The stock market has recovered from its correction territory, but there’s still significant fear due to tariff-related uncertainty. This has caused stocks to trade sideways and make very little progress toward a sustained recovery. Most stocks remain expensive, especially if you look at tech stocks.
But this shouldn’t deter you from investing entirely. Rather the opposite, since corrections tend to cause many companies to tumble below their intrinsic prices. For example, Warren Buffett pulls out his wallet during market turmoil. We haven’t seen much of that in the past two years as the market rallied, but it’s a good idea to swoop in and buy certain stocks that are trading cheaply.
MongoDB (MDB)
MongoDB (NASDAQ:MDB | MDB Price Prediction) is a database company. It sells database software to companies that need to handle lots of data. That aligns quite well with the machine learning, AI, and data center narrative, so you’d expect it to be sitting on top of a massive rally. Unfortunately, it has been quite the opposite over the past year as it has declined 47%.
You can blame it on the company’s Q4 FY2025 earnings. It wasn’t terrible as revenue still grew 20% year-over-year to $548.4 million, and the cloud service grew 24%. Guidance is what caused a selloff since MongoDB expects revenue between $2.24 billion and $2.28 billion for fiscal 2026. The midpoint is below the $2.3 billion expected by analysts. This may look like a small top-line guidance miss, but software companies are expected to continuously beat estimates, especially during the AI boom. EPS guidance of $2.44 to $2.62 also came in short of the $3.39 consensus.
Since then, the selloff has been more than enough to account for the disappointment in guidance. MDB currently trades at an earnings multiple of 70 times forward earnings, but EPS is expected to improve significantly after a 25.5% decline this year.
EPS is expected to grow from $2.73 for FY2026 all the way to $8 in FY2030. Moreover, analysts have paid much higher premiums for the stock historically, so if management manages to trounce estimates in Q1 FY2026, MDB stock could recover sharply. Its acquisition of Voyage AI for $220 million also boosted the company’s AI stack.
The consensus price target is at $320.7, implying a 67.91% upside potential. The highest price target of $430 implies up to 125% upside.
SPS Commerce (SPSC)
SPS Commerce (NASDAQ:SPSC) sells cloud-based software to help companies in the retail supply chain swap information more effectively. They also have extra analytics to track sales and inventory.
The stock was among the best-performing names since the start of 2018. SPSC stock returned around 250% in gains from February 2020 to February 2024. However, that’s around when it started plateauing. The stock pulled back sharply this year and SPSC is now down nearly 30% year-to-date.
The broader market has been jittery, and that’s partly to blame for the stock decline as it is highly involved in supply chains. However, its own numbers have spooked investors more than any broader market fears. Guidance for 2025 projects top-line growth at 19-20%. Solid, but considering how much investors were paying for this stock before it declined, it didn’t wow anyone.
SPSC seems worth buying the dip at current levels since the company has performed flawlessly, and every dip has proved to be a buying opportunity. This time is unlikely to be any different since SPS Commerce is still a cash cow with sticky recurring revenue and a network effect that’s tough to crack. It has over 120,000 companies hooked onto its platform.
The consensus price target of $207.11 implies 60.4% upside potential. Price targets go as high as $240, and even the lowest price target of $175 implies solid upside.
Datadog (DDOG)
Datadog (NASDAQ:DDOG) makes its money by selling a cloud-based monitoring and analytics platform to its businesses. Investors were raking in the dough until late 2024, when things started going wrong. DDOG stock is now down 27.8% year-to-date.
In Q4 2024, Datadog reported Q4 2024 earnings. Revenue climbed 25% to $738 million, and adjusted EPS hit $0.49 per share. Both beat expectations, but investors were not happy with the 2025 guidance. Datadog projected revenue growth slowing to 18-19% in the range of $3.175 to $3.195 billion, with an EPS decline of $1.65 to $1.7 per share from $1.82 in 2024.
Wall Street analysts were expecting $3.24 billion in revenue and stable or growing profits. That gap and the shrinking margins sent the stock tumbling. Recent broader market fears haven’t helped either. Companies are cutting budgets on some cloud services, and some big clients have optimized their usage. Some clients are now negotiating volume discounts or scaling back, and Datadog is ramping up spending to offset any revenue decline.
The dip looks like an overreaction to a temporary margin squeeze. Datadog’s EPS is expected to decline 7% this year and then continue growing at a solid pace from $1.7 in 2025 to over $6 through 2030. If they hit even the low end of guidance ($3.175 billion) and trade back to a 15x P/S ratio (not unreasonable for a 20%+ grower), that’s still a $47 billion market cap.
The consensus price target of $158.7 implies 53.5% upside potential. The highest price target is at $200.
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