1 growth stock down 65% This is a screaming buy right now

If you were paying attention, 2022 was a lousy year for digital advertisers. In the second quarter and again in the third meta platformsParent company of Facebook and Instagram, reported declining ad revenue for the first time since its IPO.

The drama at the Facebook parent company was smaller in comparison snap. A difficult time adapting to new privacy rules that make it harder for social media apps to track their members’ behavior has recently caused average revenue per user to drop by a double-digit percentage.

With all the troubles social media stocks have been facing lately, you might be surprised to learn that one of the best growth stocks to buy right now is one of them doximity (DOCS -0.34%), a company that operates a social media platform. Here’s how it stood out from the crowd to become an unbeatable target for advertisers with very deep pockets.

gain market share

Doximity’s main business is a social media platform that counts around 80% of US doctors as members. Doximity’s curated social media feed doesn’t let members post their own content, but helps them stay current on their areas of expertise.

With the vast majority of practicing physicians already connected, Doximity’s productivity tools are tremendously useful. Doximity not only enables physicians to discuss patients together in a professional setting, but also has telehealth capabilities that were used by a record 370,000 physicians in the third quarter.

A curated newsfeed isn’t particularly interesting on a personal level, but advertisers can rest assured that their brands won’t be seen near problematic content. Both brand protection and a qualified audience are powerful selling points that compel advertisers to open their wallets further to Doximity. In the third quarter, average revenue per existing marketing partner increased 25% year over year.

room to grow

Doximity reported that its third-quarter revenue rose 29% year over year to $102 million. That’s just a fraction of a total addressable market that Doximity measures at $18.5 billion.

Doximity’s estimate of total addressable market is huge, but hardly exaggerated. Americans spend more than $3.5 trillion on health care each year, and physicians make 73% of those spending decisions. In addition to advertising, Doximity has a growing business of hiring solutions and features of premium productivity tools that hospital systems are increasingly willing to pay for.

Investment advisor showing a client the best stocks to buy.

Image source: Getty Images.

Know the risks

Doximity is the only major social network specifically targeting healthcare professionals in the US. It’s hugely profitable now, and with no serious competitors on the horizon, rapid growth seems likely for years to come.

Doximity’s shares are down about 65% from their all-time highs, but much of the company’s growth potential is already priced into the price. The stock currently trades at around 51.5 times forward earnings expectations. At this high valuation, any hint of a slowdown could result in a hefty hit to stock markets over the next few years.

I think Doximity’s strong network effect will keep potential competitors at bay and allow it to continue growing by leaps and bounds. However, my doximity position is a relatively small part of a diversified portfolio. If you’re willing to take a risk on this stock, it’s a good idea to do the same.

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister of Mark Zuckerberg, CEO of Meta Platforms, is a member of The Motley Fool’s board of directors. Cory Renauer holds positions at Doximity. The Motley Fool has positions in and recommends Doximity and Meta Platforms. The Motley Fool has a disclosure policy.