Unless you shorted or invested a significant percentage of your investment portfolio in energy stocks last year, it’s entirely possible that you fell victim to the worst returns for a major U.S. stock index since 2008. .
All three major indices entered bear markets last year, NASDAQ Composite (^IXIC 2.66%), it was really on the chin because of its focus on growth stocks. The Nasdaq has lost 33% of its value in 2022 and has also fallen 38% on a peak-to-trough basis following the November 2021 high.
Bear markets are known to test investor resolve, but historically they are also a wise time to invest. Every past bear market has been sidetracked by a bull market, so it makes a lot of sense to buy quality companies at a discount.
Below are five surprising growth stocks you’ll regret not buying during the Nasdaq bear market dip.
The surest growth stock that will go bankrupt first if not bought in the Nasdaq bear market is the e-commerce giant. Amazon (AMZN 3.81%)The world’s leading online marketplace could face challenges as interest rates rise and the economy weakens, but importantly the segment with significantly higher margins is growing at a breakneck pace. That’s it.
Last year, eMarketer predicted that Amazon would account for just under 40% of all US online retail sales. Its e-commerce dominance is unrivaled, but retail sales generate very thin operating margins.
What’s even more significant for Amazon is that as of April 2021, over 200 million Prime members worldwide have signed up. Subscription revenues reach nearly $36 billion in annual run-rate sales and are much more profitable than online retail sales.
More importantly, the growth of Amazon Web Services (AWS), the cloud infrastructure services segment. The growth of cloud services is still in a relatively early stage, with AWS holding nearly one-third of his global market share. Despite accounting for about one-sixth of Amazon’s net sales, AWS generates most of the company’s operating income.
Throughout the 2010s, investors were willing to pay 30 times the median year-end cash flow to own Amazon shares. You can buy the stock now for less than 10 times his projected Wall Street cash flow for 2024.
The second easy growth stock I regret not buying during the Nasdaq bear market is cybersecurity stocks Octa (OKTA 1.52%)Despite the rising costs associated with the Auth0 acquisition weighing on its bottom line, Okta has a number of ongoing catalysts that make its sizeable price drop an attractive buying opportunity for patient investors.
First, cybersecurity has steadily evolved into a basic commodity industry over the past two decades. Before the pandemic, businesses were moving data online and in the cloud. The pandemic has accelerated the pace of this change. Cybersecurity is necessary in any economy because hackers never take a break from trying to steal sensitive information.
On a more enterprise-specific basis, Okta’s cloud-native identity verification solution stands out for its use of artificial intelligence (AI) and machine learning. By leveraging AI, Okta’s platform will become more efficient over time in identifying and responding to potential threats.
Okta’s sales performance has shown that companies are willing to pay for this top-notch protection. The company’s subscription backlog grew 21% in the third quarter from a year ago, to $2.85 billion by the end of October.
Additionally, Okta should benefit from a smaller loss in fiscal year 2024 (which accounts for the majority of calendar year 2023) as Auth0 integration issues are put in the rearview mirror and the company begins to venture into overseas markets.
The third surprising growth stock I regret not picking up during the Nasdaq plunge is a China-based online retailer JD.com (JD 1.70%)China’s COVID-19 mitigation strategy has weighed heavily on the Chinese economy over the past three years, but recent changes should open the door for fast-growing JD.com to shine.
This “recent change” I’m referring to is China’s abandonment of its controversial COVID-Zero Strategy. The coming months may be difficult as citizens build vaccine-based or natural immunity against COVID, but the move will ultimately allow economic activity to thrive again.
JD.com is China’s second largest online retailer, AlibabaBut Alibaba’s platform relies primarily on third-party marketplace services, while JD.com, like Amazon, is set up as a direct-to-consumer selling model. JD.com manages inventory and logistics and has minimal reliance on third-party marketplace services, allowing it to better manage expenses and pull levers to increase operating cash flow .
And like Amazon, JD has a fast-growing ancillary segment that offers higher margins than traditional e-commerce. The company’s logistics division grew he 39% in the quarter ended September 2021 from the same period in 2021. This does not take into account revenue from local on-demand delivery service Dada. Sustained double-digit sales and earnings growth for him between JD’s traditional online retail segment and potentially higher-margin logistics and his JD Health businesses could be realized .
The fourth growth stock I regret not buying during the Nasdaq plunge is U.S. marijuana stocks trulieve cannabis (TCNNF -0.29%)Efforts to legalize cannabis and reform banking have leveled off in the Capitol for years, but state-level legalization has proven more than enough to push Trulieb into the profit pillar.
One of the interesting aspects of this company is how it scales. Most multistate operators have moved from his 10 legal states to somewhere in his 20 states, but Trulieve Cannabis has focused most of its efforts on saturating Florida, where medical marijuana is legal. spent on getting it in order. As of the end of November, 122 of the 180 clinics were in the Sunshine State. For context, those 122 dispensaries account for just under a quarter of all marijuana stores in the state.
why florida? First of all, the state is set to become the third largest cannabis market by sales in 2024. There’s also a good chance that recreational cannabis will be voted on in Florida next year.
But a big perk of holding one of the 22 Florida marijuana retail licenses is that the owner can open as many dispensaries as they like. We were able to control our marketing costs while helping to generate consistent adjusted profits.
Investors should note that the company’s acquisition of Harvest Health & Recreation will also start paying dividends. Harvest Health, Arizona’s leading cannabis retailer, began allowing the sale of adult cannabis two years ago. And the acquisition provided Trulieve with a platform to build a presence in the Mid-Atlantic region of the United States.
The last surprising growth stock you’ll regret missing out on in the Nasdaq bear market is social media platforms. Pinterest (pin -0.64%)Despite advertisers slashing budgets amid immediate economic uncertainty, Pinterest shows its clear competitive advantage can still boost its share.
Skeptics have focused a lot on the company’s flat/shrinking monthly active users (MAU) since March 2021. Aside from the fact that his MAU trend over the long term is still upwards, the real story is that Pinterest is monetizing his MAU of 445 million without issue. Even in a tough advertising environment, he increased global average revenue per user by 11% in the third quarter. This is clear evidence that merchants are willing to pay to get their messages in front of Pinterest’s legions of potential shoppers.
Another reason Pinterest is a solid buy is its operating model. Instead of forcing consumers to rely on data tracking tools that they can opt out of, Pinterest’s site is based on the premise that users freely and willingly share their interests. The whole pinned board concept allows Pinterest to provide data that merchants can use to target users.
Finally, don’t miss Pinterest cash positions. At the end of September, it had approximately $2.67 billion in cash, cash equivalents and securities. This is more than enough capital to continue to innovate while navigating a difficult economy.