Do you have $10,000? These 2 growth stocks are trading near their 5-year lows

IIf you have $10,000 to invest and are willing to take some risk, now might be a good time to invest in scruffy stocks. In the short term, it can be scary to buy stocks that are falling and are at multi-year lows. But if the businesses are healthy and you’re willing to hold on for years, it could help you turn a nice profit.

Two stocks that haven’t been this cheap in years are biogenic (NASDAQ: BIIB) and Alibaba Holdings Group (NYSE: BABA). Their businesses are not broken, but they are facing headwinds. Investing $5,000 in each of these stocks could be an attractive option for contrarian investors.

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1. Biogenic

Healthcare company Biogen appeared to be headed for the moon last year after the Food and Drug Administration (FDA) granted accelerated approval for its Alzheimer’s drug, Aduhelm. As a result, the stock peaked over $460 before giving back those gains. Today it is trading around $220; the last time the healthcare stock traded below this was in 2013.

The problem is that the company’s sales have declined. For the period ending September 30, 2021, revenue of $2.8 billion was down 18% year over year. Growing competition led to a 48% drop in sales of the multiple sclerosis drug Tecfidera, which was Biogen’s flagship product. And the company expects the decline to continue in future periods now that Viatris launched a generic version of the drug.

Aduhelm is key to replacing lost revenue for Biogen and much will depend on whether the drug can be a winner. Currently, this is not the case. Several experts quit their jobs at the FDA last year following a controversial approval of the drug, with many simply not believing it was proven to be effective in treating Alzheimer’s disease. Medicare may end up covering only a small fraction of patients who use the drug, such as those involved in qualifying clinical trials. However, a final decision will not be made until April.

But, with Aduhelm representing the first new Alzheimer’s drug the FDA has approved in nearly two decades, it could still be a solution that many patients are looking for. And with Biogen announcing late last year that it would halve the price of Aduhelm to an annual cost of $28,200, it could make the drug much more accessible to patients. If the drug turns out to be a blockbuster, the company could expect to generate revenue for years to come.

Biogen’s stock is currently trading at a forward price/earnings (P/E) multiple of 12, which is lower than where it traded last year. Although sales are down, this is still a business that has generated a 14% profit margin in the last 12 months and could be a viable investment. If there is progress to show that there is more enthusiasm around Aduhelm from doctors and patients, especially now that it is cheaper, it could help increase optimism around Biogen.

I wouldn’t go all out on Biogen. Still, for a risk-taker with a diversified portfolio, who can afford to invest $10,000 right now, putting half that amount into that stock may not be a bad decision in the long run.

2.Alibaba

Chinese tech stock Alibaba is another risky stock that has many advantages. Last year, I thought the stock might be a cheap buy at under $200. Then it fell below $150. And now it’s trading at less than $120 per share. Outside of this year’s decline, we have to go back to 2017 for the last time Alibaba shares were trading much lower. At that time, the stock was still below $100.

The big risk here is the uncertainty of US-China relations and whether there will be any crackdowns in China that will impact Alibaba’s business. In 2021, Chinese regulators fined the company $2.8 billion after an anti-monopoly investigation. But U.S. tech companies also face similar risks. Metaplatforms may be broken due to antitrust violations, and yet it is trading at a forward P/E of over 20 while Alibaba is at just under 14. There will always be some risk involved in investing in technology companies and Alibaba is no exception. Some investors, however, might be more concerned that the Chinese government is going after its companies harder than the United States might be doing in Silicon Valley.

But, without a crystal ball, it’s impossible to know how these things will play out. This is where investment style comes in. If an investor wants to play it safe and wait and see, they can certainly do so, but until then, if things look more promising for Alibaba, the stock will likely trade much higher than it currently is.

And there’s still a lot to love in the stock. For the 12-month period ending September 30, 2021, Alibaba reported that its annual active customers in its ecosystem (which includes several e-commerce sites) stood at 1.2 billion, up 62 million from the previous year. the previous reference period. Sales of $31.1 billion were also up 29% year over year. Although the company expects its growth rate in 2022 to fall no more than 23%, this is still a decent rate for a company as large as Alibaba.

Alibaba’s stock is low to the point where the potential reward may outweigh the risks. For contrarian investors, this could be another promising long-term investment in their portfolios.

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Randi Zuckerberg, former director of market development and spokesperson for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a board member of The Motley Fool. David Jagielski has no position in any of the stocks mentioned. The Motley Fool owns and recommends Meta Platforms, Inc. The Motley Fool recommends Biogen and Viatris Inc. 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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