Professional and household investors have taken their stacks this year. After a relatively quiet 2021, each of the three major US stock indexes entered a bear market at some point in 2022. Growth focused on growth. Nasdaq Composite: (^ IXIC -0.97%) is the worst ever, down 38% from its all-time high.
When examined over a very short period of time, bear markets can be unnerving and test the resolve of new and established investors. But when that lens is widened from months or a year to decades, it’s clear that bear markets offer once-a-decade opportunities to buy high-quality stocks at a discount.
The 2022 Nasdaq bear market is an ideal time to buy innovative growth stocks that have been unfairly beaten down by poor market sentiment. Below are five stunning growth stocks you’ll regret not buying during the Nasdaq bear market downturn.
The first awe-inspiring growth stock investors would be wise to capture during the Nasdaq’s bear market downturn is an end-user cybersecurity company. CrowdStrike Holdings (CRWD: -3.04%). While bear markets tend to weigh on the stock at a premium valuation, CrowdStrike has shown it’s all worth the premium investors have placed on the company.
The key to CrowdStrike’s success is the cloud-based Falcon security platform. Falcon monitors trillions of events per week and relies on artificial intelligence (AI) to more effectively identify and respond to potential threats over time. While CrowdStrike’s solutions aren’t the cheapest, its overall retention rate among existing customers has steadily risen to over 98%.
What investors should really appreciate is the subscription adjusted gross margin, which is nearly 80% CrowdStrike. While it had no problem signing up new subscribers — 450 total subscribers and more than 21,100 subscribers in six years — it’s the company’s ability to encourage existing customers to buy additional services that really stands out. In the last quarter, 60% of subscribers purchased five or more cloud module subscriptions. Less than six years ago, less than 10% of its subscribers had four or more cloud module subscriptions. This explains how CrowdStrike’s revenue growth could easily outpace rapid sales growth for the foreseeable future.
One last thing to note is that cyber security is an essential service for businesses of all sizes and in any economic environment with an online presence.
A second attractive growth stock ripe for the picking during the Nasdaq’s bear market recovery is a China-based electric vehicle (EV) maker. Nio (NIO: -2.36%). Despite historic supply chain setbacks related to the Covid-19 pandemic, Nio is well positioned to become a disruptor in the auto industry.
Innovation is Nio’s driving force in the world’s leading automotive market. This is a company that introduces at least one new EV every year. Both sedans rolled off the production line for the first time this year, with the ET7 and ET5 starting deliveries in March and September respectively. In November, Nio delivered an all-time monthly record of 14,178 EVs, of which 6,175 were of its premium electric sedans. The top-tier battery variants of these sedans offering approximately 621 miles of range, Nio’s EVs can take on even established/legacy players.
But it’s not just traditional innovation that drives growth. I have repeatedly praised Nio for introducing a Battery as a Service (BaaS) subscription in August 2020. Through BaaS, Nio buyers receive a discount on the purchase price of their vehicle and have the option to top up, trade-in. , and upgrade their batteries in the future. As for Nio, it is attracting the loyalty of early adopters and generating monthly, high-margin subscription revenue.
By 2035, more than half of new cars in China are expected to run on alternative energy. That gives Nio plenty of runway to increase its market share.
For investors with a high tolerance for risk and volatility operating in Singapore Sea Limited (SE: -12.06%) This is a stunning growth stock that you’ll be bracing yourself for not buying during a Nasdaq bear market downturn. While the short-term losses have been unflattering as the company spends aggressively on its expansion efforts, these expenditures should pay huge dividends over the decade.
What makes Sea so special is that it has not one or two three fast growing and differentiated operating segments. Right now, the only one generating positive earnings before interest, taxes, depreciation and amortization (EBITDA) is Garena, the company’s digital entertainment arm. In particular, Garena is benefiting from the success of the hit mobile game Free fire. Overall, 9.1% of Garena’s 568.2 million quarterly users paid to play its games in the third quarter. That percentage of paid-to-play users ok above the industry average.
Second, Sea has a growing digital wallet business. Because the company operates in Southeast Asia and Brazil (ie, emerging markets where a significant percentage of consumers are underbanked), it has a significant opportunity to provide financial solutions where traditional banks have so far failed.
Third, there is the Shopee e-commerce platform. In the third quarter alone, Shopee moved $19.1 billion in gross merchandise volume (GMV), compared to $10 billion in GMV for all of 2018. That’s how fast this e-commerce operation grew. With more careful spending, Shopee is expected to reach break-even EBITDA by the end of 2023.
Green Thumb Industries
A stock of marijuana Green Thumb Industries (GTBIF: 7.67%) is the fourth phenomenal growth stock you’ll regret not buying when the Nasdaq is down. While federal cannabis reform efforts have failed, state-level legalization holds a lot of promise for multinational operators (MSOs) like Green Thumb.
As of early December, Green Thumb had 77 operating dispensaries in 15 legalized states, but has enough retail licenses in its back pocket to effectively double its dispensary presence over time. The company has focused much of its attention on limited-license states, where regulators intentionally limit the number of retail licenses an individual business can hold. Moving into markets with limited licenses ensures that Green Thumb dispensaries have time to build brand awareness and grow their customer base.
What makes Green Thumb one of the best marijuana MSOs to have is its revenue mix. More than half of sales come from a combination of food, beverages, beverages, vapes, pre-rolls, and health and beauty products. These are known as “derivative” pot products, and they command significantly higher price points and much juicier margins than traditional dried cannabis flower.
While most pot stocks are still looking for their first quarterly earnings, Green Thumb has produced nine consecutive quarters of generally accepted accounting principle (GAAP) earnings. In other words, it looks like a real leader in one of the fastest growing industries in the US
The fifth amazing growth stock you’ll regret not buying when it goes down is the social media giant Meta platforms (META: 2.82%). While ad spending may weaken in the short-term as fears of a possible recession in 2023 loom, Meta offers solid competitive advantages that make it a no-brainer buy at its current share price.
Despite the focus of the metaverse (I’ll get to that in a moment), it can’t be overlooked how dominant the Meta’s social media assets are. Collectively, Facebook, WhatsApp, Instagram and Facebook Messenger attracted 3.71 billion unique visitors each month in the third quarter. That’s more than half of all adults on this planet at the disposal of advertisers. There’s no other social media platform anywhere that gives merchants the ability to reach users like Meta, and its historical ad pricing power shows that.
As for the metaverse, CEO Mark Zuckerberg is happy to invest in the future. Even with heavy losses associated with Reality Labs (the company’s metaverse operating segment), Meta’s promotional activities easily keep the company profitable. Previously, Meta had $31.9 billion in cash, cash equivalents and marketable securities. There’s a lot of financial flexibility here for Zuckerberg to build his company on a key metaverse platform.
Meta has never been this cheap in its 10 years as a publicly traded company, and it would be a shame if long-term investors pass up this opportunity to pick up shares on the cheap.