In hindsight, Meta Platforms (NASDAQ:META) stock was clearly a “can’t miss” contrarian opportunity late last year, when the tech giant traded for as little as $88.09 per share.
Since then, META stock has rallied by around 246%, thanks to favorable company-related and sector-related developments.
However, while it may be a longtime before the Facebook and Instagram parent’s shares more-than-triple in prices again, another sort of “can’t miss” opportunity may be just around the corner.
Although tech stocks have stayed strong, various macro uncertainties threaten the market once again.
Even as META keeps “crushing it,” with improvements in its operating results, this alone may not be enough to avoid a moderately high pullback for shares.
As I’ll explain in more detail below, this could create the perfect situation, for those who regret buying this stock in the past, yet want to gain exposure to its still-promising future prospects.
META Stock is Not Unsinkable
In a little less than a year, Meta Platforms has successfully executed a turnaround that re-prioritized what matters most to investors, removed a lot of bloat, and left the company well positioned to stay ahead of its social media competitors.
It’s good that Meta Platforms has put the metaverse on the back burner, conducted several rounds of downsizing, and introduced new applications (Reels, Threads) that will keep rivals like TikTok at bay and drive organic growth.
However, make no mistake. While the underlying company is stronger today than it was as recently as late 2022, META stock is not unsinkable.
For one, it’s not only been improvements in Meta Platforms’ results that have fueled the stock’s big 2023 rally. A rebound in tech, driven by the kickoff of the generative artificial intelligence mega-trend, has played a big role as well.
Based on the recent performance of tech stocks, “AI mania” may be starting to cool down.
Meanwhile, other factors, like high interest rates and disappointing corporate earnings, could add more pressure to stocks overall. After a strong first half of 2023, the market could correct between now and year’s end, causing a downward move for META.
Why This Works in Your Favor
Declines in META stock will probably not be massive if there’s a market correction. As Louis Navellier and the InvestorPlace Research Team argued earlier this month, even with its big run-up, META’s valuation has not gotten out of hand.
Shares today trade for around 22.7 times earnings, far lower than the higher multiples some of the other big tech names trade for today. These pricier names may have more room to fall, if pessimism briefly takes hold in the markets once again.
Still, a moderate move lower for META could push it to a better entry point. A correction will only be temporary.
The market could quickly rebound as economic conditions normalize. For Meta, the rebound could be even stronger. At least, given the company’s growth tailwinds, and its continued push to maximize efficiency (including through the use of AI).
Let’s say META corrects by 10%-15%. That would push shares down to a forward earnings multiple of around 20. Such a valuation would be sustainable, again given the company’s growth potential.
Even if the stock fails to experience a re-expansion of its earnings multiple back to the low-to-mid 20s, the stock could perform strongly in the years ahead.
Back Up the Truck if Markets Get Volatile Again
Per sell-side consensus, Meta Platforms’ annual earnings per share (or EPS) could grow from an estimated $13.39 in 2023, to around $19.56 in 2025. The top end of estimates call for even larger earnings growth during this time frame.
It may not be out of the question for EPS to come in near $25 two years out. Again, even if META is still trading for 20 times earnings, this type of growth will be sufficient to send the stock to at least $400 per share, if not to even higher price levels.
These prospects alone may make the stock worthy of a buy today, at $307 per share.
But as a market downturn could briefly send it back down to between $260 and $275 per share, if the market becomes volatile again, consider it high time to back up the truck with META stock.
On the date of publication, Thomas Niel did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.