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Nasdaq Bear Market: 5 Phenomenal Growth Stocks You'll Regret Not Buying on the Low

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Last year was undoubtedly one of the toughest for investors in quite some time. The reference S&P500 produced its worst first-half return in 52 years and ultimately ended the year down 19% (its worst performance since 2008).

But it’s growth Nasdaq Compound (^IXIC 2.56%) it really took him on the chin. The Nasdaq fell in a bear market in 2022, with a full year decline of 33% and a maximum decline from its November 2021 all-time high of 38%.

A growling bear placed in front of a plunging stock chart.

Image source: Getty Images.

While declines of this magnitude in major US stock indices have been known to weigh on investors, it is also a great time to invest. Although we will never know precisely when a bear market will occur, how long it will last or if the fall will be steep, we make know that every bear market in history has ultimately been put in the rearview mirror by a bull rally. In other words, bear markets provide a unique opportunity for patient investors to buy innovative companies at a discount.

With growth stocks being the hardest hit by the 2022 bear market, they represent the most logical place for investors to put their money to work. Below are five phenomenal growth stocks you’ll regret not buying during the Nasdaq bear market decline.

Metaplatforms

The first incredible growth stock you’ll blame yourself for not buying during the Nasdaq bear market decline is social media kingpin Metaplatforms (META 2.43%). While there’s no sugar coating that Meta had a terrible 2022, skeptics seem to have passed the downside for a clearly dominant company.

Although the company has turned to long-term investments in the Metaverse – the Metaverse being the 3D virtual world where connected users can interact with each other and their environments – it is important to note how Metaverse is a leader in social media. arena. The Facebook, WhatsApp, Instagram and Facebook Messenger meta assets are consistently among the most downloaded apps in the world. In the quarter ended September, these apps collectively attracted more than 3.7 billion unique monthly active users, more than half of the world’s adult population.

Over 98% of Meta’s revenue currently comes from advertising, which is cyclical and likely to slow when economic growth slows. However, recessions and economic downturns do not last very long. By comparison, periods of economic expansion are measured in years. Advertisers are well aware that Meta’s social media assets offer them the best chance of getting their message out to as many people as possible. As such, Meta should command higher advertising pricing power more often than not.

The company’s metaverse ambitions are also exciting. Even though the Reality Labs metaverse segment is costing the company a small fortune at the moment, Meta had $31.9 billion in net cash, cash equivalents and marketable securities at the end of the third quarter, and its advertising business is very profitable. In short, Meta has the financial flexibility to make these investments in its future.

PubMatic

A second outstanding growth stock just begging to be bought as the Nasdaq plunges into a bear market is adtech stock. PubMatic (PUBM 1.77%). Just in case you thought Meta Platforms was the only ad-focused stock unfairly beaten by the 2022 bear market, I’m going to stress that innovative ad stocks are big business right now.

PubMatic operates in the programmatic advertising space and is a cloud-based sell-side platform (SSP). In English, this means that PubMatic helps publishing companies sell their digital signage space to advertisers. Since there has been a lot of consolidation among SSPs in recent years, PubMatic has less competition to contend with.

PubMatic sits at the center of the fastest growing trend in the advertising space. As businesses shift their advertising dollars from print to digital channels, such as video, mobile, OTT and Connected TV (CTV), PubMatic is perfectly positioned to benefit. With its strong ties to CTV Ads, its organic growth has consistently outpaced the industry’s digital ad growth rate.

Even better, PubMatic’s operating margin has the ability to outperform its peers. Since it has chosen to design and develop its infrastructure based on the cloud, it will not have to share its revenue with a third-party provider as it scales. Couple that with a cash-rich, debt-free balance sheet, and you’ve got an amazing deal in the adtech space.

An engineer plugging wires into the back of a data center server tower.

Image source: Getty Images.

Rapidly

The third phenomenal growth stock you’ll regret not adding with the Nasdaq falling into a bear market is the edge cloud platform Rapidly (FSLY 2.91%). Although larger than expected losses and premium valuation layoff Fastly in 2022, the new year looks much more favorable.

Fastly is best known for its Content Delivery Network, which is responsible for delivering content from the cloud edge to end users as quickly and securely as possible. The large-scale investment thesis with a company like Fastly is that we will see an increase in data consumption as the coverage of 5G wireless download speeds expands and the metaverse evolves.

Despite its disgraceful losses in 2022, many of Fastly’s key performance indicators are pointing in the right direction. Since the end of 2020, it has added just under 600 new customers, effectively doubled its global network capacity, added nine new countries, and maintained a dollar-based net expansion rate (DBNER) of around 120%. DBNER shows that existing customers spend an average of 20% more year over year.

Fastly also hired Todd Nightingale as its new CEO. Nightingale came from Cisco Systems, where he led the company’s network and cloud segment. Nightingale’s experience leading a major organizational change at Cisco should come in handy for Fastly and calm investors’ nerves.

Innovative industrial properties

The fourth impressive growth stock you’ll want to buy during the Nasdaq bear market decline is the marijuana-focused real estate investment trust (REIT). Innovative industrial properties (IIPR 3.88%). Even though federal cannabis reform efforts have fallen flat in Washington, DC, IIP, as Innovative Industrial Properties are more commonly known, finds itself in great shape.

When the curtain closed in the third quarter, IIP owned 111 medical marijuana cultivation and/or processing facilities covering 8.7 million square feet of rental space in 19 legalized states. He had collected 97% of his rents on time in the first nine months of 2022 and, crucially, had a weighted average lease term on those properties of 15.5 years. In short, IIP generates highly predictable cash flow every year.

One of the main reasons IIP continues to deliver is that its entire portfolio is triple net leased. A triple net lease requires the tenant to cover all costs associated with a property, such as utilities, maintenance, property taxes and insurance premiums. Pushing these costs to tenants helps ensure that IIP has no cash flow surprises.

Additionally, the lack of cannabis reform on Capitol Hill has boosted Innovative Industrial Properties’ sale-leaseback deals. Under this program, IIP purchases facilities for cash and immediately re-leases them to the seller. Sale-leaseback agreements allow cannabis operators to receive much-needed cash while reserving IIP’s long-term tenants.

Palantir Technologies

The fifth and final phenomenal growth stock you’ll regret not buying during the Nasdaq bear market decline is a data mining company Palantir Technologies (PLT 1.27%). Although its prime valuation has been a crutch since 2021, the stock is de-risked enough after an 86% pullback from its all-time high.

As I’ve said in the past, Palantir’s competitive advantage is that it’s seemingly irreplaceable based on what it can offer federal governments and businesses. Its artificial intelligence (AI)-focused platforms, Gotham and Foundry, can deliver sustained annual revenue growth of 20% or much more.

For years, Gotham has been Palantir’s primary growth and sales engine. This is the segment that works with federal agencies to collect data and plan missions. Gotham tends to land contracts that last four or five years, creating a steady backlog. But it’s important to recognize that Gotham’s long-term ceiling is limited by the fact that not all world governments can use its technology (for example, Palantir will not allow its solutions to be used by China or South Korea). North).

Palantir’s juiciest growth opportunity is expected to come from Foundry, which works with companies to turn mountains of data into actionable insights that help streamline their operations. The number of Palantir business customers in the United States more than doubled in the September quarter, from 59 to 132 in the prior year period. In other words, Foundry is just getting started, but it is showing great momentum despite a difficult economic environment. Look for Foundry to boost the company’s adjusted net income in 2023.

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