latest Score and Signals for PFE.
Snap Inc. (SNAP)
SNAP is a camera and social media company operating worldwide. The company’s popular offering is Snapchat, a camera application with various functionalities, such as Camera, Communication, Snap Map, Stories, and Spotlight, enabling people to communicate visually through short videos and images.
The stock has declined 87% over the past year and 78.8% year-to-date to close the last session at $9.99. Bearish sentiments around the stock can be attributed to the challenging economic conditions, slowing demand for its online ad platform, Apple Inc.’s (AAPL) privacy-related changes, and growing competition from emerging social media companies.
SNAP’s daily active users grew 18% year-over-year to 347 million in the fiscal second quarter that ended June 2022. However, its average revenue per user declined by 4% to $3.20.
The company’s revenue increased 13.1% year-over-year to $1.11 billion. However, its net loss increased 178.3% year-over-year to $422.07 million, while its non-GAAP loss per share came in at $0.02, compared to an EPS of $0.10 in the prior-year period.
While analysts expect its revenue to increase 5.3% year-over-year to $1.12 billion in the about-to-be-reported quarter, ended September 2022, its EPS is expected to remain negative. The Street expects its EPS to decline 85.4% year-over-year in the fiscal year ending December 2022.
The stock looks overvalued at its current price level. Its forward non-GAAP P/E of 137x is 931% higher than the industry average of 13.29x. Regarding its forward Price/Sales, SNAP is currently trading at 3.52x, 215% higher than the industry average of 1.12x.
SNAP is currently trading below its 50-day moving average of $11.03 and 200-day moving average of $23.01.

SNAP’s long-term trend has been DOWN since October 22, 2021, while the intermediate-term trend has been DOWN since September 26, 2022, according to the Trade Triangles.
In terms of the Chart Analysis Score, SNAP scored -55. This score indicates that SNAP is moving in a sideways pattern and is unable to gain momentum in either direction. Until a more substantial trend is identified, the stock could be avoided.
Click here to see the latest Score and Signals for SNAP.
What’s Next for Pfizer Inc. (PFE) and Snap Inc. (SNAP)?
Join MarketClub now to see the latest signals and scores, get alerts, and read member-exclusive analysis for PFE and SNAP plus over 350K stocks, futures, ETFs, forex pairs and mutual funds.
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Best,The MarketClub Team[email protected]