Got $419? Buy these 2 overlooked tech stocks for 10X gains

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The first half of 2022 is a time that growth stock investors would like to forget. The Nasdaq Compound The index, which is full of innovative tech companies, crashed an unimaginable 29.5% in the first six months of the year.

With rising interest rates, long-term cash flow is worth much less now, and it could get worse before it gets better. The Federal Reserve is determined to keep inflation in check by raising interest rates even if it drives down the prices of growth stocks.

The rise in rates is embarrassing, but the blows received by Assets received (UPST 3.79%) and Focus on video communications (ZM 2.78%) have gone too far. Unlike most disruptive tech companies that went public in late 2020 and early 2021, these two companies are now cash flow positive.

Wall Street bankers might shake their heads, but Main Street investors will be happy to know they can add two shares of Zoom and six shares of Upstart to their portfolio for just under $419 right now. Here’s how those stocks could grow tenfold in the years to come.

1. Enlarge video

Shares of Zoom soared at the start of the pandemic as companies that hadn’t even considered allowing their employees to work remotely had to adapt overnight. Since peaking at the end of 2020, Zoom’s share price has lost more than four-fifths of its value.

In addition to the virtual meetings we’re all familiar with, the company differentiates itself from a host of competing services to keep subscribers. For example, the company released a software development kit in June that developers use to custom-build their own Zoom apps.

Microsoft Teams offers competing collaboration tools, but they’re not stopping enterprise customers from flocking to Zoom. Existing business clients spent 123% more in the 12-month period ending March 31 than in the prior year period.

The number of customers contributing more than $100,000 in annual revenue jumped 46% year over year. With just 2,916 of them, however, there’s still plenty of room to grow.

2. Reached

This innovative fintech was a market darling after its IPO in late 2020, but the good times didn’t last long. Upstart’s share price peaked last October and has since lost more than 90% of its value.

Since the 1980s, the three digits Just Isaac (FICO 1.84%) Scores have been the primary means used by financial institutions to assess the credit risk of individual borrowers. If these potential borrowers haven’t taken the right steps, prohibitive scores can end their relationship with a lender before it begins.

Upstart’s lending platform uses proprietary artificial intelligence (AI) algorithms to incorporate more data points than troublesome FICO scores. This allows the company to find creditworthy borrowers that financial institutions would not otherwise have considered.

Banks and other lenders have made their way to Upstart’s doorstep. In the first quarter of 2022, fee revenue soared 170% year-over-year to $314 million. This was more than enough to cover operating expenses which only reached $275 million during the same period.

Upstart has plenty of room to grow. Instead of focusing entirely on personal loans, the company is now expanding into the auto loan market, which is at least six times larger than the personal loan market. According Trans Unionthe addressable market for Upstart’s auto loan segment is worth approximately $751 billion annually.

Since Upstart originates more loans than any other start-up trying to take on FICO, its AI engine has more data to learn. With a growing lead in the lucrative space of individual credit risk assessments, the sky is the limit for this stock.

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