Nasdaq Bear Market: 5 Unbeatable Growth Stocks You’ll Regret Not Buying When Falling
This year has been a good reminder that stocks don’t rise in a straight line — even if 2021 made you think they did. For example, the standard Standard & Poor’s 500seen as an overall measure of broad market health, turned out to be the worst first-half performance in 52 years.
It was more difficult for those who depend on growth Nasdaq Composite (^ IXIC -1.31%). The index is largely credited with pulling the stock market out of the COVID-19 pandemic recession, and it has given up as much as 34% of its value after closing high in November. This put the Nasdaq in the grip of a bear market.
Although bear markets can be intimidating, history has shown time and time again that it is the perfect time to put your money to work. That’s because every notable decline in the major indexes, including the Nasdaq Composite, was eventually eliminated by a bull market.
It’s a particularly smart time to go look for deals in the stock growth space. Here are five unbeatable growth stocks you’ll regret not buying when the Nasdaq bear market goes down.
The first massive growth stock you’ll kick yourself for not buying it during the Nasdaq bear market is the fintech giant PayPal Collectibles (PYPL -1.65%). Although two-tenths of low-income PayPal customers have been hurt by historically high inflation, digital payments offer a sustainable growth runway.
One of the most impressive things about PayPal is the continued growth of the double-digit percentage, on a constant currency basis, of total payment volume (TPV) on its digital platforms. Even as US GDP declined in successive quarters, PayPal maintained a double-digit TPV. With periods of expansion lasting much longer than contractions and recessions, PayPal is ideally positioned to thrive on the uptake of digital payments.
Speaking of engagement, active PayPal accounts tell a very encouraging story. As 2020 drew to a close, the company’s average active account was completing approximately 41 payments per year. After just 18 months, the average active account completed nearly 49 transactions over the subsequent 12-month period. Since PayPal is a mostly fee-driven platform, this steady growth in engagement suggests higher total earnings are on the horizon.
PayPal is as cheap as ever as a publicly traded company, which makes it a raucous buy for impatient investors.
The second exceptional growth stock that long-term investors will regret not collecting during the Nasdaq bear market is the online services market. Fiverr International (FVR -0.99%). Despite near-term concerns about a slowing US economy negatively impacting demand for freelance work, Fiverr is uniquely positioned to benefit from a structural shift in the local business environment in the wake of the COVID-19 pandemic.
Differentiation is the big key to Fiverr’s success. While most online service marketplaces offer services on an hourly basis, Fiverr freelancers offer their services as a package. This provides more price transparency for owners and companies looking to hire a freelance translator. Perhaps most importantly, this transparency has helped to sustainably increase the average spend per buyer.
Another way Fiverr stands out is the receipt rate – the percentage of negotiated deals in its online service market that you should keep. While most of its competitors have take rates in their mid-teens, Fiverr’s take rate was down 29.8% in the quarter ending in June. Having a take rate twice that of its competitors, and seeing the average spend per buyer continue to climb, is a two-fold punch that should be very profitable for Fiverr and its investors.
The third unrivaled growth stock bought as the Nasdaq falls into a bear market is a semiconductor solutions provider. from Broadcom (AVGO 1.67%). Although supply chain constraints and weaker orders in the near term are causing havoc in the chip industry, Broadcom has clear advantages to help it weather the storm.
First of all, Broadcom generates the bulk of its revenue from developing and selling wireless chips and accessories in next-generation smartphones. It has been nearly a decade since telecom providers made extensive upgrades to their wireless infrastructure. The 5G revolution, which delivers faster download speeds for businesses and consumers, should lead to a steady smartphone replacement cycle through at least the middle of the decade.
Broadcom’s additional operating segments also introduce intrigue. The company’s solutions are increasingly present in next-generation cars, which are becoming more and more dependent on technology. But the most exciting growth opportunity may come from data centers, where Broadcom provides connectivity and access chips. With companies accelerating the pace of moving data to the cloud after the pandemic, the demand for the data center should continue to rise.
The most important thing for Broadcom is that it ended last year with a record backlog of $14.9 billion. This accumulation provides transparency to the company’s cash flow in an uncertain economic environment.
The fourth amazing growth stock you wish you could buy on the NASDAQ bear market is the Cannabis Company Crisco Laboratories (CRLBF 3.25%). Despite the apparent reluctance on the part of Wall Street with the US federal government pressing marijuana reforms, multistate operators (MSOs) like Cresco can still thrive thanks to abundant statewide legislation.
There are two aspects to Cresco Labs’ growth strategy that make it an interesting purchase. First, the company has already focused its retail expansion on license-limited markets. While it has a presence in a number of high-dollar cannabis markets, its entry into the limited licensing markets – markets where dispensary licensing is issued – should ensure a fair opportunity to build their brands and gain loyal customers.
Cresco is also in the midst of an acquisition of MSO Colombia careWhen the deal closes, Cresco will have more than 130 operating dispensaries in 18 states.
The second unique factor at Cresco is its industry-leading wholesale operations. Although Wall Street tends to resent the low margins associated with wholesale cannabis, Cresco benefits a lot from volume. That’s because it holds a license to distribute marijuana in California, the largest pot market in terms of annual sales.
The fifth unparalleled growth stock that you will regret not buying in the slump of the Nasdaq bear market is the tech giant Microsoft (MSFT -1.67%). Even the growing possibility of a US and/or global recession shouldn’t make long-term investors think twice before putting their money to work in “Ole Softy.”
One of the reasons Microsoft is making this great investment is because the legacy and innovation sectors work hand in hand. For example, the company’s Windows operating system is not the growth story it was 20 years ago. But given that Windows still accounts for nearly three-quarters of the global desktop operating system market share, it’s an absolute cash cow for the company. The cash generated from Windows allows Microsoft to make incremental dividend acquisitions and reinvest in rapidly growing initiatives.
There is no doubt that Microsoft’s top growth initiative has anything to do with cloud computing. Microsoft Azure is No. 2 globally in cloud spending, as of the quarter ending in June, with steady growth in coin sales of nearly 50%. With cloud spending still in its early stages, Microsoft’s annual operating cash flow should cross $100 billion sooner rather than later.
As a final note, Microsoft is one of only two publicly traded companies with a coveted AAA credit rating from Standard & Poor’s (S&P), a division of Standard & Poor’s International. In simple terms, S&P has the utmost confidence that Microsoft can service and pay its debts.
This is a stock known for its incredibly high floor and ceiling that rises constantly.