2 Growth Stocks Down 38% and 65% to Buy Right Now

For the last few months, the stock market has climbed higher and higher, driven by sentiment around the artificial intelligence (AI) boom. The S&P 500 index keeps breaking through to new all-time highs and is now up 16% year to date. Many stocks are now overvalued or even in bubble territory.

Not all stocks, though. There are plenty -- even fast growing companies -- trading at discounts that investors can buy today for market outperformance. Enter Coupang (NYSE: CPNG) and Remitly Global (NASDAQ: RELY). Here's why both growth stocks are easy buys right now.

Remitly's undervalued opportunity

Sending money abroad used to be expensive, risky, and a huge waste of time for senders. The smartphone revolution and mobile connectivity have enabled disruptors like Remitly Global to improve the customer experience when sending international remittances, which is why it has rapidly gained market share since its founding. With an easy-to-use mobile application, Remitly customers can send money to various bank accounts abroad for a reasonable price, making it easy for foreigners to send money to family or friends back home.

Last quarter, its send volume grew 40% year over year to $18.5 billion, even as remittance send volumes as a whole hit a roadblock with deportations in the U.S. Its competitor Western Union doesn't report apples-to-apples figures for comparison (and competes in slightly different markets), but its total transactions declined 3% year over year in the same quarter while Remitly's soared. Lower fees and a better customer experience keep convincing customers to switch from legacy players like Western Union to Remitly.

Revenue grew 34% year over year last quarter. Over the last 12 months, its revenue was $1.46 billion. Some investors are worried about the rise of stablecoins and the immigration crackdown impacting the company's volumes and revenue, which is why the stock has slipped 65% from its highs as of this writing.

But these are misguided concerns. Even with deportations rising, Remitly is still growing rapidly. And the U.S. is not its only market. Stablecoins are an opportunity, not a threat, because they are simply a way for people to fund a money transfer, which still needs to be converted to local currency.

With a lot of market share left to capture and as the leader in the space, Remitly has a path to double its revenue to $3 billion within the next five years. A high gross margin indicates the company can expand its profit margin to 20%, which would equate to $600 million in net earnings annually at some point this decade. Today, it has a market cap of just $3.55 billion, making the stock dirt cheap to buy and hold for many years.

Image source: Getty Images.

The next Amazon, hiding in plain sight

Coupang's stock has performed well in the past few years but is still down 38% from its initial public offering (IPO) back in 2021. The technology company has built an advanced e-commerce platform in South Korea, inspired by the Amazon model.

It has a Prime-like subscription business, its own automated warehouses and delivery network, and even has streaming video and advertising as other revenue lines. Readers may be shocked to hear this, but Coupang has possibly improved on the Amazon e-commerce model, delivering packages faster and offering bundles for its own rapid grocery and food delivery to customers, who can return items by leaving them outside their homes.

Like Remitly, Coupang has consistently taken market share. Revenue grew 19% year over year on a constant currency basis last quarter, and gross profit grew 22%. The company is running a slim profit margin today, with operating income of $149 million compared to $8.5 billion in revenue.

However, this is mainly due to the rapid reinvestments management is making into new product categories like food delivery and cloud computing, as well its rapid expansion into Taiwan as its first international market.

According to management, Taiwan revenue is growing more than 100% year over year, and should help overall revenue growth accelerate in the years to come. Today, you can buy Coupang at a market cap of $57 billion, which is a cheap price for a business with $32 billion in annual revenue growing at this pace.

Coupang could be the Amazon of the East Asian market outside of China, and looks to be trading at a reasonable price after this multiyear stock drawdown.

Brett Schafer has positions in Coupang and Remitly Global. The Motley Fool has positions in and recommends Amazon. The Motley Fool recommends Coupang. The Motley Fool has a disclosure policy.