Whether you’ve invested in the stock market for decades or just recently started investing your money on Wall Street, it’s been a tough year. The S&P 500The first half return was the worst in more than half a century.
Meanwhile, things have been even more difficult for the growth addicts Nasdaq composite (^ IXIC -0.50%). Since hitting its record high in mid-November, the Nasdaq has plummeted as much as 34%. Even with a modest rebound from the lows, the index is firmly rooted in a bear market.
But there is an interesting fact about bear markets that all patient investors should know. That is to say, every bear market decline and stock market correction throughout history was ultimately swept away by a bull market rally. This means that all the sizable falls in major US indices, including the growth-driven Nasdaq Composite, are opportunities for long-term investors to jump.
Currently, growth stocks offer some of the most attractive valuations on Wall Street. The following are five fantastic growth stocks that you will regret not buying during the current downturn in the Nasdaq bear market.
The first phenomenally growing stock you will kick yourself on if you don’t pick it up on the Nasdaq’s bear market decline is China-based electric vehicle (EV) manufacturer Nio (NIO -3.25%). Although auto stocks are battling with a flurry of semiconductor chips and shortages of parts related to the COVID-19 pandemic, these are short-term concerns that do not alter Nio’s long-term growth trajectory.
We have already had a brief glimpse of the company’s ability to increase its production. In June and July, Nio delivered 12,961 EV and 10,052 EV, respectively. Before the pandemic launched a wrench into national supply chains, Nio’s management team believed it would reach an annual run rate of 600,000 EV (50,000 EV / month) by the end of the year. Once parts availability improves, little will stand in the way of Nio’s expansion.
Investors should also like the company’s innovation, which can be seen on multiple fronts. Nio has regularly introduced new vehicles to its range to broaden its appeal to home electric vehicle buyers. The ET7 sedan, which began deliveries in late March, and the ET5 sedan, which is expected to be delivered to customers in September, can travel 621 miles on a single charge with the top battery upgrade.
There is also Nio’s battery-as-a-service (BaaS) subscription, introduced in August 2020. With BaaS, buyers receive a discount off the purchase price of their electric vehicle and can charge, exchange and upgrade batteries. at a later time. Date. For Nio, the benefit is high-margin monthly subscription revenue and early shopper loyalty.
If you like growth companies that are a little off the radar, biotech stocks Exelixis (EXEL 0.37%) it represents the perfect buy after the Nasdaq bear market has fallen.
If there’s one great thing about health stocks, it’s that they’re defensive. Regardless of the poor performance of the US economy or stock market, or high inflation, patients will continue to need prescription drugs, medical devices and health services. This puts a fairly safe plan under drug stocks like Exelixis.
What makes this anticancer drug developer so special is his successful drug Cabometyx. Cabometyx is approved for the treatment of first and second line renal cell carcinoma, as well as previously treated advanced hepatocellular carcinoma. These indications alone offer more than $ 1 billion in annual sales potential. But with around six dozen clinical trials underway to evaluate Cabometyx as a monotherapy or combination therapy in an assortment of cancer types, label expansion is a very real possibility.
Also, Exelixis is swimming with cash. It ended March with approximately $ 2 billion in cash, cash equivalents, cash equivalents and limited investments. Having so much capital on hand has allowed the company to rekindle its internal search engine and fund numerous drug development partnerships.
A third fantastic growing stock that is begging to be bought and that you will regret not buying while it is down, is the payment processor Visa (V 1.12%). Although financial stocks usually take over during times of economic weakness, Visa has sustainable competitive advantages that minimize its struggles.
On a macro basis, Visa and its competitors benefit from the disproportionate amount of time the US economy spends on expansion. While recessions are inevitable, they don’t last long. If Visa shareholders are patient, they can benefit from the natural expansion of the United States and the global economy over time.
At the corporate level, Visa is the most dominant operator in the United States (the largest consumer market in the world). As of 2020, it held 54% of the credit card network’s purchase volume in the U.S. – 31 percentage points more than its closest competitor – and was the only payment processor to see a significant expansion of business. share after the Great Recession (2007-2009).
Visa’s growth track is also exceptionally long. As most global transactions are still conducted in cash, Visa has the opportunity to find its way into potentially under-banked regions, as it did with the acquisition of Visa Europe in 2016. Or it may choose to organically infiltrate the Middle East, Africa and Southeast. Asian region with its payment infrastructure over time. Sustained double-digit growth should be the expectation for Visa shareholders.
The fourth rising stock that has surprising value during this bear market decline in the Nasdaq is U.S. marijuana stock. Columbia Care (CCHWF 2.92%). As you are about to see, Columbia Care is a particularly smart way to play with the US cookware industry if you are also bullish against the multi-state operator (MSO). Cresco Labs (CRLB 1.27%).
For starters, the US cannabis industry is expected to be booming for much of this decade. Cannabis research firm BDSA predicts that the legal weed market in the United States will grow from $ 29 billion in sales in 2021 to an estimated $ 61 billion by 2026. This is a compound annual growth rate of 16. % for those of you who keep the score at home.
As an added bonus, cannabis acted as a non-discretionary element during the COVID-19 pandemic. This means that consumers are buying regardless of inflation or the deteriorating economic outlook.
What makes Columbia Care so attractive is its growth strategy and pending acquisition by Cresco Labs. As for the former, Columbia Care used the acquisitions to rapidly expand its retail presence. It has become a major player in Colorado (the nation’s # 2 weed market for annual sales) and has a footprint in most high-dollar markets.
As for the pending acquisition, the combination of Cresco and Columbia Care will create an MSO with more than 130 operating dispensaries and a footprint in 18 states. It will be the leading wholesale cookware company in the United States, with a rapidly expanding retail presence (and higher margins). The icing on the cake is that Columbia Care is trading at an 8% discount to the purchase price of all shares offered by Cresco, which represents an arbitrage opportunity for investors.
The fifth and last fantastic growing stock that you will regret not buying during the Nasdaq bear market decline is cloud-based application security and monitoring company Datadog (DDOG 2.53%). While Datadog boasts a sizeable premium over sales and earnings per share, it is also the fastest growing company on this list by a sizeable amount (a compound annual growth rate of 74% between 2017 and 2022, based on company indications for 2022).
Why Datadog is growing so fast is no secret. Companies were constantly moving their data to the cloud before the pandemic. Since being hit by the COVID-19 pandemic, this change has accelerated. With Datadog offering solutions that enable companies to monitor and secure their applications, it is perfectly positioned for what could become a sustainable hybrid workplace.
What has probably been most impressive with Datadog isn’t necessarily its strong customer growth. Rather, it was the company’s ability to generate significant organic growth from its existing customers. At the end of March 2022, Datadog had a series of 19 quarters (three months in less than five years) of a dollar-based net retention rate of at least 130%. This means that existing customers will spend at least 30% more on average in the comparable quarter of the following year.
To add, Datadog noted in late 2020 that 22% of its customers were using four or more products, with 3% purchasing six or more. By the end of March 2022, 35% were using four or more products and 12% had “graduated” to six or more. It is truly a testament to the fact that Datadog grows its business from within.
With a constantly growing addressable global market and the company that has been pushing for recurring profitability, now is the perfect time for opportunistic investors to strike.