Software stocks had a terrible time in May. The majority of last month's worst-performing shares were software providers. This is notable considering that these rapid-growth stocks rarely go on sale.
But it's not just high-flying software stocks that had a difficult time. Some biotech companies also struggled in May. If you're looking for growth all-stars at a discount, the two stocks below are for you.
This growth stock was the worst performer in the Nasdaq last month
For years, MongoDB (MDB -0.51%) has been one of the market's favorite growth tech stocks. But as with any rapid growth stock, the path forward hasn't always been smooth sailing. Last month, for instance, shares lost some 35% of their value. That left MongoDB stock down nearly 20% for the year -- a rare occurrence.
MongoDB is a difficult business for newcomers to understand. But at its core, it is a database company -- hence the "DB" in its name. The company specializes in a particular open-source infrastructure called NoSQL, which is more scalable than previous options.
As Fool.com contributor Daniel Foelber explains: "MongoDB gained popularity in lockstep with the rise of cloud computing -- which made data storage cheaper. Cheaper storage costs and easier access to the cloud make it more affordable to use a NoSQL program instead of a complex but more precise application."
At the start of May, MongoDB shares were priced at roughly 15 times sales. Right now, they're valued at under 10 times sales. As with most growth stock volatility, the drop was due to fears of a sales growth slowdown. The company beat first-quarter expectations, but management's guidance for the quarters ahead was relatively weak.
Executives did point out that there were some one-time items -- like the recognition of several multi-year contracts in 2024 -- that aren't expected to reoccur in 2025, creating an artificially high base to compare growth rates. But with the stock trading at a lofty 15 times earnings, there wasn't much room for error.
Analysts expect growth to pick back up in 2026, but this year could prove difficult for MongoDB as the market digests the lofty valuation in light of weakening results.
Could this biotech company triple in value?
Exact Sciences (EXAS 5.10%) is another growth stock that stumbled last month. Shares lost about 23% of their value in May. Over the past year, they've lost nearly half of their value. What's going on?
Exact Sciences specializes in the early detection of cancer. In 2014, it launched Cologuard, the first stool DNA test for colorectal cancer. The company has other products in the pipeline -- including tests for esophageal, breast, and liver cancers -- but Cologuard is still the biggest financial contributor today.
The company hopes to launch a new, more reliable form of Cologuard in 2025, but fears over a slowdown in sales growth have dragged the stock lower.
Still, Exact Sciences maintained its full-year sales guidance, telling investors to expect between $2.81 billion and $2.85 billion in revenue this year. And famous investors like Cathie Wood still maintain a position in the stock despite some selling.
If Exact Sciences can experience success with next year's Cologuard relaunch, plus advance some of its solutions for other indications, May's sell-off could prove an attractive buying opportunity for patient investors. The last time a sell-off occurred this suddenly, shares nearly tripled in value after bottoming at around 3 times sales -- roughly where the stock trades today.
