Software-as-a-service (SaaS) stocks had an atrocious 2022. Unfortunately, much of that was self-inflicted, especially considering the lofty valuations many stocks reached during their late 2021 peaks. Now that the mass exodus out of these companies has likely run its course, long-term investors can sift through the rubble to find some companies worth owning.

One stock set for a strong recovery in 2023 is Twilio (NYSE: TWLO). It's down nearly 90% from its high, but I'm not investing in it because it can notch a new high soon. Instead, it's a smart investment, because it still has the potential for outsized returns in the future. Read on to find out why.

When a stock is down 88%, it must increase by 733% to return to its breakeven point. That's a tall order, and it could take many years to accomplish that feat. Of course, it may never reach that previous peak again -- just look at Cisco Systems' stock chart dating back to the dot-com bubble.

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Source Fool.com