Key Points
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It’s unclear where the market goes from here, but investors should take advantage of bargains while they’re available.
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Figma has been on a roller coaster since going public, but it’s making the right moves to drive long-term growth.
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Upstart has fallen on concerns about slowing growth, but its future still looks bright.
It’s not an easy time to invest. Stocks look set to finish November down, which would be the first down month since April. Meanwhile, the CBOE Volatility Index, also known as the fear index as it spikes when stocks fall, has hit a six-month high.
No one knows where the market goes from here. There are legitimate signs of stress in the economy. Consumer sentiment has plummeted. The labor market has flatlined. The housing market is at a standstill, and companies like Walmart, Target, and Chipotle have all noted an “affordability crisis” that’s hitting consumer spending in discretionary categories.
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However, the sell-off has created some attractive opportunities in individual stocks, and now looks like a good time to go bargain hunting. Keep reading to see two that look like top buys today.
Image source: Getty Images.
1. Figma
Few stocks have gained and lost as much as Figma (NYSE: FIG) this year. In just a few months, the competitor to Adobe and specialist in user interface, user experience (UI/UX) software went public at $33 a share and skyrocketed as high as $142 just days afterward. That rally was fueled by high demand for the fast-growing software stock, which had already been validated by Adobe’s attempt to buy it for $20 billion in 2022, which regulators blocked.
However, that rally quickly faded, and Figma shares have steadily fallen since. The stock tumbled after its second-quarter earnings report in September on concerns about excessive spending and received a better response in November, but the stock continued to fall afterwards.
Still, the fundamentals of the business continue to look strong. In its Q3 earnings report, revenue rose 38% to $274.2 million, and it reported an adjusted operating profit of $34 million.
However, the biggest reason to bet on Figma stock may be its investments in artificial intelligence (AI). The company is moving quickly to take advantage of a unique opportunity, as AI could lead to a massive land grab in software where AI-enabled products are just starting to roll out.
Among the products it has introduced is Figma Weave, based on its acquisition of Weavy, which uses generative AI for images, videos, animation, and other design concepts, as well as Figma Make, which provides a suite of AI-powered design tools for web and app design.
Finally, after retreating back to near its initial public offering (IPO) price, Figma’s market cap is less than the $20 billion Adobe offered for it, and its price-to-sales (P/S) ratio of 17 looks reasonable, especially for its growth rate.
2. Upstart
Upstart (NASDAQ: UPST) is another tech stock that has fallen sharply in recent months. Upstart is an AI-powered loan originator. Like other fintech stocks, Upstart has pulled back on concerns about rising credit risk as auto delinquencies are on the rise, discretionary spending is weakening, especially among low- and middle-income consumers, and job growth has significantly slowed.
However, Upstart doesn’t seem to be experiencing any of those headwinds. Its model did slow down approvals in Q3, perhaps in response to a weakening macro environment, but there were no signs of rising delinquencies.
Despite those concerns, the business continues to surge with loans originated up 128% in the quarter to 428,056, as its conversion rate improved from 16.3% to 20.6%. Revenue jumped 71% to $277 million, and it reported generally accepted accounting principles (GAAP) profit of $31.8 million, or $0.23 per share.
Investors were disappointed that its guidance called for slowing growth in Q4, but that was by design as its model may have overcorrected. On the earnings call, management said that it’s better for the model to be too conservative than too aggressive in making loans.
After the pullback, Upstart stock is now down more than 50% from its peak earlier this year, and the business is delivering strong growth even with the slowdown to an expected 32% revenue growth in Q4.
Currently, the stock is trading at a price-to-earnings (P/E) ratio of 28 based on trailing adjusted earnings per share. The credit environment is a risk for Upstart, but if it can pass that test, there’s a lot of upside potential for the stock, as it has only started to penetrate the massive auto- and home-loan markets.
Based on its growth rate, the stock looks significantly undervalued right now.
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Jeremy Bowman has positions in Chipotle Mexican Grill, Figma, Target, and Upstart. The Motley Fool has positions in and recommends Adobe, Chipotle Mexican Grill, Target, Upstart, and Walmart. The Motley Fool recommends the following options: long January 2028 $330 calls on Adobe, short December 2025 $45 calls on Chipotle Mexican Grill, and short January 2028 $340 calls on Adobe. The Motley Fool has a disclosure policy.